Facing Reality 2013: Ideas to Reset Oregon’s Budget and Recharge Its Economy

By Karla Kay Edwards and Steve Buckstein


Americans for Prosperity-Oregon and Cascade Policy Institute published our first Facing Reality report in 2010, offering state legislators an opportunity to “reset” state government using the time-tested principles of limited government and pro-growth economic policies. We provided a series of proven ideas to balance our state’s budget without tax or fee increases, plus policies to stimulate private businesses to “recharge” our economy.

We called this approach “Reality Based Budgeting,” believing it was time that our leaders face reality, bite the bullet, quit kicking the can down the road, and adopt ideas to lower the cost of government and get the economy going again.

Decades of well-meaning politicians, bureaucrats, and special interests have grown state government spending without regard for long-term consequences, producing an unsustainable budgetary premise that threatens Oregon’s financial stability. Long-term debt, unfunded liabilities, inefficient programs, unnecessary spending, and bloated bureaucracies all contribute to this bleak future. Along with higher tax rates, fee increases, and unfunded mandates that make it harder for businesses to produce a profit, we face the perfect storm that manifests itself in Oregon’s budget and economy today. Without a drastic change in direction, it will only get worse.

Governor Ted Kulongoski acknowledged this fiscal reality when he formed his Reset Cabinet in 2009. While we agreed with some of its recommendations, it did not address ideas for economic growth. Any policy to restructure state spending must be accompanied by proven concepts to grow the private sector economy, as this is the most reliable manner to ensure long-term state budget stability. Governor John Kitzhaber seemed to acknowledge this truth last year when he said:

“We need more than an economic recovery to improve the lives of Oregonians for the long term. ‘Recovery’ implies going back to doing things the way we did in the past―we need economic reinvention.”

Unfortunately, the demonization of corporations and small businesses during the debate over tax-increase Measures 66 and 67, along with proposed regulations and higher state fees, are the antithesis of “economic reinvention” and have reinforced the impression that Oregon is not business-friendly. This must be addressed immediately if long-term investments in expanded business capacity are to occur.

Unfortunately, our recommendations for the 2011-13 biennium were largely ignored, and the state muddled through. Now, we have three major 2013-15 budget proposals from the Governor and legislative Democrats and Republicans. Each proposes to balance the budget in large part through major reforms of the PERS retirement system that, while needed, will be politically hard to achieve. Therefore, we now provide several updates of major proposals we made in 2010, coupled with a new proposal to recharge Oregon’s economy at virtually no cost to taxpayers.

While we recognize the enormity of the politics that surround these concepts, we believe they are essential if we are, as Governor Kitzhaber suggested, to “reinvent” our economy and to ensure Oregon’s long-term future. Without them, the future is every bit as dim as Governor Kulongoski’s Reset Cabinet acknowledged. With them, the future is as bright as we want it to be.

The choice is ours.



Karla Kay Edwards, Director of the Oregon Chapter of Americans for Prosperity. A strong advocate for private
enterprise and government restraint, Edwards has fought for those values in both the private and public sectors, having worked most recently at Cascade Policy Institute as the Rural Policy Analyst, as well as at the Washington Cattlemen’s Association, the Oregon Department of Agriculture, and the Fresno County Farm Bureau.

Steve Buckstein, Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy
research organization. In 2007 Governor Ted Kulongoski appointed Buckstein to the Task Force on Comprehensive
Revenue Restructuring where he represented taxpayers. He earned both his B.S. in Physics and M.B.A. from Oregon State University.

Eric Fruits, Ph.D. is an Oregon based economist and adjunct professor at Portland State University. Fruits has been
invited to provide analysis to the Oregon legislature regarding the state’s tax and spending policies. His testimony
regarding the economics of the Oregon public employee pension reforms was heard by a special session of the Oregon Supreme Court.

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