Oregon higher ed prevails after forecast of extra $152 million

Oregon higher ed prevails after forecast of extra $152 million »Play Video

SALEM, Ore. (AP) - Higher education prevailed, and business groups exhaled, after word came Tuesday that the state will have $152 million more than expected to spend over the next two years thanks to a spike in income tax collections and money raised by the Oregon Lottery.

The revenue forecast released Tuesday by state economists gave lawmakers a bottom-line $15.5 billion to negotiate over as they build the 2007-2009 budget over the next six weeks.

The extra $152 million is slated to be shared among the state's seven public universities and 17 community colleges, with some smaller amounts going to pre-kindergarten programs, economic development and public safety. An additional $50 million will be socked away in a reserve fund, according to the Democratic co-chairs of the legislature's budget-writing committee.

"The big winner today is higher education," said state Sen. Ryan Deckert, D-Beaverton, who chairs the Senate Revenue Committee. "Amazingly, they played it just right."

Tuesday's announcement was a relief for the business community, some of whom had publicly suspected that Democratic lawmakers had lowballed spending for higher education to build support for an increase in the corporate minimum tax.

The corporate minimum tax was set at $10 in 1931, and hasn't budged since. Various attempts to raise it have been considered this session, but so far, they've all fallen flat.

Discussions around the issue aren't completely dead, just deflated, those involved said Tuesday. Deckert said Republicans may still be willing to cut a deal on the issue, if it's coupled with some sort of estate tax break. And businesses acknowledge that the "shame factor" - the inevitable headlines when large corporations are found to be paying the minimum - could still bring them to the table, perhaps in the interim.

"This allows people to have a conversation about the corporate minimum, absent that desperate need to plug the budget," said Jim Craven, lobbyist for the Oregon Council of the American Electronic Association.

The other big outstanding revenue issue is whether to raise the cigarette tax by 84.5 cents a pack in order to pay for health care coverage for 117,000 uninsured children in Oregon, a cause that's been championed by Democrats and Gov. Ted Kulongoski, but stalled in the House amid Republican opposition.

Senate Minority Leader Ted Ferrioli, a John Day Republican, said $15.5 billion was plenty to pay for the children's health insurance expansion without raising taxes, on cigarettes or otherwise.

But the issue remains a politically potent one - in an interview with The Associated Press last week, Kulongoski pointedly suggested that the issue could be a distinct liability for Republicans on the campaign trail.

"The last thing you want is for the Democrats to be able to say, these guys took away health care for all 117,000 uninsured children in the state," Kulongoski said. "If they stay separated like this, there is going to be a great opportunity for Democrats to pick up more (House) seats."

Higher education groups were jubilant Tuesday, which was for them the payoff for a months-long lobbying effort that featured everything from "bake sales" at the Capitol to making sure that students showed up in force at budget hearings around the state.

The extra money is likely to be spent on beefing up course offerings, including more classes in high-growth areas like health care, technology and electronics. More money will also go new classroom buildings and toward faculty recruitment and retention.

"We are so excited that our work has paid off," said Melissa Unger, director of the Oregon Students Association. "If we can get the resources we need for all the different programs, we will walk away happy."

A few groups were conspicuously not celebrating after Tuesday's sunny revenue forecast, including advocates for the elderly and disabled, who were disappointed that they weren't projected to get any of the extra $152 million.

"What did the old people do to them?" asked Mary Botkin, a lobbyist for the American Federation of State, Municipal and County Employees. "Human services has been taking hit after hit, every session."

Economists did sound a cautionary note amidst the good news on Tuesday: Oregon's economy will probably slow down over the coming months, and isn't expected to fully recover until 2008, in part because of a so-called "correction" in the state's once-red-hot housing market. Some manufacturers and retailers will suffer as a result, and corporate profits statewide will slow to a trickle, said state economist Dae Baek.

Tuesday's forecast also provided an updated look at Oregon's unique personal kicker, money that's returned to taxpayers when budget revenues exceed forecasts by more than 2 percent.

Oregonians will receive about $1.164 billion in kicker checks next November, assistant state economist Michael Kennedy said, the first time in years the state's residents will have received a kicker check. The median refund will be $285.

(Copyright 2007 by The Associated Press. All Rights Reserved.)