Oregon's prospects for budget deal growing dim

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Updated: June 26, 2013, 3:22 PM

 

SALEM, Ore. — With prospects growing dim for a compromise that would increase tax revenue and lower employee pension costs, the Oregon Senate approved two key budget bills Wednesday after Republicans gave up on stall tactics they hoped would force a deal.

Approval of a budget for schools and a tax on hospitals and nursing homes clears the way for lawmakers to finalize a two-year budget and adjourn the 2013 legislative session.

Budget talks continued, but the optimistic tone did not. Republicans in particular were gloomy, though they stopped short of declaring dead the prospects for a compromise.

“We had an opportunity, and the opportunity is beginning to elude us in this session,” Sen. Tim Knopp, a Bend Republican who has been at the center of negotiations over pension cuts, said before voting against the school-funding bill.

Republican Sen. Brian Boquist of Dallas, who’s been negotiating for business tax cuts, agreed.

“The opportunity is about 24 hours,” he said, “and after that we need to turn the light switch off, and we need to leave.”

Months of budget talks intensified over the past week after a Eugene Democrat joined all 14 Republicans to vote down the school-funding bill in the Senate.

Lawmakers primarily worked on a three-part deal: Tax increases that would primarily affect high-income taxpayers, benefit cuts in the Public Employees Retirement System and tax breaks for some small businesses. But they’ve been unable agree on the numbers, and both parties have gotten an earful from their political bases.

Still, Sen. Ginny Burdick, a Portland Democrat and a chief negotiator, said the work isn’t over.

“We need a revenue package and we need a PERS package, and I’m still working hard on them,” Burdick said.

The Senate’s actions Wednesday clear two big hurdles that stood in the way of a budget without additional revenue and pension savings.

Senators approved a $6.55 billion spending plan for primary and secondary schools, reversing a decision to reject it last week when seven Republicans changed their votes and decided to support it. It goes now to the House.

“My schools need some certainty, because guess what, their budgets are due in a few days and they need to know what the number is,” said Sen. Jeff Kruse of Roseburg, one of the Republicans who voted for the schools budget. “But my friends, we could’ve done much better than this.”

Democrats praised the bill, saying it will allow most school districts to avoid reducing school days or laying off more teachers after years of cascading cuts. The two-year budget is a 14 percent increase over current funding, providing $800 million in additional cash. Pension cuts enacted earlier this year will reduce school districts’ costs for retirement benefits by $200 million.

Senators also passed a tax on hospitals and nursing homes, sending it to the governor. Hospitals pay the tax, which is matched by federal dollars, then returned to hospitals. The federal matching funds are a key component of the budget for Medicaid.

The House voted Wednesday to redirect corporate “kicker” tax rebates to community colleges. Oregon’s constitution requires rebates if actual tax collections over a two-year budget cycle exceed projections by at least 2 percent. Corporate tax revenue is flirting with that line.

The measure, which now moves to the Senate, would send the money to community colleges instead of rebating it to corporations.