Governor directs agencies to find ways to soften spending cuts

Gov. Ted Kulongoski directed state agencies Wednesday to seek ways to protect vital services after voters rejected an $800 million tax increase, but said major spending cuts will have to be implemented.

“There will be loss of essential programs,” including lopping about 50,000 low-income people from the state health plan, he said.

“There will be drastic consequences to some citizens,” the Democrat said.

The proposed tax hike failed 59 percent to 41 percent. Rejection of the tax package automatically triggers $544 million in spending cuts on May 1.

It was the second time in a little more than a year that voters have turned down a tax hike passed by the Legislature to balance the budget.

The state has been in budget turmoil for more than two years as the recession eroded tax revenues. That has caused the state to cut $1 billion in spending, which has hit school districts, programs for the needy and law enforcement particularly hard.

The Legislature narrowly passed the latest tax package last August in a bid to balance the state budget without inflicting even more pain on crucial programs.

It is not yet clear what exactly will be cut with the failure of the latest tax hike proposal. State government has some leeway in how the $544 million in cuts can be implemented.

Kulongoski said he wants to protect in some measure health care and law enforcement programs. For example, he said, none of the cuts will cause serious criminals to be released.

“I will not let hardened criminals out of the pentitentary before their time” has been served, he said.

The governor said he has ordered agencies to “absorb the cuts to the greatest extent possible without affecting programs.”

He repeated that he’s “not inclined” to call lawmakers into special session to reshape the budget, and legislative leaders say they’re inclined to let Kulongoski handle the problem.

Kulongoski said he will ask the Legislative Emergency Board to dip into its nearly $40 million in emergency funds to protect some programs, including the state police crime labs that process evidence for all police agencies in the state.

Officials say the automatic cuts in that program would force layoffs of 60 of the labs’ 107 employees.

The E-Board handles budget matters between legislative sessions.

Kulongoski said his other priorities include preserving health care coverage for children, pregnant women and seniors, money to continue gambling addiction treatment and to avert closing regional detention centers for juvenile offenders.

The governor, who had said before the election the “sky wouldn’t fall” if the tax measure lost, said he wasn’t startled by the voters’ choice.

“Given the state of the economy, the fact that the majority decided not to take on more tax burden isn’t surprising,” Kulongoski said.

Oregonians have been historically opposed to tax increases. That tradition, plus an economy still struggling to shake off the effects of recession, seems to have doomed the proposed tax hike.

Kulongoski said he remained optimistic, pointing to the slowly improving state revenue picture and news Wednesday that Intel plans to add more jobs in Oregon.

The economy remains “the ultimate answer to Oregon’s fiscal problems,” he said.

Political analyst Jim Moore said the vote showed that Oregonians weren’t swayed by warnings that schools and other services would suffer big cuts without the tax increase.

“People are suspicious of government, and they simply weren’t buying the doom and gloom thing,” Moore said.

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On the Net:

Citizens for a Sound Economy: http://www.cse.org/oregon/index.php

Measure supporters: http://www.ouroregoncoalition.org/

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