1.
Breaking Out of a Circle of Scarcity The Oregon Business Plan

2.
Overview <ul><li>What is the Oregon Business Plan? </li></ul><ul><li>The Circle of Prosperity: The Foundation of the Oregon Business Plan agenda </li></ul><ul><li>The Circle of Scarcity: The reality of Oregon since 1997 </li></ul><ul><li>Framing the Challenge for the next decade </li></ul><ul><li>Getting to Work: The OBP agenda for 2010 </li></ul>

3.
What is the Oregon Business Plan? <ul><li>A shared vision of Oregon’s economic future and what it takes to get there </li></ul><ul><li>A common agenda for the business community </li></ul><ul><li>A sustained, productive partnership between business and public leaders </li></ul>

4.
Business Plan Framework <ul><li>Goal </li></ul><ul><li>+ </li></ul><ul><li>Vision </li></ul><ul><li>+ </li></ul><ul><li>Strategy </li></ul><ul><li>+ </li></ul><ul><li>Initiatives </li></ul>

5.
<ul><li>Oregon Business Plan Goal </li></ul>Jobs and the Economy Goal: Quality jobs for all Oregonians

6.
Business Plan Framework <ul><li>Goal </li></ul><ul><li>+ </li></ul><ul><li>Vision </li></ul><ul><li>+ </li></ul><ul><li>Strategy </li></ul><ul><li>+ </li></ul><ul><li>Initiatives </li></ul>

7.
OBP Vision: Traded Sector Success Through Innovation <ul><li>Leading-edge traded sector (export) companies are the engine that grow quality jobs and statewide prosperity. </li></ul><ul><li>Oregon has many companies competing well through innovation in product and process, good R&D, smart marketing, and other practices. </li></ul>

8.
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

9.
Traded Sector ≠ “Large” <ul><li>Large and small is not the appropriate distinction. </li></ul><ul><li>88% of Oregon businesses that export are “small” businesses. </li></ul>

10.
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>

11.
Oregon Industry Cluster Network <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>

12.
Business Plan Framework <ul><li>Goal </li></ul><ul><li>+ </li></ul><ul><li>Vision </li></ul><ul><li>+ </li></ul><ul><li>Strategy </li></ul><ul><li>+ </li></ul><ul><li>Initiatives </li></ul>

13.
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>

14.
The Fifth P: Public Finance AKA “The Circle of Prosperity” Strong Economy Higher Per Capita Income & Lower Poverty Rate Lower Tax Rates for Our Chosen Level of Public Services Good Public Services & Higher Quality of Life Lower Costs Higher Revenues

15.
Business Plan Framework <ul><li>Goal </li></ul><ul><li>+ </li></ul><ul><li>Vision </li></ul><ul><li>+ </li></ul><ul><li>Strategy </li></ul><ul><li>+ </li></ul><ul><li>Initiatives </li></ul>

16.
Progress on some past initiatives <ul><li>Reform PERS </li></ul><ul><li>Invest in roads and bridges </li></ul><ul><li>Establish innovative signature research centers </li></ul><ul><li>Boost the number of engineering graduates </li></ul><ul><li>Identify shovel-ready industrial land </li></ul><ul><li>Support higher K-12 standards </li></ul><ul><li>Improve international air access </li></ul><ul><li>Simplify and streamline regulation and permitting </li></ul><ul><li>Create a state rainy-day fund </li></ul><ul><li>…… ..but much work remains in these and other areas </li></ul>

17.
2010 Regional Meetings

18.
Leadership Summit: December 13 th 2010 Oregon Convention Center <ul><li>Bring together business, political & community leaders from across Oregon </li></ul><ul><li>Make commitments to act on specific initiatives identified in the Plan </li></ul><ul><li>Identify road blocks </li></ul><ul><li>Celebrate successes </li></ul>

19.
How Are We Doing? <ul><li>Private sector health </li></ul><ul><li>Public sector health </li></ul>

20.
The Circle of Prosperity Starts with a Strong Economy Where Do We Stand? Strong Economy Higher Per Capita Income & Lower Poverty Rate Lower Tax Rates for Our Chosen Level of Public Services Good Public Services & Higher Quality of Life Lower Costs Higher Revenues

21.
Per capita income OR, WA v. US Average Washington Oregon US

22.
Per capita income OR, WA v. US Average Washington Oregon US

23.
Per capita income OR, WA v. US Average Washington Oregon US

24.
Per capita income OR, WA v. US Average Washington Oregon US

25.
Non-metro per capita income OR, WA v. US Average Non-Metro Washington Non-Metro Oregon

26.
Per capita income Portland, Seattle metros v. US Average Seattle Metro Portland Metro US

27.
If Oregon looked more like Washington…

28.
<ul><li>Price of Government: </li></ul><ul><li>Revenue & Taxes as a Share of Personal Income </li></ul>1977 2000 1980 1990 2007 0% 5% 10% 15% 18% State & Local Revenue State & Local Taxes General/Lottery Fund (State Only)

