Kitzhaber releases budget proposal

SALEM, Ore. — Gov. John Kitzhaber has released a state budget proposal calling for significant changes in public employee pensions and sentences for criminals.

The governor said Friday his spending plan would restore financial stability to schools reeling from years of budget cuts, even if it wouldn't provide all the money he believes they need. His proposal would pay for $1 billion in new building projects, increase spending for Child Protective Services and boost funding for the earned-income tax credit that helps low-income taxpayers.

"We're in a much better place today than we were two years ago," Kitzhaber said in a news conference.

But Kitzhaber's budget rests on big gambles, and his proposal would be a net cut in funding for schools if he loses the bets.

He's assuming the Legislature will cut benefits for retired government workers and enact changes to criminal sentencing laws that prevent the prison population from growing. His health care funding plan assumes lawmakers will extend a tax on hospitals and that the health care system will be able to significantly reduce the rate of health inflation.

House Republican leader Mike McLane, of Powell Butte, reacted with mixed reviews. In a statement, he said Republicans can support some elements of the governor's budget, but the plan takes too optimistic a view of the economic recovery. The Legislature should cut deeper than Kitzhaber proposes into public pension benefits, McLane said.

"Oregonians should understand that this budget is based on a number of assumptions that haven't been fully vetted by the Legislature," he said.

Kitzhaber's budget would pay for Oregon's share of a new Interstate 5 bridge spanning the Columbia River, and he said outgoing Washington Gov. Chris Gregoire would recommend that her state fund its portion.

It also assumes the state accepts 200,000 new Medicaid patients under the federal health care overhaul beginning in 2014. The new costs would be initially shouldered by the federal government.

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