1. The document discusses the Oregon Business Plan which aims to improve the state's economy by focusing on traded sector industries and innovation. 2. It notes that Oregon currently faces budget deficits and slow economic growth due to issues like an aging population, rising pension and healthcare costs, and a lagging personal income level compared to other states. 3. The plan proposes redesigning public services to reduce costs while maintaining quality, revamping the tax system to incentivize economic growth, and pursuing initiatives focused on jobs, education and workforce development, healthcare costs, and other areas to turn the economy around.

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

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

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

17. 2010 Regional Meetings

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…

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

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

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

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

57. Support Regional Strategies

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

69. Healthcare Redesign

71. Corrections Redesign

75. Tax System Redesign

78. Endorsements (Partial List)