Dems set stage for bargain vote

Late-session push on PERS, taxes

By Lauren Dake / The Bulletin / @LaurenDake

SALEM — The Oregon Senate Revenue Committee passed, in a party-line vote, a $215 million tax hike and steeper cuts to the state’s pension system late Friday in an effort to reach what’s been coined the “grand bargain.”

With the legislative session expected to end soon, lawmakers are making one final push to strike a deal that would both raise taxes and cut the state’s pension. Republicans want steeper cuts to the Public Employees Retirement System; Democrats push for tax hikes.

A deal would mean more money for public primary and secondary schools and mental health and senior programs. But both measures passed out of the committee on party lines: Democrats for and Republicans against. Both measures head directly to the Senate floor for a vote by the full chamber likely early next week.

Senate President Peter Courtney, D-Salem, said if the revenue measure passes, that triggers the vote on PERS. Democrats need at least two Republicans to vote to raise taxes. The two Republicans on the revenue committee signaled an uphill battle.

Sen. Larry George, R-Sherwood, took issue with describing the deal as a compromise.

“A grand bargain is typically where people come together and have a discussion and meet in the middle,” George said, adding that that’s not what has happened this legislative session.

The tax package, he added, is “a heavy lift.”

Senate Majority Leader Diane Rosenbaum, D-Portland, said she was “appalled” Republicans weren’t voting in favor of steeper cuts to PERS, since they have been in favor of reducing the system’s $14 billion unfunded liability.

The revenue bill, House Bill 2456, would send $150 million more to the state’s education system and funnel $60 million more into senior and mental health programs. It would raise corporate income tax rates from 6.6 to 7.6 percent on amounts more than $2.5 million.

It would cap deductions for couples who make more than $250,000 and individuals who make $125,000. It makes changes to the senior medical tax deduction and shifts the benefits to lower-income seniors.

The pension bill, Senate Bill 857, would lower cost-of-living adjustments for retirees. For income below $60,000, the inflation rate would be 1.25 percent, compared with about 2 percent currently. For all income beyond $60,000 the rate would be 0.15 percent.

The bill would also lower pensions for former public employees who haven’t worked in public employment since 2004 but have yet to draw their pensions. The proposed changes could reduce the system’s unfunded liability by $5 billion in the next two-year budget cycle.

If HB 2456 passes, Courtney said, he will bring SB 857 to the floor for a vote. Although the Senate will meet over the weekend, the votes aren’t expected until Monday.

“We’ve had official work groups. We’ve had rump groups. We’ve had side meetings. We met at Mahonia Hall. I’ve listened to everyone who had an idea. I’ve talked to anyone who would listen,” Courtney said. “We have one last shot to grasp this opportunity. It’s time to vote.”

House Bill 2456

What it does: Raises corporate income tax rates and funds education and health care programs.

Senate Bill 857

What it does: Lowers cost-of-living adjustments in the state’s pension system, and lowers pensions for those no longer in public employment.

Status: Both measures were voted out of a Senate committee Friday and now head to the full chamber.