1. 1990’s: State enjoyed huge economic growth and diversification Total gross state product increased by 98% from 1991-2001. High-tech industry growth. Population growth – 11 th fastest growing state. Personal income grew at annual rate of 5.6%, exceeding the nation. Exports increased by a compound annual rate of 5.8%. State General Fund grew from $4,628.1 million in 1989-91 to $10,121.8 million in 1999-2001 – dollars primarily went to K-12, Oregon Health Plan, and Public Safety. Kicker returned for personal income tax filers 7 times, totaling over $1.5 billion; for corporate tax filers 5 times, totaling over $400 million.

2. 2003-05 All Funds Resources Total: $84,451.0 Million Expenditures Total: $40,809.3 Million

3. All Funds Expenditures 2001-03 Close of Session Total: $34,077.0 Million 2001-03 Final Total: $37,836.3 Million 1989-91 Legislatively Adopted Total: $ 14,360.4 Million 1999-2001 Legislatively Adopted Total: $29,576.8 Million *Includes Consumer and Business Services

4. General Fund Forecast Comparison Fiscal Years, in Millions

5. Lottery Resources Available to the State Office of Economic Analysis Note: Resources do not include Video Lottery proceeds dedicated to the Counties. Beginning balance is included. 2003-09 debt service figures do not reflect any Education Endowment Fund or reserve earnings designated for debt service on education bonds.

6. Approved General Fund & Lottery Funds 2 of 2

7. 2003-05 Legislatively Adopted General Fund and Lottery Funds Budget *Includes Oregon Health Sciences University Expenditures Total: $10,951.4 Million Revenues Total: $10,974.3 Million

8. General Fund and Lottery Funds by Program Area * Excludes additional PERS savings of $191.5 million that is used to balance the Governor’s Revised Budget and includes new discretionary resources. State School Fund Level

9. What has caused the General Fund expenditure growth since 1989? Primary –Population –Initiatives –Policy decisions Secondary –Inflation –Lawsuits

10. State and Local Resources for K-12 School Funding Billions of Dollars

11. Estimated Impact of Measure 11 on Oregon’s Prison System

12. Department of State Police 2003-05 Governor’s Balanced Budget Sworn Positions

13. Policy Decisions Oregon Health Plan (OHP) The Office of Medical Assistance Programs budget has increased significantly since 1989-91. The General Fund and tobacco funded portion has increased from approximately $201 million to $1.21 billion.

14. Other Issues General Risk Reserves/Other Fund Balances PERS/Labor Kicker Additional Lawsuits Bond Rating Annual Sessions Accountability/oversight vs. Reduced Administration Regulatory Reform Economic Recovery Pent-up Budget Demand Potential Initiatives One-time Revenues