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Business leaders offer deal: tax increases for PERS reform
Business leaders focused on revenue reform and state spending as part of their 14th annual leadership summit.
PORTLAND — Emboldened by victory in defeating a corporate sales tax measure last month, business leaders at the Oregon Leadership Summit Monday offered state policymakers and public unions a bargain: They will support new taxes if lawmakers find ways to reduce the state's pension costs.
"We all want to invest more in those programs and services that will produce outcomes for Oregonians, but in order to do that we have to be able to demonstrate to taxpayers that the dollars will, in fact, be invested in ways that will drive meaningful outcomes," said Patrick Criteser, president and chief executive officer of the Tillamook County Creamery Association.
State budget writers face a $1.7 billion shortfall in 2017-19. In lieu of new revenue, they are forecasting cuts across state government, from higher education to human services.
The increase in costs stem largely from scaled-back federal funding for health care subsidies under the Affordable Care Act, increasing caseloads for people with disabilities and higher costs to cover the nearly $22 billion unfunded liability in the Public Employees Retirement System.
The corporate sales tax, devised by a public employee union-backed group and contained in Measure 97, would have raised an additional $3 billion per year, eliminating next year's revenue shortfall.
Voters rejected the tax measure after a bitter and costly battle between opponents from the business community and the union-backed coalition, A Better Oregon.
The state's relatively generous pension plan for public employees has long been a sticking point for business leaders.
"If we don't address PERS, any new taxes will not be invested in helping more kids graduate from high school," Criteser said. "It will be invested in paying existing obligations, and skepticism about the value of government will grow rather than diminish."
Oregon Supreme Court rulings have restricted lawmakers to two options for PERS reform, said Tim Nesbitt, former adviser to Govs.Ted Kulongoski and John Kitzhaber and past president of the Oregon AFL-CIO.
"We can reduce benefits yet to be earned by current and future employees, or we can ask employees to pay at least some of the cost of their future pensions," Nesbitt said.
"These options demand a shared responsibility among all stakeholders."
Several members of SEIU Local 503 and Oregon AFSCME gathered outside the leadership summit at the Oregon Convention Center Monday to highlight how PERS benefits public employees.
"Many of us are working for less than we would in the private sector," a pamphlet from the unions states. "We agreed to that with the understanding that we would have secure retirement. Now we are facing further retirement cuts. That breaks the promise made to us."
Business leaders gave no specific proposals they would support for raising taxes on business. One example of a possible revenue source is a proposal from early 2016 by Sen. Mark Hass, D-Beaverton, to levy a small commercial activity tax on corporations, Criteser said. Hass said last week that he is running numbers on how much revenue could be raised from the tax. His proposal last year would have raised about $500 million.
Gov. Kate Brown, who gave the keynote speech at the summit, challenged business leaders to bring her revenue proposals they can support.
"You might think that that puts a tremendous burden on me as your governor to find another way to fund Oregon's future," Brown said, referring to Measure 97's defeat. "But I'm here today to state that the price of victory is responsibility — both for me and for you."
Brown and House Speaker Tina Kotek, D-Portland, both endorsed Measure 97 during the campaign.
At last year's leadership summit, Senate President Peter Courtney, D-Salem, urged lawmakers, unions and business to reach a compromise on Measure 97 before the election. On Monday, he continued his message of collaboration.
"A state whose political and economic forces are always at odds will never be all that it can be," Courtney said.
The leadership summit marks the Oregon Business Council's release of its annual Oregon Business Plan. The plan makes recommendations for statewide policy on issues that affect business, including taxes, state spending, labor regulations and educational outcomes. In the past, the summit has focused on a variety of issues. This year, however, the agenda was "laser-focused on the state's long-term fiscal future," Criteser said.
By Paris Achen
Portland Tribune Capital Bureau Reporter
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