29.
Revenue per capita OR v WA and US average Washington Oregon

30.
Medicaid/Corrections spending is growing as a share of personal income Medicaid, human services, corrections

31.
Medicaid, human services, corrections Education operations less tuition (all levels) Education spending is shrinking as a share of personal income

32.
Average Annual Growth in General Fund, 2000-2011

33.
The Road Ahead

34.
Slow Economic Recovery 1980 1990 No change 2007 State forecast 2001

35.
28% of children under 5 live with a single parent 22% live in poverty 23% have no English speaking parent

36.
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.

37.
Fewer workers to pay for an aging population

38.
The incoming workforce is less educated

39.
Legacy costs of a poorly designed and managed public pension system have come due

40.
Costs of an Aging Population will Hit Soon Source: ECONorthwest calculations using data from Mercer, Kaiser Family Foundation, and Health Affairs

41.
Decade of Deficits Revenues (bns.) Expenditures (bns.)

42.
In March 2009, we anticipated no revenue growth for 2011-13… Source: ECONorthwest calculations based on information from Oregon Governor’s office, and Illustrative spending assumptions 2009-11 2011-13 % Change RESOURCES General/Lottery 14,442 16,019 11% Stimulus/Reserves 1,584 0 -100% Total 16,026 16,019 0% EXPENDITURES K-12 SSF 5,982 OUS, CCWD, PreK 1,903 Human Services 4,531 Public Safety 2,523 All Other 965 PERS Increase - Total Expenditures 15,903 Ending Balance 123

43.
… a sizable increase in PERS costs… Source: ECONorthwest calculations based on information from Oregon Governor’s office, and Illustrative spending assumptions 2009-11 2011-13 % Change RESOURCES General/Lottery 14,442 16,019 11% Stimulus/Reserves 1,584 0 -100% Total 16,026 16,019 0% EXPENDITURES K-12 SSF 5,982 OUS, CCWD, PreK 1,903 Human Services 4,531 Public Safety 2,523 All Other 965 PERS Increase - 368 N/A Total Expenditures 15,903 Ending Balance 123

44.
… assumed modest healthcare and corrections increases… Source: ECONorthwest calculations based on information from Oregon Governor’s office, and Illustrative spending assumptions 2009-11 2011-13 % Change RESOURCES General/Lottery 14,442 16,019 11% Stimulus/Reserves 1,584 0 -100% Total 16,026 16,019 0% EXPENDITURES K-12 SSF 5,982 OUS, CCWD, PreK 1,903 Human Services 4,531 4,984 10% Public Safety 2,523 2,674 6% All Other 965 PERS Increase - 368 N/A Total Expenditures 15,903 Ending Balance 123

45.
… and no growth in K-12 or elsewhere. Source: ECONorthwest calculations based on information from Oregon Governor’s office, and Illustrative spending assumptions 2009-11 2011-13 % Change RESOURCES General/Lottery 14,442 16,019 11% Stimulus/Reserves 1,584 0 -100% Total 16,026 16,019 0% EXPENDITURES K-12 SSF 5,982 5,982 0% OUS, CCWD, PreK 1,903 Human Services 4,531 4,984 10% Public Safety 2,523 2,674 6% All Other 965 965 0% PERS Increase - 368 N/A Total Expenditures 15,903 Ending Balance 123

46.
And that suggested a brutal biennium for post secondary education. Source: ECONorthwest calculations based on information from Oregon Governor’s office, and Illustrative spending assumptions 2009-11 2011-13 % Change RESOURCES General/Lottery 14,442 16,019 11% Stimulus/Reserves 1,584 0 -100% Total 16,026 16,019 0% EXPENDITURES K-12 SSF 5,982 5,982 0% OUS, CCWD, PreK 1,903 1,047 -45% Human Services 4,531 4,984 10% Public Safety 2,523 2,674 6% All Other 965 965 0% PERS Increase - 368 N/A Total Expenditures 15,903 16,019 1% Ending Balance 123 0

