Special session becomes likely, Kitzhaber says

SALEM — Gov. John Kitzhaber said Wednesday he plans to call Oregon lawmakers into special session to vote on measures affecting taxes, public-employee pensions and the regulation of genetically modified crops.

The special session would begin Sept. 30, capping months of negotiations between the governor and legislative leaders from both parties.

Kitzhaber said the agreement would boost education funding by $140 million to restore canceled school days in some districts and lower college tuition.

In a cheerful statement, Kitzhaber applauded lawmakers "for once again coming together for the benefit of all Oregonians."

But House and Senate leaders sounded a much more cautious tone, immediately issuing a joint statement saying simply that they "are making progress."

"There is still hard work ahead to determine whether we have the votes from each caucus needed to pass this proposal," said the statement by House Speaker Tina Kotek and Senate President Peter Courtney, both Democrats, along with Rep. Mike McLane and Sen. Ted Ferrioli, the Republican leaders.

To sweeten the pot for Republicans, many of whom are reluctant to vote for higher taxes, the deal also would include a bill prohibiting local governments from regulating genetically modified crops. A ballot measure already planned for a vote in Jackson County in May 2014 would be allowed to stand if voters approve.

Eli Dumitru of Medford, the treasurer of GMO-Free Jackson County, which sponsored the local measure, said the group opposes the bill, despite the Jackson County exclusion.

"We really do not support a bill that would allow them to pre-empt local control," Dumitru said, "even with an exemption for Jackson County. ... We want to set a model for the state.

"The fact they are sticking it into this other bill means they are obviously playing politics with it."

John Watt, a Medford lobbyist who is working with groups opposing the Jackson County GMO ban, said he didn't know enough about the legislative deal to comment at length.

He said he assumed that if Jackson County voters voted down the GMO ban then the county would be folded into the statewide exemption.

Watt said it would be very difficult for local government to have a different kind of regulatory system than the rest of the state.

"To put that kind of responsibility on local government is a burden that is almost too much," he said.

The governor's office said the overall deal includes further cuts in retirement benefits for government employees, limiting the annual inflation increases in retirement checks. Combined with cuts in the cost-of-living adjustment enacted earlier this year, the changes would erase $4.6 billion from the Public Employees Retirement System's unfunded liability and reduce the amount that state and local governments, including school districts, are required to contribute.

The improving recovery has boosted tax collections at state and local governments, but much of the additional revenue has been used to cover steep increases in PERS costs because of massive investment losses during the Great Recession.

"Sept. 30 now stands as a turning point for the future of our public schools," said Betsy Miller-Jones, director of the Oregon School Boards Association, a vocal advocate of cutting pension costs. "It's an opportunity to make a lasting change for our children and our state."

PERS cuts enacted earlier this year already are the subject of a legal challenge by public-employee unions and retiree groups, which are vowing to challenge any additional cuts, as well. They say the state is illegally breaking a contractual obligation.

The deal also would raise $240 million in new revenue. The governor's office did not release details, but talks have focused on higher cigarette taxes, an increase in some corporate taxes, and a limitation on a tax deduction for seniors' medical expenses.

Some businesses known as pass-through corporations, which are taxed on their owners' individual income tax returns, would pay a lower tax rate. Republicans who pushed for the change said it would spur job creation, but liberal groups worry it will create a tax loophole for the wealthy.

Certain agricultural exporters also would pay a lower tax rate.

Kitzhaber agreed to write a letter saying he won't sign any bill produced in a special session unless he signs them all — a pledge to Republicans that he won't veto their priorities after they help pass the measures sought by Democrats.

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