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Tobacco Lawsuit Helps Oregon Balance Budget

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File photo of a man lighting up a cigarette. (credit: CHRISTOPHE SIMON/AFP/Getty Images)

File photo of a man lighting up a cigarette. (credit: CHRISTOPHE SIMON/AFP/Getty Images)

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SALEM, Ore. (AP) — As the Oregon Legislature convened Wednesday for the start of a month-long legislative session, key lawmakers proposed spending much of a $56 million dollar legal windfall to avoid cutting services for the sick and needy.

Three legislators in charge of writing the state’s financial plan suggest taking three-quarters of the income from a court victory over tobacco giant Philip Morris, roughly $41 million, to shrink a $200 million spending gap. They’d use budget maneuvers and service cuts to cover the rest of the deficit.

“Philip Morris’ unwilling contribution to our state coffers came at a very opportune time,” said Rep. Dennis Richardson, R-Central Point, a co-chair of the Budget Committee.

Budget writers discussed their proposal as lawmakers began their first even-year session since voters decided to make the Legislature meet annually.

The tobacco money stems from a December ruling by the state Supreme Court rejecting Philip Morris’ challenge to part of the punitive damages it was ordered to pay in 1999. The company lost a lawsuit brought by the family of a Portland smoker who died of lung cancer.

Philip Morris had agreed to pay the man’s family but challenged an Oregon law requiring that 60 percent of punitive damage awards go to a state fund that compensates crime victims.

Rosemary Brewer, legal director of the Oregon Crime Victims Law Center, was less enthusiastic about taking the money from the victims’ compensation fund.

“The punitive damages award is supposed to benefit services for crime victims,” Brewer said. “Crime-victim services are critical elements of the public safety system.”

If both legislative chambers and the governor sign off, the tobacco money would decrease the severity of spending cuts. But it won’t completely protect services already reeling from more than $3 billion in cuts enacted last year.

Budget writers propose cutting $1 million from a job-training program for welfare recipients, $6.6 million from daycare services and $3.5 million from the budget for planning an overhaul of the mental health system.

They want to give the Department of Corrections authority to close the Santiam prison in Salem and move the inmates to other prisons. And they suggest cutting the funding for long-term care for seniors by $13.4 million. That cut would primarily affect service providers, not the elderly, said Rep. Peter Buckley, D-Ashland, a Budget Committee co-chair.

“It stresses out the system, but it does not remove anybody from services,” Buckley said. “And that was vital to us.”

The proposal also suggests $25 million in personnel cuts, largely from middle management. The budget writers suggest increasing the manager-to-employee ratio and eliminating public affairs positions that deal with the media and with the Legislature.

“We’re not making the cuts because we want to make them,” said Sen. Richard Devlin, a Tualatin Democrat and the third budget committee co-chair. “We’re making them because we have to maintain a balanced budget.”

The proposal does not cut K-12 education funding. The co-chairs said community colleges will feel a pinch, however, because their funding will be flat despite growing classes.

Legislators are contending with a forecast projecting that revenue will be $300 million less than lawmakers anticipated when they first approved the budget. Costs have increased significantly for some Department of Human Services programs, and an anticipated influx of federal dollars to pay for long-term care never came through.

Much of the shortfall has been absorbed by reserves built into the original budget. Richardson, who pressed for the reserves, said many of the additional cuts will reduce the long-term cost of government. He said he’s pleased that the budget proposal doesn’t draw down from savings accounts or raise taxes and fees.

Richardson, Buckley and Devlin co-chair the joint House-Senate Ways and Means Committee, which drafts a spending plan and submits it to both chambers for approval.

Budget changes have yet to be approved and in the committee, and interests affected by cuts could put pressure on lawmakers to look elsewhere for savings.

Gov. John Kitzhaber supports the Legislature’s budget framework, spokesman Tim Raphael said.

In a Senate committee meeting, Kitzhaber pitched his proposal to allow a new education oversight board to create nonbinding achievement compacts with school boards and community colleges.

“We don’t have any time to lose in moving these strategies forward,” the governor said in urging prompt action by the Legislature.

Dozens of demonstrators, many from the Occupy Wall Street movement, gathered on the Capitol steps. Kitzhaber spoke briefly with about two dozen who packed into his office asking for him to join them in opposing a U.S. Supreme Court decision that removed most restrictions on election spending by corporations and labor unions.

Kitzhaber said he was sympathetic to their message and wished them luck.

There was a heavy police presence inside the Capitol, but Oregon State Police spokesman Gregg Hastings said there were no incidents or arrests.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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