| Remarks by Governor Kulongoski |
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| February 1, 2005 |
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Eugene Area Chamber of Commerce
REMARKS BY GOVERNOR TED KULONGOSKI
Tuesday, February 1, 2005
Thank you Kip for your introduction – and the outstanding service you and your colleagues at NW Natural provide to the people of Oregon.
I also want to thank the members and guests of the Eugene Area Chamber of Commerce for giving me this opportunity to talk about how – together – we can build a prosperous future for Eugene and all of Oregon.
I was in Eugene just a week ago to talk to some students at the law school who are interested in public service. I told them if they want to get rich – they’re probably not making the best career move. But if they want a rich and rewarding life – then public service is a great place to start.
I bring this up for two reasons: First, I began my own career in public service right here in Eugene. You don’t get to be my age without making a few mistakes. But coming to Eugene, starting a family and law practice here, and representing this community in the Legislature were three of the smartest moves I ever made.
Almost everything good that has happened in my life began in this great city. I would not be where I am today without the friends and colleagues I met here – many of whom are in this room. So I welcome this chance to be with you.
The second reason I bring up my comment to the law students is because I never want to leave the impression that I think making money and getting rich is a bad idea. Believe me – I don’t. Your balance sheets are an important measure of how well I’m doing my job. The stronger they are – and the better off your employees are – the happier I am. That’s why my highest priority for the last two years has been to build this state’s economy.
That means putting more money in the hands of Eugene workers – and bigger profits on the books of Eugene businesses. I want you to compete and win. I want you to invest, expand and create family-wage jobs. I want you to be able to afford health care coverage for your workers. And I want you to stay on a path of sustained growth.
This kind of success comes from skills learned in the private sector: Predicting consumer trends; hiring a workforce with cutting edge skills; managing debt; investing in new technology; and expanding into new markets. These are the basics of business – and you know a lot more about them than government. But government does have an important role to play in keeping the economy on track. Regulatory policy, protecting Oregon’s environment and quality of life, building a pre-K through 20 education system that is second to none, retraining displaced and lower wage workers, and being fiscally responsible are just some of the ways government can have a positive impact on the direction of the economy. So I don’t expect Eugene area employers to keep their bottom lines growing without help. You need a full time partner in the Governor’s office – and I’m here to tell you that you have one.
Growing Oregon’s economy is my passion. And creating family-wage jobs is my obsession. So my message is this: I am absolutely committed to building more capacity and infrastructure. I am committed to speeding up permits and reducing regulatory barriers that stand in the way of growth and job creation. I am committed to education as an enterprise – and to making strategic investments in our schools so that students in the Eugene area get the quality education they need – and you get the quality workforce you need. And I am committed to staying the course. I will not rest until the Oregon economy becomes an engine for job growth and healthy profits throughout the Eugene area.
Two weeks ago I told the Legislature that the state of our state is good – and that our economy is recovering slowly but steadily. The numbers back me up. Unemployment – while still too high – is declining, both statewide and here in the Eugene area. Lane County unemployment fell in December to 6.2-percent – lower than the statewide average.
In the 12-month period ending last November, Oregon had the 8th fastest job growth rate in the country. Overall, non-farm payroll in Oregon is 35,000 jobs ahead of where it was a year ago. We haven’t recovered every job that was lost during the recession – but we’re getting close.
The news is even better in Lane County where growth in the RV industry, renewed strength in wood products, and the economic stimulus provided by the University of Oregon and Lane Community College have led to the creation of hundreds of new jobs. The best news is that 65-percent of these new jobs are considered “high wage.”
I’m especially pleased with the breadth of Oregon’s economic recovery. Since the recession bottomed out in June 2003, we’ve seen significant job growth in manufacturing, construction, business services, health care and hospitality. Again, Lane County is helping lead the way. Forty-percent of the new jobs in the Eugene area are in the manufacturing sector. This compares with just over 5-percent in the rest of the state.