47.
And now, in September , forecasts have dropped and the challenge is far greater. Source: ECONorthwest calculations based on information from Oregon Governor’s office, and Illustrative spending assumptions 2009-11 2011-13 % Change RESOURCES General/Lottery 13,464 15,042 12% Stimulus/Reserves 1,469 0 -100% Total 14,933 15,042 1% EXPENDITURES K-12 SSF 5,982 5,982 0% OUS, CCWD, PreK 1,903 70 -96% Human Services 4,531 4,984 10% Public Safety 2,523 2,674 6% All Other 965 965 0% PERS Increase - 368 na Total Expenditures 15,903 15,042 -5% Ending Balance -970 0

48.
With no sales tax and recent income tax increases, Oregon income and capital gains taxes are among the highest in the nation M 66

49.
Will we circle into a drain? <ul><li>Low investments in education and high income tax rates threaten further erosion of personal income levels </li></ul><ul><li>The U.S. and Oregon economies appear poised for a slow, jobless recovery. </li></ul><ul><li>Aging of the Baby Boom generation will increase the age 65+ population by 46% during 2010-2020, putting upward pressure on Medicaid spending. </li></ul><ul><li>High health inflation will continue, which will drive up the costs of Medicaid and public employee compensation. </li></ul><ul><li>Legacy costs of a poorly managed/conceived public employee pension system have come due. </li></ul>

50.
<ul><li>Jobs agenda to get the economy moving </li></ul><ul><li>Redesign public services to support the economy </li></ul><ul><li>Revamp the tax system to incent economic growth </li></ul>How to turn things around: Focus on Jobs and Income

51.
<ul><li>Jobs agenda to get the economy moving </li></ul><ul><li>Redesign public services to support the economy </li></ul><ul><li>Revamp the tax system to incent economic growth </li></ul>How to turn things around: Focus on Jobs and Income

52.
Decade of Deficits Revenues (bns.) Expenditures (bns.)

53.
Decade of Deficits with Oregon at 97% US Avg. Income Revenues Expenditures

54.
How Can We Grow Jobs and Income? <ul><li>Agree that it is important, in GOOD times, not just bad. </li></ul><ul><li>Agree that increasing incomes is the best way we can support families, public services and non-profits. </li></ul><ul><li>Build community culture that respects business and responds to needs. (Attitude of public officials is important). </li></ul>

55.
Grow Income: Welcome High Wage Jobs in Good Times and Bad

56.
Support Industry Strategies <ul><li>High Tech </li></ul><ul><ul><li>Semiconductors </li></ul></ul><ul><ul><li>Software </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 and transportation equipment </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>Ag </li></ul></ul><ul><ul><li>Food processing </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><li>Creative Industries </li></ul><ul><ul><li>Film and Video </li></ul></ul><ul><ul><li>Design </li></ul></ul>

57.
Support Regional Strategies

58.
Identify statewide policy initiatives Develop specific actions and set priorities among them. <ul><li>Improve tax and budget policy </li></ul><ul><li>Strengthen education and workforce development </li></ul><ul><li>Reduce health care cost and improve quality </li></ul><ul><li>Enhance transportation infrastructure </li></ul><ul><li>Strengthen our capacity for economic innovation </li></ul><ul><li>Ensure reliable, affordable and clean energy </li></ul><ul><li>Strengthen access to capital </li></ul><ul><li>Ensure the availability of shovel-ready industrial land., connected to infrastructure </li></ul><ul><li>Simplify/streamline regulations and permitting </li></ul><ul><li>Preserve/strengthen economic development tools and incentives </li></ul>

59.
Initiatives – The heart of the Business Plan <ul><li>Tax and Budget Policy </li></ul><ul><ul><li>New budgeting process </li></ul></ul><ul><ul><li>Short-term revenue policy </li></ul></ul><ul><ul><li>Long-term adjustments. </li></ul></ul><ul><ul><li>Employee compensation </li></ul></ul><ul><li>Strengthen education and workforce development </li></ul><ul><li>Reduce healthcare costs and improve quality </li></ul><ul><li>Transportation infrastructure </li></ul><ul><li>Innovation policy </li></ul><ul><li>Energy </li></ul><ul><li>Industrial lands </li></ul><ul><li>Regulatory/permit streamlining </li></ul><ul><li>Access to capital </li></ul><ul><li>Economic development tools </li></ul>How we balance the budget over the next decade has critical implications for growing jobs and incomes We also must pursue tactical actions to spark both near and long term job and income growth.

