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Breaking Out of a  Circle of Scarcity The Oregon Business Plan
Questions <ul><li>Over the long run, how is Oregon doing at creating and sustaining high wage jobs? </li></ul><ul><li>What...
The Circle of Prosperity:  How its supposed to work  Strong Economy Higher  Incomes & Lower  Poverty Rate Lower Tax Rates ...
So How Are We Doing on Jobs and Incomes? Strong Economy Higher  Incomes & Lower  Poverty Rate Lower Tax Rates and/or More ...
Per capita income OR, WA v. US Average  Washington Oregon US
Per capita income OR, WA v. US Average  Washington Oregon US
Per capita income OR, WA v. US Average  Washington Oregon US
Per capita income OR, WA v. US Average  Washington Oregon US
If Oregon looked more like Washington…
Change in Oregon employment starting… Sources: U.S. Bureau of Economic Analysis; Oregon Office of Economic Analysis Job Lo...
So what does this mean for quality public services? Strong Economy Higher  Incomes & Lower  Poverty Rate Lower Tax Rates a...
<ul><li>The first thing to know:  As a share of total personal income , Oregonians don’t deviate on how much they spend on...
Revenue per capita OR v WA and US average Washington Oregon Since our income is declining compared to Washington, so is ou...
Change in Oregon employment starting… Sources: U.S. Bureau of Economic Analysis; Oregon Office of Economic Analysis Combin...
A “Decade of Deficits”  ($3bn/biennium) Revenues (bns.) Expenditures (bns.)
Recap <ul><li>Oregonians have significantly lower incomes than the national average (long-term trend, not related to curre...
Tradeoffs: Medicaid/Corrections spending is growing as a share of personal income  Medicaid, human services, corrections S...
Medicaid, human services, corrections Education operations less tuition (all levels) Tradeoffs: Education spending is shri...
The Demographic Tsunami <ul><li>All indications are that these spending trends will be exacerbated over the coming decade ...
The number of Oregonians aged 65+ will increase 46% during 2010-2020.  Or about 60 per day. And, as they retire, they’ll t...
Fewer workers to pay for an aging population
Annual average growth, 2010-2019 P20 Total GF/LF Spending All of this means fewer dollars for education over the next deca...
28% of children under 5 live with a single parent 22% live in poverty 23% have no English speaking parent Yet educating ou...
And education matters more now than ever
And We Are Already Seeing the Consequences of Neglect The incoming workforce is LESS educated than the outgoing
Can we turn things around?
<ul><li>  Turnaround Plan </li></ul>FOCUS
Replace the tired debate <ul><li>Public sector versus private sector </li></ul><ul><li>Business versus unions </li></ul><u...
With a new paradigm <ul><li>Focus on economic growth.   -It’s the best way we can support families, public services and no...
<ul><li>Oregon Business Plan Goal </li></ul>Jobs and the Economy Goal:  Quality jobs for all Oregonians
<ul><li>Oregon Business Plan Goal </li></ul>25,000 Jobs/Year Goal:  Quality jobs for all Oregonians
<ul><li>Oregon Business Plan Goal </li></ul>Per person income above US average by 2020 Goal:  Quality jobs for all Oregoni...
Grow Income: Welcome High Wage Jobs in Good Times and Bad
Traded Sector Drives Growth Traded/Export Sector Suppliers Local Sales to rest  of  world Most jobs are here:  schools, ho...
Traded Sector  ≠  “Large”  <ul><li>Large and small is not the appropriate distinction.  Both large and small companies sel...
Clustering is Critical <ul><li>Traded sector success isn’t random – traded sector businesses cluster </li></ul><ul><li>Sim...
Oregon Industry Clusters <ul><li>High Tech </li></ul><ul><ul><li>Semiconductors + electronic components </li></ul></ul><ul...
Four Ps for Prosperity <ul><li>People : Support for the education & training of our current & future workforce. </li></ul>...
<ul><li>Long-term, outcomes based budgeting </li></ul><ul><li>Education </li></ul><ul><li>Healthcare </li></ul><ul><li>Tax...
Decade of Deficits Revenues (bns.) Expenditures (bns.)
Annual average growth, 2010-2019 P20 Total GF/LF Spending Where We’re Headed: Baseline Economy; No Reset Human Services Pu...
Annual average growth, 2010-2019 P20 Total GF/LF Spending Baseline Economy; Corrections Reset Human Services Public Safety
Annual average growth, 2010-2019 P20 Total GF/LF Spending Baseline Economy; Corrections & Healthcare Reset Human Services ...