There has even been some good news for our wood products industry. Employment is up slightly, and lumber production is on track to reach its highest level in 14 years. I want to do everything I can to strengthen this positive trend. That’s why I established the Office of Rural Policy, to focus on the economic needs of traditional industries. And that’s why today I’m proud to announce that the Oregon Economic and Community Development Department has awarded 50,000-dollars to Whitsell Manufacturing – local wood products manufacturing company that recently purchased an abandoned mill in Saginaw. The money will help Whitsell re-open the mill – and create 40 to 60 new wood products jobs.
I’ll say more about both our traditional and new industries shortly. But the point I want to emphasize is this: Oregon in general – and the Eugene area in particular – is heading for a solid recovery, and the myth that Oregon is not business-friendly is just that – a myth.
National survey after national survey says we have one of the best business climates. Yet business leaders outside Oregon often have a more favorable view of our regulatory environment and business tax structure than we do. The time has come for all of us to think positive about doing business in Eugene – and throughout Oregon. Talk positive about doing business in Eugene – and throughout Oregon. And act positive about doing business in Eugene – and throughout Oregon.
We are a great state – with abundant resources, a genius for doing more with less, and a quality of life that makes cities like Eugene an attractive place to build a business or begin a career.
When I talk about Oregon’s economic recovery, I usually emphasize the positive changes we’re seeing statewide. But today I want to focus my attention primarily on the progress we’re achieving in the Eugene area. In addition to the improved job numbers and general upturn in the Eugene area economy – I have worked hard to attract new businesses to this region. In doing so, I’ve had great support from our local development partners, and from Marty Brantley and his staff at the Economic Development Department.
This hard work is paying real dividends. Let me give some examples. The University of Oregon now has the authority to issue bonds to acquire the Williams Bakery facility off Franklin Boulevard in Eugene. This transaction will help Williams Bakery relocate to a larger site – and give the University land for new development.
Royal Caribbean recently announced the opening of a call center in Springfield that will create 1,000 jobs. And Lowe’s will open a distribution center, just north of here in Lebanon that is likely to create another 1,000 jobs.
We reformed PERS, which will save Oregon taxpayers – including many businesses and business-owners here in Eugene – 9-billion dollars. In the 2003 legislative session, we passed the largest transportation bill since Oregon built its share of the Interstate Highway System. This 2.5-billion dollar package to build and repair roads and bridges will mean significant contracts for goods and services provided by Eugene area businesses. It will also mean thousands of high wage construction jobs here and across Oregon.
When I ran for Governor, I made increasing industrial land one of my top economic priorities. After only two years, we have 20 project ready sites – covering over 1,700 acres. One of the very first sites to earn certification was the 40-acre Greenhill Technology site in Eugene. Today, we are working to certify sites in Eugene, Springfield, Cottage Grove, Veneta, Florence, Oakridge and Junction City.
Last week I announced that over 150,000 Oregonians were placed in jobs through our workforce development programs. Connecting well-trained workers with business is one of the most effective steps government can take to jump-start the economy. That’s why with help from the Lane Workforce Partnership, we’ve awarded training grants to many Eugene area businesses – including Marathon Coach, Lanz Cabinet Shop, Whittier Wood Products and PSC Inc. – to help their employees become more productive and their products more competitive.
I want Oregon to be a national leader in research and development. As I told the Economic Summit in December, I am literally going to put the D back in R & D. But this can only be done with a strong partnership among government, business and post-secondary education. That’s exactly what we’re doing at the Oregon Nanoscience and Microtechnologies Institute. The University of Oregon is playing a major role in developing the basic science – and commercializing its applications.
ONAMI is a great example of my long-term economic vision for making Oregon the Innovation State. This vision of Oregon as the Innovation State – which I spoke about at length at the Economic Summit – will bring Eugene more highly skilled workers, more new high tech companies, and more business opportunities for the membership of this Chamber.
This is not mere rhetoric. Real change is happening on the ground – including today. That’s why I’m pleased to announce for the first time that Invitrogen intends to expand Molecular Probes – its West Eugene subsidiary. This major expansion would not have been possible without a 1.2-million dollar incentive package from the state – with an additional 200-thousand from Lane County and the local Regional Investment Board.
Molecular Probes is Oregon’s largest private biotech employer, and a major player in the biotech cluster that we are building in the South Willamette Valley. It has a product line that is unmatched anywhere – and is poised for future growth as pharmaceutical companies move toward the development of personalized medicines. Molecular Probes already employs 250 people. With this new expansion, the company will add another 100 jobs, half of which will require a PhD or Masters Degree. The average pay for these new jobs will exceed 50,000-dollars.
Matching the skills of Oregon workers with the needs of growing non-polluting companies like Molecular Probes is a critical piece of my education and economic development strategy. That’s why 500-thousand dollars of the state’s incentive package came from my Strategic Workforce Training Fund.
The expansion of high tech companies like Molecular Probes – which offer high wage jobs and new opportunities for regional suppliers – is just one of many reasons that I believe we should face the future with optimism. I know we have a lot of work ahead of us. And I know that many families and businesses in the Eugene area are still hurting. But my entire life’s experience has been about hope and looking to the future. I’m not about to change now.
When I started my public service career in Eugene, I was a practical legislator. It was more important to me to find common ground and win than to draw a line in the sand and lose. Today, I am a practical Governor who favors partnership over partisanship – and knows that optimism alone will not bring us economic success.
We also have to face up to – and overcome – major economic challenges. Some are short-term. Some are long-term. None are easy. And all require a solution that can only come from business and government working together. Let me start with the short-term.
In December I released my 05-07 budget. The Legislature will now spend the next six months coming up with its own budget. As the Legislature does its work – I believe that they should adhere to the same values that guided my decisions. That means ending business as usual in state government.
It is true that revenues are higher than they were at the start of the last biennium. But costs have gone up even more – driven by the rising cost of living, the constitutional mandate to put more people in prison, and federal mandates on education, health care, and homeland security. There is no way to balance the budget while holding harmless public safety, human services, and education. These three programs make up 95-percent of the state’s General Fund.
The bottom line is: We made tough choices this year that weren’t made in the 01-03 budget. As I said in my State of the State address – we have 12-billion to spend and that’s it. We will live within our means! State government will not be asking for more taxes from citizens. I want the people and businesses of Eugene – and all of Oregon – to understand: This is what we can buy with the money we have.
What my 05-07 budget lacks in dollars it makes up for in fiscal honesty and responsibility. For starters, it is the first budget in Oregon history that is absolutely transparent. The programs are all available on my website. I constructed my budget so that it inherently includes a spending limitation and a long-term plan for a rainy day fund. This will give state government the fiscal stability it has lacked for years.
In addition to a much needed rainy day fund – my budget creates an investment fund for pre-K through 20 education. If the Legislature follows my lead, exercises budget discipline, and restores fiscal stability – then based on today’s revenue forecasts, we can create a half-billion dollar plus, per biennium, education investment fund before the end of this decade.
I also remain committed to improving Oregon’s transportation infrastructure – because quality transportation is directly related to the health of our economy. My budget includes a program called ConnectOregon, which will do for rail, marine and aviation what our transportation package last session did for roads and bridges.
But most important, to solve our short-term fiscal challenges I have proposed a no-gimmicks, pay-as-you-go budget. We do not borrow money to cover ongoing operating expenses. We do not shift costs to future budgets. And we do not take one-time monies from reserve funds.
As for our long-term economic challenges – let me say this: No one ever comes up to me and asks, “Governor, what are you doing to make my life better 20 years from now.”
People are focused on their lives today. I understand that. But my job is to look out for both the short-term needs – and long-term future – of our citizens and businesses. We must look forward – toward the horizon and beyond. That’s exactly what I intend to do: Look forward and in partnership with the Eugene Area Chamber of Commerce and all the people of Oregon – face up to four critical challenges that will determine our long-term economic destiny.
These challenges are: Leadership, globalization, technology and education.
Leadership is the necessary first step for competing in the global economy, expanding technology, and building a pre-K through 20 education system that is second to none. But leadership is not just about how well public officials and public employees do their job. We need steadfast, courageous, and visionary leadership in the private sector too.
That means partnering with schools and community colleges to increase private investment in workforce training. It also means supporting socially responsible non-profits like the Oregon Food Bank; converting to cleaner and more cost-efficient energy sources; demanding fiscal sanity in Salem; and watching tomorrow’s economic trends – not just today’s bottom line.
The second major challenge affecting our long-term economic future is globalization of the market.
There are many hardworking Oregonians who believe that the global economy is making it more difficult for them to obtain personal and financial security. These concerns are real. Free trade is not always fair trade. This is not news to workers. And it is not news to Eugene area employers either. We know that our foreign competitors sometimes sell their goods below cost – and set up regulatory barriers against our exports.
But we live in a global economy. That’s the reality. We can run from these changes or embrace them. But we cannot stop them. And even if I could put the Genie back in the bottle, it would not be the right decision for Oregon and Oregon businesses. One in every four manufacturing jobs in Oregon is tied to exports.
Instead of complaining about the global marketplace – the smartest thing we can do is compete and make money. This is not a pipedream. We are a coastal state. Our access to the Pacific Rim gives us an enormous competitive advantage. We just have to do a better job marketing Oregon, and make sure that we have better, cheaper and faster ways to import what we need – and export what we make.
Our third long-term economic challenge is to increase productivity and profits through the use of state-of-the-art technology.
I want to be absolutely clear – I am not turning my back on traditional industries. Timber, agriculture and manufacturing are essential to Oregon’s economy. We continue to support and invest in them. That’s why today, I have a third major announcement: I have asked Gwyn Harvey, Chair of the Oregon Workforce Investment Board, to appoint a committee – with members from both business and labor. The committee will develop a workforce strategy for manufacturing businesses in the state’s critical “traded-sector” clusters. I want nothing less than a workforce strategy that will make Oregon a first class state for manufacturing and global competitiveness.
We must not walk away from industries that are already critical to Oregon’s economy. But we must also develop new Oregon industries that will do for the economy in the 21st century what computers did in the closing decades of the 20th century. That’s why I created the Oregon Innovation Council. The Council will recommend steps the public and private sectors must take to increase investment in research and development, foster technology transfer, market Oregon ideas and products, and build the Innovation State.
Our fourth long-term economic challenge is education.
I am absolutely convinced that Oregon’s economic future rises or falls on the financial, political and moral commitment we make to pre-K through 20 education. Where is the link between our economy and our education system? Oregon is a large state with a small population. If we’re going to succeed in the global economy, we have to find a niche. For my money, Oregon’s niche is to have the best educated, best trained, best skilled population of any state in America. That means delivering a first rate education to students of every age – and knocking down barriers to education for students of every age.
I believe the time has come for dramatic change in the way our education system is managed and funded. Right now we have three education sectors with separate budgets, policies and goals. The system is not collaborative and coordinated enough to give us what we need: More efficiency – and better outcomes. That’s why when I was making tough budget choices, I came down on the side of strategic investments within education sectors and across them. We put more money into K through 12. We increased funding for the Oregon University System. And we doubled our investment in Oregon Opportunity Grants – which will raise to 130,000 the number of students that will be given assistance paying for a post-secondary education.
Last week I told students in Salem that if the Legislature tries to reduce my proposed increase in financial aid – they should camp out in the Capitol until the Legislature sees the light.
We raised the bonding capacity of the University of Oregon, Lane Community College and Oregon’s other public colleges and universities to an unprecedented 450-million dollars. This will be the first investment in the bricks and mortar of our community colleges in over 20 years! I also intend to work with our community college presidents – and the Legislature – to find more General Fund revenue for community colleges.
Improving pre-K through 20 education is not just about more dollars. We also have to change the way our schools are managed. We need a coordinated system that delivers education in a way that is better, faster and more cost-effective. I’m proposing to consolidate Education Service Districts and have those that remain handle central office administrative services – including payroll and transportation – for most districts. And as I’ve said more times than I can count: Let’s create one statewide K through 12 health insurance pool instead of the 198 separate contracts for health care that we have now.
My overarching goal for pre-K through 20 education is to identify and eliminate barriers to student success. Right now the biggest barrier to student success is Oregon’s decade-long disinvestment in post-secondary education. If the downward path we’ve been on continues, we condemn ourselves to decades of mediocre economic performance – here in Eugene and across Oregon.
This is a university community. The economy of this region is dependent on brainpower – as well as the University of Oregon’s research facilities, purchasing power, and the number and quality of its graduates. And yet, even as our statewide population is growing, enrollment in the Oregon University System is declining. I’m telling you – this is a disaster in the making! If we don’t put a stop to it, every member of this Chamber will pay the price. Maybe not directly. But certainly indirectly.
Try growing a business in a region where skilled workers with technical or professional training are scarce; capital is moving out because new businesses have no reason to move in; and talented high school students are being lured away – first by schools in other states and later by businesses in other states. This is the perfect storm of educational and economic decline. It hasn’t hit us yet, if we spend another ten years neglecting post-secondary education, I can pretty much guarantee you – it will.
Oregon’s community colleges and universities have the ability to provide high quality post-secondary education. Lane Community College and the University of Oregon prove my point. What they’re lacking is the ability to make that high quality education affordable and accessible.
We’ve been treating post-secondary education like an ATM for the rest of the budget. When we cut funding, community colleges and universities must raise tuition. That makes it difficult for students of working families to earn the post-secondary education they want and deserve. They lose the chance to reach their full potential – and we lose the talent and energy they bring to our economy.
I am determined to close the affordability gap by controlling tuition costs and increasing financial aid – without sacrificing educational quality. But I’m not going to be able to do this on my own. I need help. From students and parents who must make their voices heard. From the Legislature. And from the business community.
This is not the first time in my life I’ve needed – or asked for help. I was a down on my luck kid who grew up in a Missouri boys’ home. At the time, no one was taking bets that I’d make it through high school – let alone college and law school. But I did – with help from a handful of teachers who believed in me – and, yes, a government that was willing to open up doors of opportunity.
So no one has to tell me how important financial assistance is for college. I wouldn’t be here without it – and neither would many of you. The Eugene Area Chamber of Commerce is a ready-made advocacy organization for the needs of business. But I hope you will advocate for Oregon’s education needs too. Not just as a way of standing up for students – but as a way of standing up for yourselves. After all, who benefits most from a highly motivated, highly skilled workforce – fully committed to living and prospering in Oregon? The answer is obvious: You do.
So I ask you – and all members of the Oregon business community – to join me at the bully pulpit and speak out on behalf of my investment fund for pre-K through 20 education; for doubling our Oregon Opportunity Grants; and for creating a rainy day that will bring real fiscal stability to Oregon.
I mentioned the threat of a perfect storm – but now could be the time for a perfect start to a more secure economic future. With our economy recovering, this is the time to get back on the budgetary straight and narrow, build a rainy day fund and an education investment fund, and face up to Oregon’s long-term economic challenges.
All we need is the courage to be bold, the wisdom to compromise, and the willingness to accept shared sacrifice. These are values that I discovered in Eugene when I first came here over 30 years ago. I know that they are values that the Eugene Area Chamber of Commerce still lives by today. If we put them to work building a brainpower economy in this region – and do so by working together – I promise you, we will succeed.
Thank you.
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