A business take on the state budget crisis

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Tackling Oregon’s Budget Woes
By  J.L. Wilson
Associated Oregon Industries,

Associated Oregon Industries, in concert with some of Oregon’s leading business and trade associations, is devoting much of 2010 to an effort to address the State of Oregon’s projected $2.5 billion deficit for fiscal years 2011-13. Economists predict that Oregon will run multi-billion dollar deficits for the next decade unless corrective measures are taken.

As a recent study from the Oregon Business Council and ECONorthwest suggests (see study here), Oregon’s budget problems stem primarily from three factors. First, there simply aren’t enough jobs in Oregon. In addition to the lack of jobs, there is not enough income generated in the state to produce a vital public sector. Finally, government expenditures, primarily with regard to employee costs and Medicaid expenditures, are unsustainable.

AOI, the Oregon Business Council and other business groups are organizing around a common platform and agenda regarding this daunting fiscal challenge by using a three-tiered approach.

The primary question that must be answered is: How does Oregon grow jobs and income? To do this, business groups are focusing on the state’s economic development policy. There are several available proposals that could spur immediate job creation, but over the long term, Oregon must take inventory of a “best practices” approach to fostering industry growth.

The second tier involves an in depth look at government expenditures and addressing why those expenditures have become unsustainable.

The third tier takes a look at Oregon’s system of taxation and determining if there are better methods of taxation that would have a greater positive impact on investment and job creation.

The need for this intensive effort will be brought into sharp focus this week with the state’s economist giving the state legislature a $563 million shortfall in the revenue update. Oregon is one of just a handful of states with no improvement on unemployment numbers, and the state’s depressed revenue collections will underscore the importance of business groups coming together to produce solutions.