SALEM, Ore. (AP) - Gov. Kate Brown and Oregon’s two highest-ranking lawmakers say Democrats have conceded their months-long effort to convince at least two Republicans, one each in the House and Senate, to get on board with a scaled-back Measure 97 business tax that voters rejected last fall.
Brown’s joint statement with Senate President Peter Courtney and House Speaker Tina Kotek rattled the hallways of the Oregon Legislature Thursday, prompting a change of course for the remaining weeks of the 2017 session that still has key issues to address: K-12 education, long-term transportation package and balancing the 2017-19 budget.
“It has become clear that the Legislature will not have the necessary support to achieve structural revenue reforms this session,” they wrote. “Still, we have laid the groundwork for long-term reform to bring balance to our budget and tax system. As the Legislature closes out its business, we will also start planning the next steps to lead to success in the 2019 session.”
Lawmakers have less than three weeks left in the 2017 session, and gridlock between Democrats and Republicans over the business tax overhaul has been stalling progress on other issues. Wednesday’s passage of several health care-related bills, including a large “provider” tax for Medicaid, alleviated some tension by helping whittle down the upcoming budget deficit from $1.4 billion to roughly $500 million.
Brown said the $8 billion transportation infrastructure package is, contrary to recent rumors, “still alive at this point.” She said the statewide hiring freeze ending June 30 that she ordered earlier this year will be extended, although it’s unclear for how long, to help curb government costs.
She also explained the rationale behind postponing the tax reform debate to 2019 rather than 2018, an election year and when the session would last for only five weeks.
“It takes a full legislative session to vet structural changes to Oregon’s revenue situation, I think I would’ve liked to have a process leading up to that,” she said. “Ballot Measure 97 and the battle over that prohibited that table or that level of collaboration.”
The state’s teachers union, the Oregon Education Association, could outpace Brown’s plan in 2018 when it may go to the ballot with a scaled back version of Measure 97.
“Let’s be clear: our elected leaders and business community have failed our students,” OEA President Hanna Vaandering said in a statement. “There is ample time to raise the revenue needed to invest in our schools … but if they don’t, we plan to take this issue directly to the voters in 2018.”
On Monday, Democratic Sen. Mark Hass, who co-chairs the Tax Reform Committee, made a last-minute pitch to raise $500 million next biennium by raising the existing corporate income tax, rather than a so-called gross receipts tax that Measure 97 would’ve imposed. That plan appeared to have sway with some Republicans, but not House Democrats.
As of Wednesday, House Democrats moved a proposal out of committee to repeal a small business tax break that came out of former Gov. John Kitzhaber’s 2013 bipartisan “Grand Bargain,” which included major pension changes that were later overturned by the courts.
The House Democrat plan would raise about half as much money as Hass’s pitch. It also irked Republicans in both chambers, with Senate Republican Leader Ted Ferrioli calling the grand-bargain repeal a “heist.”
“The Senate will not permit the Speaker of the House to hold hostages, derail our bipartisan progress and jeopardize the credibility of the Legislature,” Ferrioli said. “The Measure 97 hidden sales tax was massively defeated and we will not pay the gross receipts tax ransom the Speaker is demanding.”
A final vote on an $8.2 billion K-12 funding package - the state’s biggest-ever and an 11 percent increase from the current budget cycle - is coming up Tuesday. The House was supposed to vote earlier this week, but Democrats delayed it in hopes of cobbling together another $200 million for schools.
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