60.
<ul><li>Jobs agenda to get the economy moving </li></ul><ul><li>Redesign public services to support the economy </li></ul><ul><li>Revamp the tax system to incent economic growth </li></ul>How to turn things around: Focus on Jobs and Income

61.
Redesign delivery to reduce cost and maintain service Raise Taxes Reduce / Eliminate Services

62.
Redesign delivery to reduce cost and maintain service Raise Taxes Reduce / Eliminate Services

63.
Redesign delivery to reduce cost and maintain service Raise Taxes Reduce / Eliminate Services

64.
Redesign 101: Develop a long range vision

65.
Redesign 201: Calculate the per unit costs of everything (and tie them to results)

66.
Redesign 301: Follow the money, challenge systems to deliver more with less, and drive better outcomes (especially in education)

67.
Education Redesign

68.
<ul><li>The Charge </li></ul><ul><li>Increase students attaining degrees to meet 40/40/20. </li></ul><ul><li>Cut an average 1-year from time to degree </li></ul><ul><li>Increase minimum standards in reading, writing, and mathematics </li></ul><ul><li>Reduce costs per student by 10 percent or more by accelerating learning, applying new learning tools, and shrinking overhead </li></ul><ul><li>Possible Areas for Redesign </li></ul><ul><li>Revamp incentives to reward student achievement, credit, and degree completion </li></ul><ul><li>Create performance-based scholarships </li></ul><ul><li>Redesign financing of special education and ELL </li></ul><ul><li>Incent districts and colleges to consolidate delivery and administration </li></ul><ul><li>Reconsider the state role in student transportation </li></ul>REDESIGN EDUCATION

69.
Healthcare Redesign

70.
<ul><li>The Charge </li></ul><ul><li>World class health for each Oregonian by 2020 </li></ul><ul><ul><li>Medical care at 10% of GSP </li></ul></ul><ul><ul><li>Universal access to healthcare </li></ul></ul><ul><ul><li>Healthy and satisfied users </li></ul></ul><ul><ul><li>Healthy communities in the top five or above of World Benchmark of Health </li></ul></ul><ul><li>Possible Areas for Redesign </li></ul><ul><li>Design an insurance exchange that gets the incentives right for customers and providers </li></ul><ul><li>Payment reform </li></ul><ul><li>New benefit package designs </li></ul><ul><li>Value-based purchasing </li></ul><ul><li>Administrative simplification </li></ul>REDESIGN HEALTHCARE

71.
Corrections Redesign

72.
<ul><li>The Charge </li></ul><ul><li>Identify fiscally sound, research-based sentencing and corrections policies that protect public safety, hold offenders accountable, and control costs </li></ul><ul><li>Possible Areas for Redesign </li></ul><ul><li>Create a modern system of uniform, transparent, and proportional sentencing guideline practices that optimizes prison use </li></ul><ul><li>Selectively adjust M11 sentences </li></ul><ul><li>Expand and enhance home detention and supervision </li></ul><ul><li>Implement incentives and performance goals for counties </li></ul>REDESIGN CORRECTIONS

73.
<ul><li>The Charge </li></ul><ul><li>Ensure a high quality public sector workforce whose compensation is benchmarked to comparable private sector occupations </li></ul><ul><li>Possible Areas for Redesign </li></ul><ul><li>Sunset the 6% PERS pickup </li></ul><ul><li>Phase-in employee participation in healthcare costs </li></ul>REDESIGN LABOR

74.
<ul><li>Tactical jobs agenda to get the economy moving </li></ul><ul><li>Redesign public services to support the economy </li></ul><ul><li>Revamp the tax system to incent economic growth </li></ul>How to turn things around: Focus on Jobs and Income

75.
Tax System Redesign

76.
<ul><li>The Charge </li></ul><ul><li>Develop a stable revenue source for education and other critical services, and create an environment for economic growth </li></ul><ul><li>Possible Areas for Redesign </li></ul><ul><li>Reduce the capital gains rate </li></ul><ul><li>Put the Rainy Day Fund in the Constitution with a 10% cap to be filled with personal kickers </li></ul><ul><li>Create a higher education stability fund to be filled with corporate and capital gains kickers </li></ul><ul><li>Set aside an ending balance for the Rainy Day Fund </li></ul>REDESIGN REVENUE/TAX POLICY

77.
Steering Committee <ul><li>Associated Oregon Industries </li></ul><ul><li>Oregon Business Association </li></ul><ul><li>Oregon Business Council </li></ul><ul><li>Portland Business Alliance </li></ul><ul><li>Oregon Innovation Council </li></ul><ul><li>Engineering and Technology Industry Council </li></ul><ul><li>Oregon Association of Minority Entrepreneurs </li></ul><ul><li>Oregon Business Development Commission </li></ul><ul><li>Oregon Board of Higher Education </li></ul><ul><li>Oregon Transportation Commission </li></ul><ul><li>Regional at-large members </li></ul>

78.
Endorsements (Partial List)