According to tradition, this speech should be a summary of Oregon's status and how my administration got us there.

And, as a matter of fact, Oregon is doing well -- very well.

Nearly every Oregon county is growing. Jobs are growing at about the same rate outside Portland and the Willamette Valley as inside.

The even better news is that jobs are now growing faster than population and per capita income and wages have begun to grow faster than the national average.

But today's prosperity didn't just happen. It would be nice to be able to take credit for it, but it's not the result of anything that happened this past year.

It is, instead, the result of vision, planning, commitment and investments that have happened over the past 20 years -- the very things that I contend are not happening today.

So instead of delivering the state of the state speech today, I'd like to talk about the fate of the state . . . I want to share my vision for Oregon and what I propose to move us toward it.

You've heard this quote before, but I want to share it again.

Fifty-eight years ago, in a speech before the Portland City Club, Lewis Mumford issued a challenge to the people of Oregon.

He said: "you have a basis here for civilization on its highest scale, and I am going to ask you a question which you may not like. Are you good enough to have this country in your possession? Have you got enough intelligence, imagination, and cooperation among you to make the best use of these opportunities?"

I'd like to use that challenge as the basis for my remarks today. Will we keep the Oregon promise so eloquently described half a century ago or will we take it for granted and hence allow it to slip away?

That is the choice before us.

Today Oregon is still the best place in the world to live, because those who went before us cherished this place, guarded its gifts and protected its quality.

But unless we recommit ourselves to the kind of investments we have made in the past we will certainly lose the Oregon we love.

In the simplest terms, that is my message today; if we want to preserve the Oregon promise, we're going to have to invest. Not spend. Invest in transportation infrastructutre and education. Investments that will pay large retruns in future prosperity and quality of life.

But the only way we can afford to do this over the long term is by reducing expenditures in other parts of the state budget through policy choices that we must make now. Specifically, by reducing juvenile crime rates and by moving people off the welfare rolls and into the workforce, we can free up resources to invest in education and transportation.

That is the only way we can keep faith with the future.

So, let's begin by looking at where we are today.

Our economy is on an upswing. But we cannot sustain that growth unless we commit ourselves to strengthening our entire school system -- from pre-kindergarten to life-long learning opportunities.

In the past, we have understood that if we want economic opportunity for our children, we had to provide access to quality education, and we made the investments necessary to ensure that quality.

In particular, the enrollment capacity of our post-secondary schools has, until recently, kept up with demand, even during the baby boom period from 1960 to 1975. We were rightly proud of our ability to prepare a well qualified workforce, and to help our young adults realize their full potential, so that each successive generation could reinvest their talents and energies in making Oregon even better.

The importance of education was emphasized in Oregon Shines, the strategic planning document produced in 1986 by the Goldschmidt Administration. In fact, the first of the three strategic initiatives in that document was to develop a superior work force, an objective that is directly tied to a superior educational system.

Ten years later, this focus on education should be even more important as Oregon -- and the world -- continue to make the transition from an economy based on labor and natural resource extraction, to one based on information and knowledge.

But this is not the case.

Our efforts to fully fund public schools on an equitable basis for all Oregon children is struggling. You who live in Portland, know that. Your district faces cuts that will clearly impact the quality of education for Portland school children.

Our efforts to prepare Oregon citizens for the good jobs of our economy are undercapitalized.

Our funding for higher education is a disgrace -- a disaster waiting to happen. Oregon is dead last among the 50 states in per capita funding of higher education.

At a time when our economy demands highly-trained workers, our choice to disinvest in our education system is a choice for stagnation, low wage jobs and an uncompetitive workforce.

We are making the same choice with our transportation system.

There is no doubt that Oregon's historical commitment to a high quality transportation system has been a big part of our current economic success.

Our roads, as well as our other transportation systems, have helped us get where we are today. They enable our citizens to get to school and work; they provide public access to the natural wonders which are Oregon's special treasure; public transit lowers pollution and reduces congestion; and perhaps most importantly, our transportation infrastructure is a key to our economic health -- it moves our goods to markets outside our state.

But we are simply not maintaining this precious asset.

