Legislative leaders seek compromise on tax reform

The heads of the Oregon House and Senate said Monday they still have not brought together two opposing sides over how to fix the state's unstable revenue system and a $1.8 billion shortfall in the next two years.

The heads of the Oregon House and Senate said Monday they still have not brought together two opposing sides over how to fix the state’s unstable revenue system and a $1.8 billion shortfall in the next two years.

House Speaker Tina Kotek, D-Portland, and Senate President Peter Courtney, D-Salem, have been leading an effort to negotiate a compromise between public unions and business leaders. But they are making slow progress with just a week before the 160-day legislative session.

“I’m very discouraged right now,” Courtney said. “We do not have them in the room together.”

The two groups last year waged the most expensive political battle in the state’s history over a $6 billion corporate sales tax measure. Voters overwhelmingly defeated Measure 97 on the November ballot.

Since then, victorious business leaders have acknowledged the state needs more revenue stability. The state’s system is overly dependent on income tax revenue, which fluctuates drastically with economic spikes and dips. However, business leaders say they won’t support new business taxes until lawmakers curtail rising costs associated with the Public Employees Retirement System.

Courtney said he spurred the Legislature’s budget writers last week to release a budget without any new revenue to give lawmakers a reality check on what they’re facing in terms of cuts. Budget writers unveiled a plan that would entail kicking more than 350,000 people off Medicaid, larger class sizes, university tuition hikes and cuts in child welfare workers.

Beyond having informal meetings with business and labor leaders, Gov. Kate Brown has largely distanced herself from the push for revenue reform since the failure of Measure 97, which she endorsed. In her proposed budget last month, Brown laid out several new taxes to address the state’s revenue shortfall but excluded any that would raise business taxes.

“She has seven taxes we’re supposed to vote on individually, but basically, long-term she’s thinking 2018,” Courtney said. “This also complicates this long-term perfect fix” that some lawmakers are pursuing.

In an email to the Pamplin Media Group/EO Media Group Capital Bureau, Chris Pair, a spokesman for Brown, did not address the governor’s preference for timing in revenue reform.

“The cuts proposed put into human terms the devastating consequences families face with a tax system that is unstable, inadequate, and fundamentally out of balance to meet Oregon’s essential needs,” Pair wrote in the email. “While Gov. Brown will continue working hard to make sure state government does more with less, she maintains that we must work to develop a long-term solution that doesn’t put Oregonians at risk every two years.

“Gov. Brown looks forward to working with legislators, business leaders and advocates to come together on these tough choices and build a budget and revenue package that keeps the doors of opportunity open for all Oregonians”

Kotek said 2017 is the best time for lawmakers to reform the revenue system.

“I don’t want to wait until ’18 because we might be dealing with a whole different set of problems … because of what the federal government decides to do,” Kotek said. “There is a lot of unknowns on the horizon.”

If public unions, business leaders and lawmakers aren’t serious about negotiating a solution to the revenue system this year, then “we have to move on and stick to deadlines,” Kotek said. Lawmakers could look at just making a combination of cuts and small tax increases to address the revenue shortfall.

“The next month or so we have a window of opportunity to talk about something bigger, and it’s going to be up to other Oregonians besides us trying to push them to come to the table,” Kotek said.

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