Editorial: No bargain? Not so grand

Instead, the state Office of Economic Analysis issued its quarterly revenue forecast, which revised the state government’s projected income during the current biennium downward by $37 million. That’s a minor adjustment, requiring no significant budget revisions. But it also shows that economic recovery has not shaken off its chronic anemia, and that Oregon can’t count on a boom in revenues to provide the resources to adequately fund public education and other state services.

Days after the Legislature adjourned its regular session in July, Kitzhaber said he hoped to bring lawmakers back to Salem for a special session to address what he called “unfinished business.” The Legislature approved a rollback in PERS benefits saving $460 million over a two-year period, mostly by limiting cost-of-living increases. Kitzhaber wanted additional reductions in the $900 million range, along with about $200 million in tax increases.

The governor spent part of the summer barnstorming the state, meeting with legislators one-on-one and holding public meetings to promote what has come to be known as the “grand bargain”: Republicans would get the larger PERS reductions they unsuccessfully sought during the regular session, while Democrats would get tax increases whose approval could not be secured because of a lack of Republican support.

Such a bargain could remove a political target from public employees’ backs. Petitions are circulating for an initiative that would make Oregon a “right-to-work” state, allowing employees to opt out of paying union dues. The proposal is aimed primarily at public employees, who now make up the bulk of Oregon’s unionized workforce. Further reductions in PERS benefits would weaken initiative supporters’ argument that public employees wield unchecked political power, and could also leave voters feeling that public employee unions do not deserve a further blow in the form of a right-to-work law.

The grand bargain might also deflect ballot measures for tax increases being prepared by Our Oregon, a union-backed political organization. The group is contemplating proposals similar to the personal and corporate tax increases approved by voters in 2010 after a bitter campaign. The public’s — and Our Oregon’s — appetite for tax hikes could be satisfied by a carefully tailored package of increases approved by the Legislature as part of the grand bargain.

Beyond short-stopping ballot measures from the right and the left, the grand bargain could also open the way for a discussion of comprehensive tax reform. The bargain would wring the current system dry, leaving little more to be obtained from PERS or tax increases. Oregonians could then look beyond those issues and begin to devise a tax system that is fair, adequate and stable.

But the grand bargain hasn’t come together. Republican legislators, rather than jumping at the chance to save more money on PERS, are demanding tax cuts as the price for their support. Democratic lawmakers have never been enthusiastic about further PERS reductions, and have not warmed to the idea.

Kitzhaber hasn’t set a deadline for calling a special session, but after Labor Day the 2014 campaign season will begin its early stages. That will make it harder for lawmakers of either party to break with their strongest supporters and sign on to a bargain of any kind. It also increases Republicans’ temptation to hand Kitzhaber a failure that might affect his decision to run for re-election.

The opportunity for a deal is still at hand, but time is running short. If the grand bargain slips away, some of the same issues will be decided at the ballot box — with results that are likely to be anything but grand.