Think again

Living within our means can trump living mean

By TIM NESBITT
President, Oregon AFL-CIO

When it comes to running state government and providing services to its citizens, no one denies that Governor Ted Kulongoski was dealt a tough hand when he took office almost three years ago. He inherited a deep recession, shrinking revenues and an angry electorate that voted to reject new taxes to bail out state services two times during the first 14 months of his administration. But how the governor played that hand is a matter on which there is great disagreement.

His defenders say that he at least stopped the Legislature from making a bad budget situation even worse. He challenged the short-sighted (using one-time money to pay for current operations) and the irresponsible (borrowing more money today with no idea of how to pay it back tomorrow). By so doing, they say, he kept the Legislature from digging an even deeper budget hole in the future.

“Yeah, but,” his critics say. They complain that, by adopting the mantra of living within our means and enthusiastically defending that approach as state revenues declined, Kulongoski seemed to embrace austerity, even when that meant cutting families from the Oregon Health Plan. And, their biggest complaint is that he largely ducked the issues of the unfairness and inadequacy of our tax system.

I say “yeah” and “but.” The governor played the budget hand as best he could, even if his table talk was sometimes inappropriately upbeat. Large-scale, revenue-raising tax reform just wasn’t in the cards these past few years. But, he could and should have done more to highlight the flaws of our tax system. Oregon collects proportionately more taxes from working families and less from profitable corporations than any other state in the West. And, since we keep cutting taxes on corporate profits, we’ll get less revenue than we used to from those corporations as our economy recovers.

Still, the governor has the opportunity to apply his live-within-our-means strategy to a different hand now. Anti-government groups like Citizens for a Sound Economy and its successor, Freedom Works, are likely to place a draconian spending limit on the November 2006 ballot. (Note: We already have a spending limit, and we’re spending well under that limit.) These are the same people who campaigned against the revenue-raising measures that the voters rejected in 2003 and 2004 by arguing that we should live within our means. They argued that we should wait for an economic recovery to produce the revenues we’ll need to restore state services.

Well, now that we’re living within our means and our means are starting to improve, the anti-government crowd is trying to renege. The bottom line is this: They want to starve government and keep it from doing good things for working families by ratcheting down its resources in both bad times and good.

This time, the governor is holding a winning hand. Everyone sees better times on the horizon, with the long-awaited chance to use the revenue dividends that the state will collect from an improving economy to revive our education system -- expand Head Start and kindergarten, reduce class sizes in grade schools, better prepare high school students for post-secondary education and training and make higher education more affordable.

Revenue forecasts for the next biennium project a modest, but encouraging, 8.6 percent increase in the state’s general fund receipts. This is why House Speaker Karen Minnis and the governor opened the bidding this year on how much of our future revenues should be dedicated to education. Kulongoski outbid Minnis. Now, the only question about the governor’s higher bid is whether he’ll be able to play all the cards he’s holding – and the answer to that question depends on whether he can beat back the proposed spending limit.

If the revenue forecast holds (one worry is what higher oil prices will do to the national economy), we should be able to start climbing back up the down staircase in the next budget period. This is a time when living within our means should trump living mean.

So, whether or not he runs for re-election, the governor needs to play this hand for all its worth in 2006. He can answer those who have criticized his lack of leadership by leading the effort to defeat the spending limit and bring in the business community to join him in this effort. Then he or his successor can get to work on repairing, restoring and reviving the things we expect from our government instead of replaying another bad hand in which we’re told that the things we need to do to rebuild our state just aren’t in the cards.

Tim Nesbitt is president of the Oregon AFL-CIO. For more information, check out the Oregon AFL-CIO online at oraflcio.unions-america.com