State budget deal falls through

Democrats and Republicans in the Oregon Legislature wasted no time blaming each other for the unraveling Tuesday of a major budget deal for schools and other services.

"Frankly, we failed," said Sen. Alan Bates, D-Medford. "We couldn't get the Republicans there."

Bates blamed Republicans, but Republicans faulted Democrats for asking for a tax hike that wasn't necessary to balance the budget, while failing to heed Republican demands for a $150 million tax cut for corporations.

A massive $5 billion, long-term reduction for the Public Employees Retirement System was sent back to committee after the deal fell apart over disagreements that the bill didn't go far enough.

"If you're not going to fix the PERS crisis, we're not going to give you a tax increase," said Rep. Dennis Richardson, R-Central Point.

Richardson said the PERS reform engineered by Democrats is mostly just kicking the problem down the road and is another example of bowing to the powerful public-employees union lobby. Also, Richardson said, a tax increase shouldn't be necessary because the state has realized more revenues. The K-12 portion of the proposed budget jumped about $1 billion over the previous biennium to $6.75 billion even without the increased tax, he said.

"They're just being dishonest," he said. "When they say they blame the Republicans, I don't know how they can keep a straight face."

Senate President Peter Courtney said he would allow a vote on PERS pension cuts only if the tax bill passed. House Bill 2456 would raise $200 million by increasing corporate taxes, income taxes, tobacco taxes and limiting senior medical deductions.

Senate Bill 857 would reduce the unfunded liability of PERS by $5 billion.

Democrats hoped to entice a few Republicans to join them as the Legislature attempts to wrap up this session. Tax increases require a three-fifths majority to pass, so Democrats, who control the Senate 16 to 14, needed four Republican votes. Only Sen. Bruce Starr (R-Hillsboro) joined them.

When it was clear the measure would fail, both Starr and Bates switched their votes to "no."

Bates said his switch was a move to keep House Bill 2456 alive in hopes that a possible compromise could be reached.

Bates said the PERS reform would provide real changes that have a chance to stand up to court challenges, rather than piling on extra reforms sought by Republicans that wouldn't pass constitutional muster.

"I'm totally burned out with Republicans," Bates said.

He said the tax cuts sought by Republicans would have required extensive rewriting of the tax code and would have taken at least a year to figure out all the technical ramifications. Rep. Sal Esquivel, R-Medford, said it's difficult to believe Democrats when they charge Republicans with obstructionism.

"The truth of the matter is that they are in charge of the House, the Senate and the governor's office," he said. "How can we obstruct that?"

Esquivel said he would like to give education more money, but he said he won't do it by raising taxes.

"Right now, if the Legislature gets $1, it wants to spend $1.50," he said.

Reach reporter Damian Mann at 541-776-4476 or

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