Prospects for Oregon budget deal growing dim

SALEM, Ore. (AP) With prospects growing dim for a compromise that would increase tax revenue and lower employee pension costs, the Oregon Senate approved two key budget bills Wednesday after Republicans gave up on stall tactics they hoped would force a deal.

Approval of a budget for schools and a tax on hospitals and nursing homes clears the way for lawmakers to finalize a two-year budget and adjourn the 2013 legislative session.

Budget talks continued, but the optimistic tone did not. Republicans in particular were gloomy, though they stopped short of declaring dead the prospects for a compromise.

"We had an opportunity, and the opportunity is beginning to elude us in this session," Sen. Tim Knopp, a Bend Republican who has been at the center of negotiations over pension cuts, said before voting against the school-funding bill.

Months of budget talks intensified over the past week after a Eugene Democrat joined all 14 Republicans to vote down the school-funding bill in the Senate.

Lawmakers worked on a three-part deal: Tax increases that would primarily affect high-income taxpayers, benefit cuts in the Public Employees Retirement System and tax breaks for some small businesses. Most of the additional money would go to education.

But legislative leaders have been unable agree on the numbers, and both parties have gotten an earful from their political bases.

Still, Sen. Ginny Burdick, a Portland Democrat and a chief negotiator, said the Senate Finance and Revenue Committee, which she leads, will consider bills Thursday that would raise revenue and cut pension costs, but she wasn't sure whether the committee would advance them to the full Senate. The revenue bill would require two Republican votes.

Senators approved a $6.55 billion spending plan for primary and secondary schools. It goes now to the House.

"My schools need some certainty, because, guess what, their budgets are due in a few days and they need to know what the number is," said Sen. Jeff Kruse of Roseburg, one of the Republicans who voted for the schools budget. "But my friends, we could've done much better than this."

Democratic Sen. Chris Edwards of Eugene, who cast the pivotal swing vote against the budget last week, again voted no.

Other Democrats praised the bill, however, saying it will allow most school districts to avoid reducing school days or laying off more teachers after years of cascading cuts. The two-year budget is a 14 percent increase over current funding, providing $800 million in additional cash. Pension cuts enacted earlier this year will reduce school districts' costs for retirement benefits by $200 million.

Senators also passed a tax on hospitals and nursing homes, sending it to the governor. Hospitals pay the tax, which is matched by federal dollars, then returned to hospitals. The federal matching funds are a key component of the budget for Medicaid.

The House voted Wednesday to redirect corporate "kicker" tax rebates to community colleges. Oregon's constitution requires rebates if actual tax collections over a two-year budget cycle exceed projections by at least 2 percent. Corporate tax revenue is flirting with that line.

The measure, which now moves to the Senate, would send the money to community colleges instead of rebating it to corporations.

Copyright 2013 The Associated Press.