by Shelby Sebens | Northwest Watchdog
Gov. John Kitzhaber is calling Oregon lawmakers back to Salem for a special session Sept. 30 to both cut state employees’ pensions and increase taxes for additional funding for schools and other programs.
He said legislative leaders have agreed to boost revenue by $244 million while cutting the state’s unfunded pension liability by $4.6 billion for the 2013-15 biennium. The package includes further cost of living adjustment cuts than what the Legislature passed during the regular session and tax cuts for small businesses, tax increases on corporations and a 10-cent increase in the tobacco tax.
As lawmakers prepare to head for a short special session, here are some points to remember:
1. Who’s for it: The Oregon Business Plan, a coalition of state businesses, applauded the special session in a press release Friday. The group especially likes the tax relief for small businesses.
We believe this provision will lead to new business investment and grow much needed jobs in every corner of our state. We would have preferred that the plan refrain from increasing taxes on any segment of a business community that is just now regaining its footing after a long and deep recession, but we recognize that the proposed increase in the C-corporation tax rate is far preferable to other plans that have been discussed.
The Oregon School Boards Association and other education groups also support the package and are lobbying for others to jump on the bandwagon.
2. Who’s against it: Not surprisingly, unions are not a fan of this special session. They don’t want to see any cuts to pensions and are calling Kitzhaber’s special session “Wrong for Oregon.”
From SEIU Local 503, a public employees’ union:
While students are being crammed into classrooms and our universities remain crucially underfunded, it’s time for big business and corporations to pick up their part of our shared sacrifice. The revenue proposal being discussed doesn’t get us anywhere near that.
Expect government spending watchdog groups to be on guard about this, too, for different reasons. The Taxpayer Association of Oregon recently pointed out much of the discussion behind this package has happened without public input behind closed doors. Some Republicans argue the increased taxes are unnecessary given the state has an extra $2 billion in its general fund.
“The need for more revenue is difficult to justify,” said state Sen. Doug Whitsett, R-Klamath Falls.
3. Pension problems: State Budget Solutions, a nonprofit that advocates for state and local budgeting reform, listed Oregon as one of the nine worst states for pension health. The study, “Promises made, promises broken,” looked at states facing a particularly large unfunded liability.
The package is an attempt by Kitzhaber to whittle down the state’s $14 billion unfunded liability in the Public Employees Retirement System while appeasing his fellow Democrats who rely heavily on union support and getting Republicans on board with tax increases.
4. Key votes: Kitzhaber needs all Democrats and two Republicans in both the Senate and House to agree to his package as Oregon requires a super majority vote for any tax increases. Statements from both sides of the aisle have been cautiously optimistic, saying there’s more, difficult work to be done.
5. Other issues: Kitzhaber is also calling on lawmakers to consider a statewide policy on genetically modified organisms to keep counties from creating patchwork rules across the state. Local communities are already considering labeling genetically modified crops. It’s also possible Kitzhaber will try to add the Columbia River Crossing project now that Oregon has a plan to build the new I-5 bridge from Portland to Vancouver without the help of Washington state.
Contact Shelby Sebens at [email protected]
Northwest Watchdog is a project of the Franklin Center for Government & Public Integrity