Annual average growth, 2010-2019 P20 Total GF/LF Spending Stronger Economy; Corrections & Healthcare Reset Human Services ...
Healthcare Redesign
Corrections Redesign
Education Redesign
Education Redesign <ul><li>Vision and Goal: 40-40-20 </li></ul><ul><li>Budget across 0-20, rather than in silos </li></ul>...
Tax System Redesign
Tax Reform <ul><li>Oregon income and capital gains taxes are too high and create perverse incentives (particularly because...
Targeted Actions to Spark Economic Development and Job Creation <ul><li>Oregon Innovation Plan </li></ul><ul><li>Improve b...
Progress <ul><li>Governor and legislature have been key partners and shown tremendous bipartisan leadership </li></ul><ul>...
Learn More: Please Visit www.oregonbusinessplan.org .
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Circle of scarcity 9.12.11

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Oregon economic and budgetary challenges and how to address them in a way that supports the long-term health of Oregonians and Oregon's economy.

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Circle of scarcity 9.12.11

  1. 1. Breaking Out of a Circle of Scarcity The Oregon Business Plan
  2. 2. Questions <ul><li>Over the long run, how is Oregon doing at creating and sustaining high wage jobs? </li></ul><ul><li>What is the (two-way) relationship between Oregon’s economic performance and the health of our public services (particularly education)? How has this been playing out in Oregon? </li></ul><ul><li>How do we to turn things around? </li></ul><ul><li>Are we making progress? </li></ul>
  3. 3. The Circle of Prosperity: How its supposed to work Strong Economy Higher Incomes & Lower Poverty Rate Lower Tax Rates and/or More Dollars for Public Services Good Public Services & Higher Quality of Life Lower Costs Higher Revenues
  4. 4. So How Are We Doing on Jobs and Incomes? Strong Economy Higher Incomes & Lower Poverty Rate Lower Tax Rates and/or More Dollars for Public Services Good Public Services & Higher Quality of Life Lower Costs Higher Revenues
  5. 5. Per capita income OR, WA v. US Average Washington Oregon US
  6. 6. Per capita income OR, WA v. US Average Washington Oregon US
  7. 7. Per capita income OR, WA v. US Average Washington Oregon US
  8. 8. Per capita income OR, WA v. US Average Washington Oregon US
  9. 9. If Oregon looked more like Washington…
  10. 10. Change in Oregon employment starting… Sources: U.S. Bureau of Economic Analysis; Oregon Office of Economic Analysis Job Losses From Recession Are Deep and the Recovery Will Be Slow
  11. 11. So what does this mean for quality public services? Strong Economy Higher Incomes & Lower Poverty Rate Lower Tax Rates and/or More Dollars for Public Services Good Public Services & Higher Quality of Life Lower Costs Higher Revenues
  12. 12. <ul><li>The first thing to know: As a share of total personal income , Oregonians don’t deviate on how much they spend on Government. For the State General Fund, its about 5 cents on every dollar earned (bottom line) </li></ul>1977 2000 1980 1990 2007 0% 5% 10% 15% 18% State & Local Revenue State & Local Taxes General/Lottery Fund (State Only) Revenue (Taxes + Fees) as a Share of Personal Income
  13. 13. Revenue per capita OR v WA and US average Washington Oregon Since our income is declining compared to Washington, so is our investment in Public Services
  14. 14. Change in Oregon employment starting… Sources: U.S. Bureau of Economic Analysis; Oregon Office of Economic Analysis Combined with all of the job losses, and the slow recovery, and we have a recipe for...
  15. 15. A “Decade of Deficits” ($3bn/biennium) Revenues (bns.) Expenditures (bns.)
  16. 16. Recap <ul><li>Oregonians have significantly lower incomes than the national average (long-term trend, not related to current recession) </li></ul><ul><li>Job losses are severe and will take years to recover. </li></ul><ul><li>The contribution of Oregonians to the public sector through taxes and fees remains remarkably consistent over time (as a share of total personal income), despite many actual and attempted changes to tax and fee policy. </li></ul><ul><li>Since we have lower incomes than the nation as a whole, we have fewer dollars/capita to spend on services than our peers. </li></ul><ul><li>And the job losses and slow recovery from the recession exacerbate this already unfortunate trend. </li></ul><ul><li>The result is a decade of $3 billion deficits each biennium </li></ul><ul><li>That is just the total pie and says nothing of how we spend our limited resources. </li></ul>
  17. 17. Tradeoffs: Medicaid/Corrections spending is growing as a share of personal income Medicaid, human services, corrections So how are we spending out limited dollars?
