Create the Fundamental Conditions for Long-Term Job Creation and Prosperity

John Kitzhaber helped launch the Oregon Business Plan in 2002 during the last recession. Before that, Oregon had no comprehensive plan to create jobs and grow its economy. Now, Oregon has a bi-partisan strategic framework developed by Oregon’s top business executives, elected officials and community leaders to create a stronger, more competitive and robust Oregon economy. The next Governor must provide the leadership to turn the Oregon Business Plan into a set of specific actions.

The Oregon Business Plan is built around our traded-sector industries – businesses that sell their goods and services primarily outside the state, creating jobs and bringing in new dollars that benefit local communities. Furthermore the plan recognizes that the ability of Oregon’s traded-sector industries to produce economic prosperity and quality jobs for Oregonians requires investing in our people; protecting our environment and high quality of life; promoting a spirit of innovation; maintaining the availability of important public and private services; and ensuring a stable and adequate revenue source to finance public services. These important components of long term prosperity are referred to in the Business Plan as the “Five Ps” – People, Place, Pioneering Innovation; Productivity; and Public Finance.

People: Education and Workforce. Quality, accessible education is essential for all Oregonians to earn family wage incomes and to have a secure place in our economy. An educated workforce, in turn, is a powerful magnet for knowledge-intensive industries. A quality system of public education can also help communities throughout the state and segments of the Oregon population that have had the greatest difficulty connecting with opportunities in the new economy.

The Oregon Business Plan calls for a “40-40-20” education goal: 40 percent of Oregon adults should have a bachelor’s degree or higher; 40 percent should have at least an associate’s degree or other technical credential; and the remaining 20 percent should have a high school diploma that represents a high level of academic and work readiness skills.

Achieving this goal will place unprecedented demands on the capacity of our current education system (pre-K through 20) and will require not only a different and more integrated operation of the education enterprise, but also a unified, transparent, student-centered, and performance-based budget framework. In the near future we will be releasing a detailed policy paper on the actions that will be necessary to bring about this transformational change in education and workforce training.

Place: Quality of Life. Oregon is a special place to live, and Oregon’s quality of life helps attract and retain talented people who drive our economy. Access to the outdoors and recreation, arts and culture and safe communities are among the many features that can support economic prosperity. Our strategy to transform Oregon’s economy must enhance rather than deplete our natural environment and the quality of life that so characterizes our state. Among other steps, we must incorporate progressive land-use policies and easy access to multiple transportation options in our strategy for economic development.

Pioneering Innovation. Much of the recent growth in the Oregon economy has been propelled by knowledge-based industries such as electronics, software, and green technology – and through innovation and new products from all industries. Long term prosperity will depend on our collective capability to continuously learn and adapt in an ever-changing economic world. The infrastructure necessary for knowledge-based growth includes strong private sector research activities, a good entrepreneurial climate, and access to investment capital for new ventures.

Oregon has taken major strides to improve its climate for innovation over the past several years, thanks to the Oregon Innovation Plan and other efforts. The Oregon Innovation Council is a model for collaboration between the university system, state and local governments, private businesses and venture and other capital providers. We must continue this work, but also address additional issues including the creation of added incentives for research and development and increasing the availability of investment capital.

Productivity. The cost and availability of a range of public and private services influences the competitiveness of Oregon businesses in national and international markets. Environmental, health, and community development policies designed to sustain quality of life set our base expectations upon which we will build a healthy productive economy.

To achieve the productivity we need, Oregon must focus on maintaining competitive rates for such crucial services as quality health care and energy. We must insure that business taxes are competitive with those in other states while maintaining equity in our overall tax system. To meet this challenge will require strong leadership from the Governor and willingness on the part of business and labor to work together toward a prosperous and secure economic future.

Among our top priorities must be:

• Restructuring the way health care is organized and delivered in order to improve the health of Oregonians at a lower cost without sacrificing quality. Health care is the single fastest rising cost for businesses, individuals and families. The legislation currently being developed in the U.S. Congress is focused largely on insurance reform which is not the same as health care reform. Oregon must seize the opportunity to develop innovative state programs to deal with the issues left unaddressed by the federal legislation. As a medical doctor and “father” of the Oregon Health Plan, John Kitzhaber is in a unique position to lead further reform in Oregon that can serve as a national model.

• Addressing energy in a way that keeps rates competitive and meets our goals of greenhouse gas reduction and energy independence. Accelerating energy efficiency across all sectors will be key to this strategy.

• Advancing the coordination between state and local governments to streamline permitting across jurisdictions.

Public Finance. Oregon's system of public finance and budgeting must provide a much more stable funding base for critical public services and create stronger incentives for economic growth. Our volatile system of public finance was the main reason a recent report by the Pew Center on the States identified Oregon as one of ten states most at risk of plunging into the same kind of financing and budget crisis that has gripped California. To break Oregon’s boom/bust economic cycle and stabilize public revenue we must:

• Conduct long-term budgeting. Currently Oregon state government operates around a two-year “biennial” budget making it difficult to plan ahead. Oregon must develop and implement a long-term, transparent, performance-based budget built on 8 to 10 year projections of both revenues and expenditures.

• Reform Oregon’s ballot measure process to ensure that voters are more aware of the long-term budgetary impacts of proposed measures.

• Address issues of local government financing including inequities created by Measures 5 and 50 and the potential loss of federal timber payments to rural counties with federal forestlands.

• Reform Oregon’s kicker law. Before money goes back to taxpayers, it should first fill a reserve fund that will protect Oregonians from service cuts or tax increases during recessions. This is the most immediate way to ensure stable funding for education and other programs in the face of cyclical tax revenues.

• Broaden Oregon’s system of public finance to reduce its narrow dependence on the income tax.
  

The Oregon Business Plan offers an excellent roadmap for creating a robust and stable economy in Oregon. We know what needs to be done. Now Oregon needs strong leadership from the Governor to actually implement this strategy. In the past, the annual Business Summit has provided an opportunity to explain the Oregon Business Plan and develop a consensus about Oregon’s future. The Business Summit should be expanded to ensure leaders from labor, workforce development and community advocates are at the table. The next Summit needs to move beyond a “conversation,” and become a public “negotiation” among leaders and a “commitment” by the Governor and legislative leadership to move forward with the specific actions necessary to implement key aspects of the Oregon Business Plan.

Over the next few months, we will be releasing position papers that describe the vision, strategy and specific actions necessary in each of these areas.