Over the next seven years, Oregon faces a potential loss of more than $200 million in federal highway funds. At the same time, the Oregon Legislature has not increased funding to the highway trust fund for more than five years. Quite simply, we do not have the money in the current system to keep up with growth and maintenance needs. And every year we wait to fix the problem -- it gets worse. Our estimates show that early in the next century, we will only have the resources to either maintain our system or add needed capacity. That's unacceptable -- we must be able to do both.

With Oregon's population growing at a rate of nearly 50,000 people per year, the lack of investment in our transportation system deprives us of a critical tool to manage that growth in a way that does not detract from our quality of life.

There are those who believe that by not investing in our transportation system we can discourage growth. The truth is that an inadequate transportation system does not discourage growth, it simply produces sprawl and congestion.

Our choices in transportation and education reveal a general and alarming trend, leading to one inescapable conclusion: we are not investing the way we have in the past.

And it's not because we as a state aren't willing to put our resources behind problems. It's more a matter of priorities.

Let me give you one stark example. In 1990, 13 percent of the state general fund went to higher education. Four percent went to corrections.

Today, nine percent of the general fund goes to corrections -- mostly to prison construction and operation -- and only eight percent goes to higher education.

That means that in the past five years, our general fund commitment to higher education dropped by five percent while our commitment to prisons increased by five percent.

Does this really reflect what Oregonians value? Of course not. But it is clear to me that our choices no longer reflect the values that have traditionally defined Oregon.

We say we value our economy; yet we have not made education or transportation high priorities.

We say we value our children and their safety; but we have not yet made crime prevention a top priority. We have built a lot of prisons, but we have done little in the area of early intervention for at-risk youth -- who are committing crimes at a far higher rate than any other segment of the population.

We say we value compassion; yet 400,000 Oregonians are still without basic health care coverage.

Is this the Oregon of the future -- a place where people pay lip service to certain values and then undercut them with their actions?

Is the Oregon Promise destined to fail?

I say no. The challenges we face may be different from those of the past, but I do not believe they are any greater.

As I mentioned at the beginning of this speech, I believe we can make the investments necessary for our future prosperity. But to do so we must act to reduce expenditures in other parts of the state budget.

In that regard, I have four specific proposals which deal with reducing expenditures in public safety and public assistance and investing in transportation and education.

First, in public safety -- we must enable our public safety system to both punish criminals and prevent crime.

Today, we punish. But we don't prevent.

Keeping people in prison will protect the public from crimes by those particular offenders -- while they are in prison. But it will not prevent new crimes by new offenders. Building more and more prisons, which we have done and will continue to do under Ballot Measure 11, does not lower the crime rate.

Between 1987 and 1991 we built more than 3,000 new prison beds in Oregon. Yet today people feel no safer than they did eight years ago. In fact, they feel less secure because of the dramatic increase in violent crimes committed by juveniles.

Now, with Ballot Measure 11, we will build another 4,000 prison beds by 1999 at a cost of more than $1 billion. Yet this huge expenditure will do nothing to reduce the ever-growing number of juvenile delinquents, who will become young thugs, who will become violent offenders.

The only way to do that is to invest in prevention -- to stem the tide of people coming into the system on the front end. That is one of the central goals of the Partnership for Community Corrections, Senate Bill 1145 . . . and the primary objective of the upcoming special session.

To Representative Mannix and Representative Tiernan, and others who oppose this effort -- who view prevention as being "soft on crime" -- I say this:

We will punish those who commit crimes in Oregon. We will fully implement the provisions of Ballot Measure 11. But to focus only on punishment and not at all on prevention is to accept the necessity of victims.

It is to say that we do not care how many crimes are committed in Oregon -- we do not care how many people are victimized -- as long as those responsible are punished. I simply do not buy it and I do not believe that most Oregonians do either.

I am not willing to continue to disinvest in education in order to build more prisons unless we make an equally strong commitment to reducing the incidence of crime -- particularly among juveniles.

That is how we reduce our overhead. That is how we build a public safety system, rather than simply a prison system. That is how we invest in the future. And I call on all Oregonians to support this effort in the upcoming special session.

