Kulongoski unveils budget; Republicans object over tax increases

SALEM -- Gov.  Ted Kulongoski unveiled a 2009 budget proposal on Monday that gives spending priority to education, health care and job creation. Republicans responded by saying the governor’s budget is based on tax increases that have not been passed yet.

The governor announced his budget changes even as experts predict the state is headed into a recession. By keeping the social safety net in place, Kulongoski hopes to keep Oregonians' confidence up as the state's unemployment rate rose above the national average to 7.3 percent in October.

“I believe that hope, confidence, certainty, and reassurance will see us through this very tough time – and the hard choices I had to make in my 2009-2011 budget and are a window to Oregon’s future,” Kulongoski said. “My message to the people of Oregon is:  Have hope.  Feel confident.  Believe with certainty.  And rest assured – together we will see a brighter day.”

To maintain his budget proposal, Kulongoski is banking on the legislature passing four changes to Oregon’s tax system. The first is to Oregon’s corporate minimum tax, which the governor hopes will be altered in order to send more money toward education. Two other changes include an increase in the provider tax paid by hospitals, and a $.60 cent tax increase on a pack of cigarettes, which was rejected by voters in 2007, would provide the revenue for increased health care funding. Increased transportation funding, which he says will fund improvements to Oregon’s infrastructure, will come from a tax increase on vehicle registration and an increase in the gas tax.

Senate Minority Leader Ted Ferrioli (R-John Day) says Kulongoski’s budget will only put more pressure on families that are already struggling with a difficult economy.

“The Governor’s answer to 133,000 unemployed Oregonians is taxes, taxes and more taxes.  While the Governor recognizes that families have been changing their lifestyles and spending in the face of a struggling economy, he fails to recognize that government must follow their lead,” Ferrioli said.  “Government has been spending at a break neck speed, creating unsustainable program growth despite almost $1 billion more in revenue. Now is the time to counter that tax and spend mentality with common sense and fiscal responsibility.”

House Minority Leader Bruce Hanna (R-Roseburg) pledged to work with Oregon Democrats to come up with a fiscally sound budget for the state in 2009, but he also said that such a budget should not resemble Kulongoski’s proposal. The house minority leader said Kulongoski’s budget was presumptuous, since it was based on tax increases the legislature has not considered yet.

“The Governor's budget doesn't reflect reality. It's balanced on imaginary revenue including tax increases that haven't yet been approved yet,” Hanna said. “Democrats can't tax, spend and borrow out of the mess they created. Throughout 2009, we will work with Democrats to develop a more responsible state budget. However, we will oppose saddling Oregonians with reckless tax increases and uncontrolled debt.”

But with a 36-seat Democratic majority in the Oregon House, Hanna and House Republicans may not be able to do much about it. The 12-seat advantage that Democrats hold means Republicans don’t have the votes to stop the tax, and if every Democrat votes in favor of a tax increase, the issue will not even be sent to voters.

House Speaker-elect Dave Hunt (D-Clackamas) was quick to point out that Kulongoski's budget priorities, including routing 54 percent of the general fund toward education, was in line with both state and federal Democrats. And that the new tax increases should be seen as investing in the future, rather than burdening Oregonians in the present.

“While we may be asking for some new fees to help create jobs and fix our transportation system, the amount we are asking for pales in comparison when compared with the cost of doing nothing," Hunt said in a statement. "The end result of the transportation and public works package – creating tens of thousands of new jobs annually, along with saving families and businesses money and time in the future – will be well worth the investment, especially as the price of gas has dropped so dramatically."