'A critical moment': Kate Brown, lawmakers discuss budget negotiations at Salem forum

Gov. Kate Brown, Senate Republican Leader Ted Ferrioli, Sen. Mark Hass and Tim Nesbitt discuss Oregon's budget challenges during a forum in Salem on Wednesday.(Helen Jung)

The high stakes and tensions involved in Oregon's budget negotiations were on display during a political forum in Salem Wednesday night.

"We're sort of at a critical moment," Gov. Kate Brown told an audience at Willamette University. There's "broad support" in the Legislature to pass bills aimed at cutting spending, and perhaps even enough votes to rein in public employee pension costs, Brown said. "The question is, are folks really serious about the revenue (proposals)."

Brown, a Democrat, said there's a "lack of trust on the part of folks in the progressive community" that the business community will agree to an increase in corporate taxes, even if lawmakers first cut spending and trim pension costs. Since voters rejected Measure 97's mammoth corporate tax in November, business leaders have insisted the state must cut costs before passing a corporate tax increase.

But Senate Republican Leader Ted Ferrioli, R-John Day, said voters don't trust lawmakers to spend new corporate tax revenue on education, as some including House Speaker Tina Kotek, D-Portland, have said they want to do. Ferrioli said the only way to control how the state spends additional tax revenue would be to amend the state Constitution, so the Legislature should refer a measure to voters.

"If you want to trust somebody, trust Oregonians," Ferrioli said.

Oregon's government faces an estimated $1.4 billion shortfall in the next two-year budget, if lawmakers want to maintain current programs and services. That's despite a growing economy and tax revenues that continue to overshoot state economists' projections. State spending is outpacing revenue growth due to rising personnel costs for raises, pensions and health care, as well as an increase in the state's contribution to its Medicaid program.

Brown and Ferrioli spoke before an audience of approximately 100, convened by the editorial board of by The Oregonian/OregonLive. The other panelists at the forum were Sen. Mark Hass, D-Beaverton, and Tim Nesbitt, who served as an adviser to former governors Ted Kulongoski and John Kitzhaber. Nesbitt is also a past president of the Oregon AFL-CIO.

Nesbitt said Oregon's budget situation is confounding to many Oregonians, who don't understand why the state faces a budget gap at a time of record tax receipts.

"We actually are number one in the country for revenue growth since the recession," Nesbitt said. "And we're talking about not being able to balance the budget, cutting school days."

Nesbitt attributed the situation to a variety of historical causes, including property tax cuts in the 1990s that lightened the burden on businesses and the state's mismanagement of the public pension system.

Hass, who's leading an attempt to change Oregon's corporate tax, pushed Ferrioli to list state programs on which he'd cut spending. Ferrioli, who said lawmakers should aim for $1 billion in cuts in a general fund budget of more than $20 billion, did not propose anything specific but said the Legislature should repeal some unfunded mandates that he said include a requirement to teach about the Irish potato famine.

Hass said Ferrioli's reluctance to get specific is an example of the challenges involved in solving Oregon's long-term structural budget problems. "That's part of the problem I have with that approach, is we're trying to work on policy with this ... tax, and it's hard," Hass said.

-- Hillary Borrud

503-294-4034; @hborrud

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