"Families are hurting, businesses are hurting and our communities are hurting," Kulongoski said in a press release. "The reductions I'm ordering today will have an impact on us all, but my hope is that it will help us gain some stability for the current budget so we can focus on targeting our investments in the next budget that get Oregonians back to work and invest in our children's future through health care and education."

Senate President Peter Courtney (D-Salem) said members of the legislature need to "roll up their sleeves and begin finding ways to close these budget gaps." 

"We can't just tax our way out of it and we can't just cut our way out of it," he said.

Courtney added that his priorities will continue to be protecting vital services like education, public safety and the human services safety net of things like food stamps, aid to needy families and healthcare for children. He will also strongly advocate in favor of a bold program of bond-funded construction projects that will create jobs while repairing the state's deteriorating infrastructure.

House Republicans issued this statement in reaction to the news:

SALEM, Ore. - In light of a $762 million revenue shortfall for the 2009-11 biennium, House Republicans today called for sustainable and prioritized spending in the next budget. The caucus also called for tax reforms to promote capital investment and to provide tax relief for lower-income Oregonians and working families.

"Spending in 2007 was unsustainable, and now the Legislature is facing difficult decisions in 2009," said House Republican Leader Bruce Hanna (R-Roseburg). "It is time to bring government spending back under control, and to pass measures to keep dollars flowing through our economy and to keep capital within our state."

Rep. Vicki Berger (R-Salem), Vice-Chair of the House Revenue Committee, said the Legislature can't continue to increase spending and taxpayer-obligated debt. She said Legislature must pass tax reforms to help working families and lower-income Oregonians, and prioritize spending to protect schools, public safety and health care for vulnerable Oregonians.

"The state can't afford to dig a larger fiscal hole," Rep. Berger said. "It is time to focus on sustaining the programs and services most important to Oregonians, and passing pro-growth and pro-family tax reforms that would put more dollars back into our economy."

Earlier this year, House Republicans announced legislation to double the state's child tax credit and make Oregon's income tax fairer for lower-income workers. The caucus will also introduce legislation to reform Oregon's capital gains tax rates, among the highest in the nation, to promote capital investments in businesses and workers.

"Rather than finding new ways to extract more money from Oregonians, we will work to put more money back into their pockets and back into the economy," Rep. Hanna said. "The Legislature must create a better environment for businesses that helps them succeed and create jobs."