PERS reform, higher taxes on the table

Legislators representing Jackson County are preparing for a vigorous debate over proposed pension reform and higher taxes after Gov. John Kitzhaber's call for a possible special session on Sept. 30.

Sen. Alan Bates, D-Medford, said legislators from both sides of the aisle will need to agree on a deal that could ultimately pump more money into schools. "I think we have a chance," he said.

Reform of the Public Employees Retirement System will require support from moderate Democrats, he said.

"Far-left Democrats don't want to touch anything in the PERS system," he said.

The proposed PERS reform asks for a multiyear cost-of-living freeze for high-income retirees but not low- or moderate-income retirees. The estimated long-term pension cost reduction could be $5 billion.

A proposed change in income-tax deductions for high-income taxpayers could net the state $200 million that could be put into schools in this biennial budget. One of the proposals is to not allow a senior medical credit for high-income Oregonians.

To gain support from moderate Republicans, a proposal to offer a tax break to small businesses also is on the table, Bates said. So far, the tax break idea has received the least support, but Bates hopes that Democrats will try to work with Republicans on this issue.

Even though unions won't be happy, Bates said he's ready to vote for PERS reform, the changes in deduction, and the small business tax credit.

"Some of us really mean it when we say we will work both sides of the aisle," he said. "It's easy to say 'no' and be a flame thrower."

Rep. Dennis Richardson, R-Central Point, said he doubted any meaningful PERS reform would come out of the special session. He said he thinks the governor's real motivation is to raise taxes.

He said the approved state budget already reflects a 13 percent increase in revenue. "It just shows those in charge never have enough money," Richardson said.

He also is suspicious the governor and Democrats might overturn the concessions to Republicans while continuing to support a tax hike.

"Republicans have no confidence any deal that would be made would be honored in the next session," he said.

The ideas being proposed for the special session were debated when the Legislature met earlier this year.

"Nothing has changed since that session," Richardson said.

Kitzhaber has tried to reach across the aisle for a deal that would raise revenue to boost funding for schools and mental health treatment while lowering the cost of public employee pensions. Kitzhaber said he's committed to including support for small businesses — a key demand from Senate Republicans.

Kitzhaber said he will meet with House and Senate leaders from both parties in hopes of securing a deal before holding a special session.

Rep. Mike McLane, R-Powell Butte, stated in an email that he supported a special session if the governor pushes for additional PERS reform urged by Republicans.

Reach Mail Tribune reporter Damian Mann at 541-776-4476 or

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