The second major area of overhead in state government lies in our welfare system. It is clearly in the best long-term interest of all of us, now and in the future, to support policies that help our vulnerable citizens move from dependence to independence, whenever that is possible. In this area Oregon has been quite successful.

Oregon's welfare-to-work program is fast becoming a model for the nation. But we need to recognize that a significant contributing factor in our success has been the Oregon Health Plan.

By assuring low-income Oregonians that they won't lose access to health care if they get a job, we have dramatically lowered our welfare rolls. In the past year, we moved 4,500 families off welfare and into the workforce with a biennial general fund savings of $30 million. That's cutting overhead.

We expect another 12 percent reduction in case load over the current biennium, but our success will be short-lived if we do not continue our pioneering effort to expand basic health care coverage to all our citizens.

Just 18 days ago the employer mandate to provide health insurance was automatically, and quietly repealed due to legislative action taken in 1993. This is nothing to celebrate. We have broken the promise of the Oregon Health Plan to extend coverage to the 400,000 working Oregonians and their dependents who remain uninsured.

This mandate may be repealed, but the problem won't go away. Those Oregonians will still be without coverage. They will still seek their basic care in the emergency room. They will still be paid for by shifting costs to the rest of us. And most importantly, they will still be without the resources to do what the rest of us take for granted: keep our health.

In the coming year, I will continue to press the case that these Oregonians must be afforded the opportunity for basic health coverage. If we are not to achieve this through an employer mandate, we have the responsibility to enact an alternative approach.

Over the next ten months, I will call upon our legislature, our businesses, our labor organizations and our health care providers to form a reinvigorated coalition to complete the health reforms we started in 1989.

I will reconstitute the Oregon Health Council and charge it with developing a six-year strategy for accomplishing the following:

First, ensuring access to a basic benefit package for all Oregonians. This access will draw upon the strengths of our current public/private financing partnership and will focus as a first order of business on extending coverage to Oregon's working uninsured. It will also address the needs of our migrant and seasonal workers.

Second, obtaining maximum health benefits from the resources currently being used in our health care system; ensuring that we capitalize our system efficiently, that we use technology efficiently, and that our health professionals employ best practice standards; and,

Third, exploring the potential for broader community partnerships to address the underlying health needs that drive people into the health care system in the first place. This will involve not only an increased community responsibility, but also increased individual responsibility for the overall health status of Oregonians.

By focusing on juvenile crime prevention and on expanding access to basic health care, we can continue to reduce expenditures in these two key areas -- public safety and public assistance. In the process, we will increase our ability to invest in the two areas most critical to our future security and prosperity: transportation and education.

Next week I will be initiating a statewide effort to address our transportation infrastructure needs. I believe we must invest in a transportation system that will deliver the kind of future that Oregonians want -- a place where livability and growth can exist side-by-side.

Let me make it clear, however, that we cannot fall back on another process that produces no more than a list of highway projects to be funded. Financing road construction or any transportation system improvement without giving thought to how we integrate them with our land use, economic development and housing plans is doomed to failure.

While there are very real capital construction needs that must be addressed, we cannot ultimately build our way out of this problem. Therefore, I intend to focus my initiative in a way that addresses these needs but that also helps us lower transportation construction and maintenance costs in the future and stretches our resources as far as possible.

The objectives of this initiative must be to maintain quality communities that have a high level of livability as well as economic opportunity.

There are several efforts underway around Oregon to meet the challenge of growth.

Here in the Portland Metropolitan Region, Metro officials are doing transportation work in the framework of the 2040 plan. This plan represents on paper what we need to do on the ground. We need to build on local efforts like this and develop new relationships between state, local and regional government which have the flexibility to deal with different needs around Oregon.

To accomplish this, I will appoint five regional advisory committees that will assess community and regional transportation needs in different parts of the state. The committees will be made up of public and private leaders who will bring a fresh look and a broad perspective to the needs of their region and its communities.

I will also appoint a state advisory committee that will assess needs of statewide concern. This committee will integrate its recommendations with those of the regional advisory committees to produce a comprehensive package for consideration by myself, the Oregon Transportation Commission and legislative leadership.

I will ask these citizen committees to follow a four-step path in developing recommendations related to transportation and growth management.