Legislature turns to budget with all eyes on schools

SALEM, Ore. (AP) Democrats in charge of the Oregon Legislature have promised to find more money for schools. This week they'll show their cards.

The Legislature's chief budget writers are expected to release their proposed two-year spending plan on Monday a sort of counteroffer to Gov. John Kitzhaber's proposal late last year and a blueprint that will drive budget discussions in the coming months.

The proposal is likely to include at least $6.75 billion for schools, which House Speaker Tina Kotek, D-Portland, has set as her top budget priority. That's $1 billion more than the current two-year budget enough to reverse some of the budget cuts that have plagued schools with fewer teachers, larger classes and shortened school years.

There will be a catch, though. Sending that much more money to the classroom would mean spending less on teachers' retirement and all eyes in Salem will be on how deep the budget chiefs propose cutting into pension benefits for public employees.

Lawmakers also could propose reducing tax deductions or credits to raise additional revenue.

"It will take some political will on both sides, but we believe we can get it done," said Rep. Peter Buckley, an Ashland Democrat who serves as one of two co-chairmen of the Ways and Means Committee, the Legislature's budget-writing panel.

Current school funding is about $5.7 billion. Kitzhaber proposed raising it to $6.15 billion, plus an additional $250 million from cutting pension benefits.

All public employers including counties, cities, school districts and the state are facing a big hike in their pension costs this summer to help repair the damage of severe investment losses during the Great Recession.

Democratic leaders have said they're open to considering pension reforms, but they must be constitutional and fair to government workers.

Rep. Dennis Richardson, a Central Point Republican and former Ways and Means co-chair, said he'd like to see cuts to public-employee pensions and also a shift of money from human services to education. He said human services expenditures which include safety-net programs for low-income Oregonians, seniors and the disabled have risen faster than education spending.

"This trend of expenditure allocation cannot be continued, and the ones who suffer most are the students in our Oregon public schools," Richardson said.

That could be a tough sell to majority Democrats.

Buckley said the budget will also rely on a renewal of a tax on hospitals to help pay for Medicaid, the government-funded health plan for people with low incomes. Hospitals have agreed to support a renewal of the tax for two more years and also to hike it 1 percentage point to raise additional money that would be used to help them enact new Medicaid reforms approved last year.

The tax is projected to raise about $600 million over two years. Because it raises state revenue, the tax requires support from three-fifths of lawmakers and will need votes from some Republicans.

The agreement of the hospitals, the Oregon Health Authority and coordinated care organizations that administer Medicaid is crucial to ensuring it passes, Buckley said.

"I cannot tell you how important it is that we got that done," he said.

Hospitals support the tax because it ensures thousands of people keep their health care coverage. Otherwise, they'd seek emergency-room care for which hospitals would not be reimbursed.