No sign of relief from Oregon budget impasse

Of the Associated Press

SALEM — The Oregon Senate delayed a vote on a $6.55 billion funding package for schools Tuesday because it was clear it wouldn't pass — the latest wrinkle in a budget impasse that shows no sign of breaking.

Three weeks before a deadline for lawmakers to approve a two-year spending plan, Republicans are still demanding tougher cuts in pensions for retired government workers and Democrats still want to increase tax revenue. And both sides are still saying the other's demands are too steep.

There have been no formal meetings between the governor and legislative leaders since two days of talks broke down a week ago.

Democrats are trying to shift the debate toward their comfort zone. House Speaker Tina Kotek, D-Portland, told reporters this week that the discussion has been “out of balance” — focused too much on cuts in Public Employees Retirement System benefits and not enough on new revenue.

“Until we see a solid commitment from Republican leadership on new revenue to the tune of $275 million, I can't talk about any additional PERS changes, because I think that's the stumbling block right now,” Kotek said.

Democratic Gov. John Kitzhaber made similar statements to the Oregonian editorial board on Friday. He's floated $5 billion in long-term pension savings in exchange for $275 million in new revenue.

Democrats have majorities in the House and Senate but need at least two Republican votes in each chamber to raise taxes. GOP leaders have maintained that they're willing to entertain tax increases in exchange for “serious” pension savings, but they say $5 billion in pension savings doesn't justify a tax increase of the size Democrats are seeking.

“There's no burning desire on the part of Republicans to have a chance to vote for new revenue,” said Sen. Ted Ferrioli of John Day, the Republican leader. “Although we're willing to do that for a significant PERS reform.”

The pension system's unfunded liability is estimated to be about $14 billion, and contributions from state and local governments are set to rise precipitously in the coming years to help fill the gap.

Democrats voted earlier this year to reduce inflation adjustments for retirees, but Republicans chided the effort as anemic.

Budgets for many state services are left in doubt until lawmakers come to a resolution on the pensions and taxes debate. A compromise could significantly increase the amount of money available to spend on services, from both higher tax revenue and lower spending on employee pensions.

A vote on the most closely watched budget — state aid for primary and secondary schools — was delayed until Monday. Democratic Sen. Chris Edwards of Eugene joined all 14 Republicans in pledging to oppose it, denying the 16th vote that would be needed to advance the measure. Edwards said last week that he'd hold out for a better deal because the $6.55 billion spending plan would mean cuts to his home school district.

The Legislature's budget committee on Wednesday will consider advancing a continuing resolution that would keep the government running temporarily if lawmakers fail to approve a budget by the end of the month.

Democrats have emphasized the benefits that the additional revenue and pensions savings would potentially have: enough money for schools that nearly every school district could avoid cuts, and smaller tuition increases for colleges and universities.

But Republicans are quick to point out that the Democrats are in charge and will take the blame if voters feel there wasn't enough pension savings.

“In the end, one party runs the state of Oregon, and we're all going to live with the consequences of what the Democrats choose to do or choose not to do,” said Rep. Mike McLane of Powell Butte, the House Republican leader.

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