12/01/2008

By BRAD CAIN  / Associated Press

Gov. Ted Kulongoski's proposed state budget for the next two years would protect education from funding cuts but make deep reductions in some social services spending, including programs for the disabled, the elderly and low-income families.

In presenting his proposed budget on Monday, Kulongoski said the nation's economic turmoil requires hard choices.

He called for reducing the amount of money to provide in-home care for some 6,500 seniors and the disabled as well as cuts in state child care subsidies for 3,500 low-income working families.

Additionally, about 100,000 adults could lose dental and vision benefits under the Oregon Health Plan while about 3,000 low-income Oregonians could lose access to community-based mental health and drug and alcohol treatment programs.

Kulongoski's 2009-2011 budget proposal is a starting point, and legislative leaders on Monday immediately signaled it could be open to major revisions.

Senate President Peter Courtney said he's concerned that Kulongoski's social services cuts go too deep, especially since the most recent monthly unemployment report showed 14,000 Oregonians joining the jobless ranks.

"It's ugly out there," the Salem Democrat said. "We need to explore every option and we absolutely must protect those who can't protect themselves — our children, our elderly and those with disabilities.'"'

In his budget announcement, the Democratic governor said his two-year spending blueprint will avoid cuts in the K-12 budget and for higher education. He said he's advocating that approach because the state will need a well-educated work force for when economic recovery does come to the state.

He noted that in the last recession, many schools were forced to drop as many as two weeks from their academic calendars to make ends meet.

"As long as I am governor, we will not close our school doors early," he said.

Kulongoski said his budget makes children a priority because it also would bring health care coverage to 95 percent of all Oregon children within three years.

His $16 billion budget also includes funding for a transportation package intended to create thousands of jobs immediately and would expand the business energy tax credit to bring new green industries to the state.

"We don't have the money to do everything that needs to be done in the next two years," he said. "But today I propose a budget that invests in the future by investing in children, working families, businesses and economic opportunity during these challenging times."

Kulongoski's budget contains various tax increases that could generate a lot of debate when the 2009 Legislature convenes Jan. 12.

To help pay for an expansion of health care coverage, Kulongoski is proposing an increase in the cigarette tax of 60 cents per pack. Voters shot down a larger cigarette tax hike in November 2007 for children's health insurance.

This time, Kulongoski wants to tax hospitals and health insurers to the tune of $700 million over the next two years to pay for expanded coverage for children and low-income adults who currently aren't covered.

Further, the governor is proposing a 2-cent-a-gallon gasoline tax hike and sharp increases in vehicle fees to help pay for his transportation package.

He's also proposing an increase in Oregon's corporate minimum tax to increase the amount of money available for a program that provides cash grants to college students.

Republicans said state government has a spending problem, not a revenue problem.

"The governor's answer to 133,000 unemployed Oregonians is taxes, taxes and more taxes," said Senate Republican Leader Ted Ferrioli. "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."

Kulongoski said, however, that he thinks the public will support more revenue, especially when it comes to paying for things like his job-creating transportation package.

"I know that when the economy is down, asking Oregon families to pay more for anything is a tough sell," he said. "But that money will go back into the pockets of these same families — and the businesses they own or work for — through a stronger economy."