Setting state standards.

Byline: The Register-Guard

As speaker of the Oregon House of Representatives, Lynn Lundquist gave Oregon the Quality Education Model - a powerful concept that measures the cost of the educational system legislators say they want. Now, as head of the Oregon Business Association, Lundquist has an idea that could be equally potent. He wants the Legislature to define the minimum services the state must provide, and if revenues are insufficient to support services at that level, to cover the difference by scaling back tax deductions.

Establishing some minimum standard for state services makes sense. Oregonians can argue about the amount of fat to be found in state agencies, but there is a point at which reductions in public services begin to endanger people's well-being. The state can't function, much less prosper, unless it can provide basic public safety, education and human services programs. Cuts beyond that level begin to produce costs that exceed any savings.

The Oregon Business Association's line in the sand is drawn to ensure that state government meets general standards in the areas of education, public safety, health and human services, the environment and transportation. A state that can't meet those standards, the association warns, is not a good place to live or do business.

The association goes further, defining specific characteristics of public services that meet the minimum standards. Oregon's public schools, for instance, must maintain a 178-day school year, have class sizes no larger than this year's and offer as many extracurricular activities as are available this year. Community colleges must maintain current tuition, course offerings and enrollments. State universities must be funded no less than 30 percent below comparable institutions in other states, remain accessible to Oregon residents and provide financial aid to the neediest students.

These are not goals to be strived for, in the association's view - they are the points at which the Legislature must begin seeking solutions other than further budget cuts. Yet the school year in Hillsboro, the state's fourth largest district, has already ended 17 days early. Lane Community College and its 16 sister institutions are raising tuition, cutting programs or both. Gov. Ted Kulongoski proposes 20 percent less state funding for the Oregon University System than it received in 1999, and legislative leaders propose cutting even more.

Defining unacceptable levels of erosion in public services is one thing, finding ways to support services at adequate levels is another. Lundquist says neither the governor nor the Legislature will be able to lead the state to accept a broad tax reform proposal for the two-year budget period that begins July 1. The Legislature appears ready to consider tightening or eliminating some of the 350 existing income tax deductions, credits and exclusions. Lundquist, however, warns that examining each of the tax breaks individually would lead to 350 separate battles, each one of them involving a powerful constituency.

Instead, Lundquist suggests lumping all or most tax deductions together, and then discounting their value on personal and corporate income tax returns. For instance, if the deductions were found to reduce state income by an aggregate amount of $5 billion, and if the state Legislature determined that an additional $500 million was needed to maintain minimum service levels, the value of the deductions would be reduced by 10 percent. This approach would resemble a progressive tax, since higher-income people tend to have more tax deductions. Lundquist proposes that the deduction discount expire after two years, and during that period the state would seek a better way to finance public services.

This idea may have flaws, but after two years of progressively deeper cutbacks resulting from plunging state revenues, it's encouraging to see a business organization step forward to say that Oregon has reached or is approaching the point at which further cuts are unacceptable. Equally encouraging is the association's willingness to suggest a means of paying to prevent damaging reductions in services. Legislators and the governor should be equally willing to say that cuts will go only so deep and no deeper.