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Published in Print: March 13, 2002, as Oregon to Vote on Ed. Trust Fund; Kitzhaber Vows to Fight GOP Plan

Oregon to Vote on Ed. Trust Fund; Kitzhaber Vows to Fight GOP Plan

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A political impasse over Oregon's budget troubles continued this month, following the end of a second special legislative session to resolve a funding gap of almost $1 billion in the state's current two-year budget.

The special session ended March 1 with the Republican-controlled House and Senate supporting the use of education trust funds to make up a shortfall in revenue and an increase in state expenditures.

Included in the Republican plan to balance the budget is a ballot measure in May asking voters to transform the state's Education Empowerment Fund into an education stabilization fund that would support schools financially in emergency situations.

In addition, the ballot measure seeks to use $220 million from that new stabilization fund to apply to the deficit.

Mark Simmons, the Republican speaker of the House, describes the stabilization fund as "landmark legislation." He added that the new fund would protect the "financial health" of schools in the future.

As it now stands, the $5.2 billion education budget for 2001-2003 has been cut by about $112 million, which includes aid that emphasized literacy programs for elementary school students.

But Democratic Gov. John A. Kitzhaber vows to fight the GOP ballot measure because he believes it does not address the long-term fiscal needs of the state.

Mr. Kitzhaber plans to veto the legislature's use of $67.5 million in tobacco-settlement money for the budget and will let the budget bill become law without his signature. In a news release, the governor said the budget would create a "huge financial cliff for the net biennium—particularly for public education."

"This is stunningly irresponsible," he added.

Ongoing Battle

The first special session, which ended Feb. 11, sparked a standoff when GOP legislators bypassed Mr. Kitzhaber's proposed budget and adopted a plan of their own that relied on money from trust funds. ("Gov. Kitzhaber, Lawmakers at Odds Over School Funds," Feb. 20, 2002.)

This week, the governor plans to announce $87.5 million in additional cuts to make up for restoring the tobacco fund and other funds in the GOP budget.

In the recent session, Republican lawmakers once again balked at Mr. Kitzhaber's budget solution, which included tax increases for cigarettes, beer, and wine and a repeal of a 2000 voter-approved tax cut.

Republicans believe that they are seeking a temporary financial solution while Oregon and the nation work out of the recession.

"We did not need a long-term tax increase to solve a short-term problem," Mr. Simmons said in a statement.

Jean Thorne, the governor's education adviser, said Mr. Kitzhaber would oppose the May 21 ballot measure that would scuttle the Education Empowerment Fund. The fund was established in the mid-1990s, using 15 percent of the annual revenue generated by the state lottery to support education.

Currently, Ms. Thorne said, the fund is being used for needs-based college scholarships and to pay debt service on lottery- backed bonds for school operations.

Meanwhile, the ballot measure puts Oregon's education advocates in a difficult position. While the governor vows to campaign to defeat adoption of what is being called the "rainy day fund," the state's schools could be left with a $220 million deficit—about $330 per student—if the measure doesn't pass.

Vol. 21, Issue 26, Page 15

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