Posted on 06/29/2002 3:43:13 PM PDT by Jack Black
House rejects Senate budget
06/29/02
JAMES MAYER
SALEM -- Lawmakers worked Friday to reconcile competing budget plans approved by the Senate and House, a dicey undertaking that could mean the difference between going home or digging in for an even longer fight.
Both plans reflect delicate political balancing acts, with Republicans gritting their teeth to vote for tax increases and Democrats holding their noses to vote for spending cuts and accounting tricks. And efforts to inject the explosive issue of the public employee pension system into the mix might further complicate the negotiations.
The House voted Friday to reject changes the Senate had made to its plan, sending the question of how to bridge a $860 million gap in the state budget to conference committees. Legislative leaders planned to meet behind closed doors Friday night in an effort to reach a final deal.
"I think things are very fragile, but they always have been," said House Speaker Mark Simmons, R-Elgin. "House members seriously stretched what was politically possible, and this stretches it further."
Lawmakers could adjourn the year's third special session today if a deal comes together.
"These are tough, tough votes," Simmons said. "But if things fall into place, we can move quickly."
The House adopted its plan to balance the state's two-year, $12 billion budget three days after the special session began June 12, but the Senate struggled for almost two weeks before agreeing Thursday.
The House's rejection of the Senate plan means lawmakers from both parties in both houses will meet in conference committees to try to hash out their remaining differences in public. Most talks have been in closed-door caucus meetings.
The two plans have much in common. Both include tax increases, spending cuts and one-time revenues. But there remain sticking points:
The House plan includes $108 million in revenue by phasing in Measure 88, an income tax cut voters approved in 2000. But there weren't enough votes in the Senate. As a result, the Senate plan falls short of balancing the budget.
The House plan would send to voters a 75-cents-a-pack cigarette tax increase. The Senate would increase the tax by 60 cents, but without the referral to voters. The current tax is 68 cents.
The Senate plan would use 6 cents of the cigarette tax increase to back $50 million in borrowing that would reduce cuts in schools and state programs. It also includes up to $150 million in cigarette tax bonding in case tax collections continue to fall and a new shortfall develops. House Democrats are squeamish about bonding, and too much borrowing could trigger a veto from Gov. John Kitzhaber.
Both plans would send to voters a new version of Measure 13, the proposal to create a rainy-day fund for schools that was defeated in the May primary. The House version would provide $180 million for schools and back it up with revenue bonds if voters reject it in a September special election. The Senate would take $150 million, with no backup.
The action on the Senate floor Thursday was nothing more than "political theater," said Rep. Max Williams, R-Tigard. By not dealing with Measure 88, the Senate had not solved anything, he said.
"We're in a shared power environment," Williams said. "Like it or not, we have a Democratic governor and narrow majorities at both ends of the building."
Republicans have a 32-28 advantage in the House and a 16-14 edge in the Senate. It takes a three-fifths majority -- 36 votes in the House and 18 in the Senate -- to pass tax increases.
Rep. Mark Hass, D-Portland, said Democrats supported a lot of things they didn't like in the House compromise, and senators added to the list.
"There's more bonding. There's more accounting gimmicks," Hass said. "Every time I see a plan, it looks a little weaker. We are right at the edge."
Off to the side of the major budget issues, intense negotiations continued over what to do about the Public Employees Retirement System, which critics say gives retirees overly generous pensions. PERS is $8.5 billion short of what it needs to meet its future obligations.
Lawmakers are looking at two significant changes in the system. One would update mortality tables to reflect the longer time public workers are living beyond retirement. That would have the effect of reducing annual benefits.
Another change would eliminate PERS for all new public employees hired after July 2003, establishing instead a retirement plan that more closely resembles private industry plans. PERS could become a factor in how soon the special session ends.
"My preference is to not go home without this bill," said Rep. Rob Patridge, R-Medford, vice chairman of the PERS committee. But he said emotions around the issue are running high, and it could stall before it makes it to the House floor.
"It's a powder keg around here," Patridge said.
Harry Esteve of The Oregonian staff contributed to this report. Reach James Mayer at 503-294-4109 or jimmayer@news.oregonian.com.
The PERS system is an ultra cushy retirement program for state workers that guarantees them 8% annual returns on the investment portfolio, even if the investments lose money. (Of course if it makes more than 8% the surplus is not paid to taxpayers!). This absurd shakedown scheme threatens the entire state. I've heard of large corporations choosing not to do business here becuase the believe the potential tax liability is so high. This in a state that has a huge percent of idiot communist Greens who blame corporations for everything except original sin.
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