PORTLAND, Ore. -- Gov. Ted Kulongoski gave the legislature a grade of "incomplete" Friday during a speech to the Portland City Club, praising lawmakers for their bipartisan work on fashioning a rainy day fund savings account, but adding that plenty of work remains before the session's scheduled end in June.

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The speech was the governor's most detailed assessment yet of the legislature at mid-session, and it revealed some rifts between the second-term Democrat and the Democrats who lead the legislature.

Kulongoski chided the co-chairs of the legislature's powerful budget-writing committee, Sen. Kurt Schrader, D-Canby and Rep. Mary Nolan, D-Portland, who cut way back on the amount of money he'd proposed for higher education and community colleges.

"My budget reinvests in higher education -- while the co-chairs' budget continues the disinvestment of the last two decades," he said.

Schrader and Nolan have defended their budget, saying that the $352 million Kulongoski had proposed for university capital construction projects would have plunged the state deeply into debt that it cannot afford.

Still, Kulongoski said he suspects Schrader and Nolan may have been trying to send a message by omission, to persuade skeptical legislators to raise the minimum income tax charged to corporations, set at $10 in 1931 and unchanged ever since. Doing so could generate about $90 million for post-secondary education, a pet cause of the business community, Kulongoski said.

"Maybe the co-chairs are a lot shrewder than I thought they were, or maybe they know something that I don't know," Kulongoski said. "What they are counting on is for members of the business community to tell the legislators: Do this. Increase the corporate minimum tax."

The governor also urged moving forward on energy legislation. A bill moving through the legislature would require 25 percent of Oregon's electricity to come from renewable energy sources by 2025. But the bill has run into questions over how much it could increase energy prices in the short term.

And Kulongoski said lawmakers should be practical about what can be achieved this session for large-scale reform of the state's health care system, warning that it would be a mistake to abandon the current system of employer-backed health care too soon, in favor of a government-backed universal health care plan. About 1.8 million Oregonians currently rely on employer-provided health care.

Former Gov. John Kitzhaber, whose signature achievement was the Oregon Health Plan to provide coverage for the working poor, has proposed a bill to request that Oregon be granted full authority over its share of federal health care dollars.

The state would then use that money to design a universal health care system, Kitzhaber has said.

But Kulongoski said the immediate focus should be on expanding the state prescription drug pool and raising the state's cigarette tax to pay for health coverage to 117,000 uninsured children in the state. Details of that proposal are being hashed out behind closed doors at the Capitol, with Republicans negotiating for some kind of tax relief to be attached to the bill.

"If special interests succeed in blocking a reform as compelling as this one, I doubt we will muster the political fortitude to enact more far-reaching reforms any time soon," Kulongoski wrote in a letter this week to Kitzhaber and state Sens. Alan Bates of Ashland and Ben Westlund of Bend, who have also been working on health care proposals.

In Friday's speech, Kulongoski also urged lawmakers to come to consensus on Oregon's property rights law, passed by voters in 2004 and perhaps the most divisive issue in the current session.

Negotiations over the law, known as Measure 37, are ongoing, but common ground has proved elusive.

The governor also found time to tick off some high points of the session so far, including a bill he signed to pool health insurance coverage for educators, and bill to curb the payday loan industry.