  18. 18. Medicaid, human services, corrections Education operations less tuition (all levels) Tradeoffs: Education spending is shrinking as a share of personal income
  19. 19. The Demographic Tsunami <ul><li>All indications are that these spending trends will be exacerbated over the coming decade (s) because of </li></ul><ul><li>An aging population </li></ul><ul><ul><li>Demanding more health services </li></ul></ul><ul><ul><li>Reducing the number of workers earning wages and paying taxes </li></ul></ul><ul><li>Continued passage of “tough on crime” ballot measures </li></ul>
  20. 20. The number of Oregonians aged 65+ will increase 46% during 2010-2020. Or about 60 per day. And, as they retire, they’ll take their diplomas and experience with them.
  21. 21. Fewer workers to pay for an aging population
  22. 22. Annual average growth, 2010-2019 P20 Total GF/LF Spending All of this means fewer dollars for education over the next decade. Human Services Public Safety
  23. 23. 28% of children under 5 live with a single parent 22% live in poverty 23% have no English speaking parent Yet educating our population will not get any easier
  24. 24. And education matters more now than ever
  25. 25. And We Are Already Seeing the Consequences of Neglect The incoming workforce is LESS educated than the outgoing
  26. 26. Can we turn things around?
  27. 27. <ul><li> Turnaround Plan </li></ul>FOCUS
  28. 28. Replace the tired debate <ul><li>Public sector versus private sector </li></ul><ul><li>Business versus unions </li></ul><ul><li>More money versus less money </li></ul>
  29. 29. With a new paradigm <ul><li>Focus on economic growth. -It’s the best way we can support families, public services and non-profits. -Agree that it is important, in GOOD times, not just bad. -Build a community culture that respects economic growth. -Advance specific initiatives to improve the business climate and create jobs. </li></ul><ul><li>2. Redesign our public services to get more bang for each public buck </li></ul>
  30. 30. <ul><li>Oregon Business Plan Goal </li></ul>Jobs and the Economy Goal: Quality jobs for all Oregonians
  31. 31. <ul><li>Oregon Business Plan Goal </li></ul>25,000 Jobs/Year Goal: Quality jobs for all Oregonians
  32. 32. <ul><li>Oregon Business Plan Goal </li></ul>Per person income above US average by 2020 Goal: Quality jobs for all Oregonians
  33. 33. Grow Income: Welcome High Wage Jobs in Good Times and Bad
  34. 34. Traded Sector Drives Growth Traded/Export Sector Suppliers Local Sales to rest of world Most jobs are here: schools, hospitals, grocery stores, restaurants But firms in this sector drive the economy
  35. 35. Traded Sector ≠ “Large” <ul><li>Large and small is not the appropriate distinction. Both large and small companies sell their products and services outside of Oregon borders (including financial services) </li></ul><ul><ul><li>88% of Oregon businesses that sell outside our borders are “small” businesses (50 of fewer employees). </li></ul></ul>
  36. 36. Clustering is Critical <ul><li>Traded sector success isn’t random – traded sector businesses cluster </li></ul><ul><li>Similar and related businesses draw advantages from proximity </li></ul><ul><li>Places specialize </li></ul>
  37. 37. Oregon Industry Clusters <ul><li>High Tech </li></ul><ul><ul><li>Semiconductors + electronic components </li></ul></ul><ul><ul><li>Software </li></ul></ul><ul><ul><li>Education technology and services </li></ul></ul><ul><ul><li>Bioscience </li></ul></ul><ul><li>Advanced Manufacturing </li></ul><ul><ul><li>Metals </li></ul></ul><ul><ul><li>Machinery </li></ul></ul><ul><ul><li>Transportation equipment </li></ul></ul><ul><ul><li>Defense </li></ul></ul><ul><ul><li>Food Processing </li></ul></ul><ul><ul><li>Aviation </li></ul></ul><ul><li>Footwear, sports apparel and outdoor gear </li></ul><ul><li>Natural Resources </li></ul><ul><ul><li>Forestry and Wood Products </li></ul></ul><ul><ul><li>Agriculture </li></ul></ul><ul><ul><li>Nursery products </li></ul></ul><ul><ul><li>Tourism </li></ul></ul><ul><li>Clean Technology </li></ul><ul><ul><li>Solar manufacturing </li></ul></ul><ul><ul><li>Environmental Technology and Services </li></ul></ul><ul><ul><li>Energy efficiency </li></ul></ul><ul><ul><li>Electric vehicles </li></ul></ul><ul><ul><li>Green building and design </li></ul></ul><ul><ul><li>Wind energy </li></ul></ul><ul><ul><li>Wave energy </li></ul></ul><ul><li>Creative Industries </li></ul><ul><ul><li>Film and Video </li></ul></ul><ul><ul><li>Design </li></ul></ul>
