FOR IMMEDIATE RELEASE
January 7, 2002

Contact:
Bob Applegate
(503) 378-6496
Jon Coney
(503) 378-6169

Governor John Kitzhaber today released a list of $830 million in budget reductions that would be necessary to rebalance the 2001-2003 state budget without new revenue. The governor released the list of possible cuts as the first step in a bipartisan process with legislative leadership to rebalance the budget in a special legislative session targeted for early February.

"It is critically important for Oregonians to understand the depth of our budget problem and see the level in reduction in state services necessary to rebalance the budget," Kitzhaber said.

The cuts were made necessary by a projected $700 million decrease in state revenue due to the recession; and by $130 million in increased costs due to medical cost inflation in the Department of Corrections; and to an increased demand for social services by Oregonians directly affected by the recession.

"Let me be clear that this is not a ‘Governor’s Recommended Budget’," Kitzhaber said. "I believe that making this level of cuts is neither responsible nor politically possible. This should be viewed as a starting point for the debate and I will work over the next week to come up with a more balanced approach involving budget cuts, the use of existing unallocated resources as well as a consideration of new revenue." Kitzhaber targeted the week of January 14 as the probable release date for a more balanced budget plan.

Governor Kitzhaber also noted that the fiscal challenge involved not only rebalancing the budget for the current biennium, but doing so in a way that begins to reduce the looming billion dollar shortfall projected for the 2003-2005 and the 2005-2007 budgets. "Our responsibility is to make the tough choices now that will put our General Fund budget back on a sustainable footing for the future," he said.

Since nearly 90 percent of the General Fund is allocated to three program areas -- education (56.1%), human services (21.7%) and public safety (11.3%) -- those are the areas that must bear the brunt of the budget reductions.

The general outlines of the proposed cuts are as follows:

Primary and Secondary (K-12)

Over 42 percent of the General Fund budget -- $5.2 billion -- goes to our primary and secondary school system. For this reason, it is very difficult to rebalance the budget without cutting funding for public schools. The proposed rebalanced budget would reduce state funding of our K-12 system by $304 million or six percent.

How those reductions will affect our children’s education will differ among Oregon’s 198 school districts. While each locally elected school board will make the final decisions, it is reasonable to assume that these cuts will affect student to teacher ratios, access to language and art instruction, textbook purchases, transportation services and length of school year.

Community Colleges

The proposed rebalance would cut the state appropriation to Oregon’s 17 community colleges by $38 million or eight percent. Like our primary and secondary school system, locally elected boards govern Oregon’s community colleges. Exactly how those reductions will be managed is up to those local boards. However, some examples of possible cuts include: reduction or elimination of outreach programs, reduction of English as a second language offerings and adult literacy classes, reduction or elimination of evening and weekend classes and increases in tuition ranging from 15 to 25 percent.

Oregon University System

The proposed rebalance would cut $84 million or ten percent of the state appropriation to Oregon’s institutions of higher learning. Specifically, the proposed reductions include: