Candidates tout plans to heal ills of economy.

Byline: DAVID STEVES The Register-Guard

Can Oregon's next governor turn the state's economy around?

It's the most obvious problem facing the state - and the reason that thousands are out of work, that voters are deciding whether to pay more taxes and school principals are wondering how to do more with less money.

But it won't be easy for whoever wins next Tuesday's election - whether it's Republican Kevin Mannix, Democrat Ted Kulongoski or Libertarian Tom Cox.

That's the assessment of Joe Cortwright, a Portland economist and consultant - whose view is shared by most economic experts.

In the long run, the ideas being bandied about - cutting taxes, making the bureaucracy more business-friendly, bolstering the education system, wooing businesses to expand or relocate here - could possibly have an impact.

"But there's practically nothing that state governments can do that influences the short-term path of the economy," Cortwright said. "Because we don't control interest rates and we can't deficit spend. And those are the two big things the federal government does that actually does influence the short-run course of the national economy."

The candidates themselves don't see it that way.

Mannix, who has been promising to whip the state economy into shape, isn't about to concede that as governor he'd be helpless to do anything about one of the nation's highest jobless rates and a resulting drop in tax revenues.

Asked how long it will take for his economic-revival ideas to have a tangible impact on Oregon's economic woes, the Salem attorney and former legislator said: "I'd say in about six to nine months."

Both major party candidates have tried to make the economy the main thrust of their campaigns.

Libertarian Tom Cox hasn't come up with an elaborate plan for a government jump start - in large part, he says, because he has a minimal-government philosophy.

Cox, a Hillsboro management consultant, has pushed tax cuts and the elimination of regulations that don't justify the burdens they place on taxpayers and industry.

Mannix, too, wants to cut taxes and free businesses from regulations.

He has promised to cut the number of rules and regulations in half - a campaign vow that's drawn criticism from Kulongoski and others who say that many of those regulations are vital to the protection of senior citizens and the environment.

Mannix said he would go about the elimination of rules so that "without reducing standards, we can reduce the volume of red tape which government ties up business with."

He also has promised to reduce the capital gains tax from 9 percent - the same rate that most workers pay income taxes - to 5 percent.

And he plans to put his publicity-generating abilities to work on behalf of Oregon's economy.

Mannix said he would raise private funds to pay for an Oregon trade and economic development office on New York's Wall Street to make sure investors and business leaders are constantly reminded of Oregon's economic climate, its quality of life and its well-educated work force.

Through these and other steps he has outlined in his campaign, Mannix said, "I will have created a positive business environment to bring more business interest and investment into the state."

Kulongoski said his top priorities are job creation and economic vitality, but he acknowledges that pulling out of a recession will be difficult in light of Oregon's heavy involvement in global trade and its reliance on the high-tech manufacturing sector, given the presence of Intel, Hynix, Sony and other computer and semiconductor-related plants here.

He wants to establish a "business action plan" that will guide long-term investment of state dollars and make changes in state tax code and other policies that could boost Oregon's fortunes for years to come.

"We need to build a business action plan that looks long term, rather than bumps from session to session about where we want to invest the dollars we have in our economy as far as the infrastructure," he said.

Kulongoski has his own ideas about dealing with the bureaucracy. Instead of looking at the number of rules, he wants agencies to do a better, and different, job of overseeing them.

"Instead of telling applicants why what they're doing doesn't comply with rules, I think we need to help them understand better what they can do to comply with them," Kulongoski said.

"So I actually see a more service-oriented regulatory process."

Kulongoski, a former insurance commissioner, attorney general, Supreme Court justice and legislator, said the economy will be his top priority.

But he isn't focusing on 10-point plans or zeroing in on the precise number of administrative rules to eliminate.

He points to his wealth of leadership experience and especially his role in brokering a reform of the worker's compensation system that won accolades from Oregon's business sector.

"It's not just about promises," he said. "It's about who's been able to do it."

WHERE THEY STAND: ECONOMY

Here's a look at where the candidates for governor stand on issues affecting the state's economy:

Job creation

Mannix: Wants to use the governor's office as a "bully pulpit" to champion Oregon as a business-friendly state, both within and beyond its borders. He plans to emphasize changes he would try to make: cutting the capital-gains tax, expanding tax credits and eliminating half the administrative rules on the books. He would create a privately funded state economic development office on Wall Street to encourage investment in business relocation to Oregon.

Cox: Rather than use government programs to direct job growth to certain economic sectors or geographic areas, he would rely on a tax cut to make the state more attractive for existing businesses to expand here and outside companies to locate here.

Kulongoski: Wants to make "growing the economy" his administration's top priority. He would create a "business action plan" to guide long-range investment of state dollars into infrastructure and program areas, such as education, that will bring well-paying jobs in "environmentally sustainable industries" to different areas of Oregon.

Taxes

Mannix: Wants to encourage business investment by reducing the capital gains tax rate from 9 percent to 5 percent. Plans to press for expanded tax credits for child care expenses, parent and teacher education expenses and for employers who provide jobs to young people and trainees. He vows to oppose any legislatively enacted tax increase and has called for a "tax armistice" to set the thorny subject aside for a while.

Cox: Has called for a $1.5 billion income tax cut, which would be across the board. He also would eliminate the capital gains tax. The tax cuts would be paid for through specific budget reductions he has outlined in a white paper.

Kulongoski: Wants to make the capital gains tax less onerous by providing a tax deferral for investments in Oregon. Such a program was allowed to lapse because it was too narrowly written. He expects state leaders to eventually take up tax reform, leading to a comprehensive look at ways to overhaul the tax code so it's better aligned with state economic development goals.

Regulations

Mannix: Wants to get rid of one-half of all regulations on the books. After receiving criticism for putting protection of senior citizens and the environment at risk, he has said he wouldn't let elimination of rules result in "reduction of protection standards."

Cox: Says he agrees with Mannix's emphasis on trimming regulations, although he says the Republican's determination that half of all regulations must go is "absurd."

Kulongoski: Biggest concern is with regulations that slow down the ability to get a permit or other government approval for a business activity. He wants agencies that enforce regulations to speed up the application process and to be more service-oriented instead of simply playing the role of rule-enforcer.

ON THE WEB

All three candidates address the economy on their Web sites:

Tom Cox: www.thomasbcox.com

Ted Kulongoski: www.tedforgov.com

Kevin Mannix: www.mannixfororegon.com

CAPTION(S):

INSIDE The candidates answer questions about economic issues / 9A THE SERIES MONDAY: Education TODAY: The economy WEDNESDAY: Public safety