  38. 38. Four Ps for Prosperity <ul><li>People : Support for the education & training of our current & future workforce. </li></ul><ul><li>Place : Working to enhance Oregon’s quality of life and resource utilization. </li></ul><ul><li>Productivity : Ensuring the availability of cost-competitive public and private resources and services. </li></ul><ul><li>Pioneering Innovation : Support for innovative research, business formation, availability of investment capital, and commercialization of research. </li></ul>
  39. 39. <ul><li>Long-term, outcomes based budgeting </li></ul><ul><li>Education </li></ul><ul><li>Healthcare </li></ul><ul><li>Tax policy </li></ul><ul><li>Public safety/corrections </li></ul><ul><li>Public employee compensation </li></ul>Policy Agenda <ul><li>2. Implement targeted policies to spark economic development and job creation. </li></ul>1. Redesign public budgeting and public service delivery to reflect future economic, fiscal and demographic realities
  40. 40. Decade of Deficits Revenues (bns.) Expenditures (bns.)
  41. 41. Annual average growth, 2010-2019 P20 Total GF/LF Spending Where We’re Headed: Baseline Economy; No Reset Human Services Public Safety
  42. 42. Annual average growth, 2010-2019 P20 Total GF/LF Spending Baseline Economy; Corrections Reset Human Services Public Safety
  43. 43. Annual average growth, 2010-2019 P20 Total GF/LF Spending Baseline Economy; Corrections & Healthcare Reset Human Services Public Safety
  44. 44. Annual average growth, 2010-2019 P20 Total GF/LF Spending Stronger Economy; Corrections & Healthcare Reset Human Services Public Safety
  45. 45. Healthcare Redesign
  46. 46. Corrections Redesign
  47. 47. Education Redesign
  48. 48. Education Redesign <ul><li>Vision and Goal: 40-40-20 </li></ul><ul><li>Budget across 0-20, rather than in silos </li></ul><ul><li>Centered around students and their seamless experience, rather than institutions </li></ul><ul><li>Learning becomes the constant and “seat time” the variable </li></ul><ul><li>High degree of accountability for results, lots of flexibility for students and educators to achieve them </li></ul><ul><li>More tools to evaluate student progress and learning </li></ul><ul><li>Data systems that track student performance over time and across institutions </li></ul>
  49. 49. Tax System Redesign
  50. 50. Tax Reform <ul><li>Oregon income and capital gains taxes are too high and create perverse incentives (particularly because of proximity to WA). </li></ul><ul><li>Oregon’s tax system is extremely volatile (cap gains is MOST VOLATILE type of tax) </li></ul><ul><li>We have no permanent mechanism for savings yet we regularly send “kicker” checks back to taxpayers </li></ul><ul><li>Long term: total overhaul (i.e. create sales tax, lower income/cap gains tax) </li></ul><ul><li>Near term: Savings/Kicker + Cap Gains reform </li></ul>
  51. 51. Targeted Actions to Spark Economic Development and Job Creation <ul><li>Oregon Innovation Plan </li></ul><ul><li>Improve business finance/access to capital tools </li></ul><ul><li>Simplify regulations and permitting </li></ul><ul><li>Industrial land supply </li></ul><ul><li>Forest thinning + biomass </li></ul><ul><li>6. Accelerate energy efficiency efforts </li></ul><ul><li>7. Targeted infrastructure projects </li></ul><ul><li>8. Workforce training </li></ul><ul><li>9. Water withdrawal on Columbia </li></ul><ul><li>10. Targeted tax incentives/changes </li></ul>
  52. 52. Progress <ul><li>Governor and legislature have been key partners and shown tremendous bipartisan leadership </li></ul><ul><li>OBP is an umbrella organization-the real work gets done by people and organizations on the ground </li></ul><ul><li>See handout </li></ul>
  53. 53. Learn More: Please Visit www.oregonbusinessplan.org .

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