SALEM — The Democrats in charge of writing a new state budget said Friday they're casting aside proposed tax increases and public-employee pension cuts and will begin advancing early pieces of a spending plan for the next two years.
Democrats want to increase taxes. Republicans want steeper cuts in public-employee pensions, and each side is accusing the other of refusing to negotiate. Democratic Gov. John Kitzhaber this week proposed a budget outline he framed as a compromise. Republicans rejected it, saying the plan wouldn't do enough in the way of pension cuts.
The governor on Thursday urged lawmakers to move on with a budget based on existing revenue.
Sen. Richard Devlin and Rep. Peter Buckley, co-chairmen of the budget-writing Ways and Means Committee, said that's what they intend to do. Time is running out to begin fitting together the pieces of the spending puzzle, they said. "Unless someone's got a proposal they want to toss in immediately, we're going," Buckley said. "We've got to get budgets passed."
The state's spending authority expires June 30, and the Legislature will need to approve a flurry of agency budgets to keep them operating.
Republicans, however, insist it's the Democrats who are being inflexible. "The Democrats have, to this point, employed a go-it-alone strategy," said Sen. Tim Knopp, R-Bend.
Democrats got some room to maneuver Thursday when state economists delivered a revenue forecast that projected a significant increase in revenue over previous estimates. That means Democrats can fund their priorities without the new tax revenue they had demanded for months.
Republicans are holding on tightly to one key bargaining chip, however. Senate Republicans have refused to provide the two key GOP votes that would be needed to pass a tax on hospitals and nursing homes. The so-called provider tax would collect about $800 million from hospitals and nursing homes over the next two years, leveraging more than $1.3 billion in federal matching funds. It provides a big chunk of funding for the state Medicaid program, the Oregon Health Plan.
The key question will be whether all 14 Senate Republicans hold together in opposition to the provider tax in the face of pressure from hospitals, which rely on it to ensure Medicaid can cover thousands of Oregonians who would otherwise seek uncompensated care in emergency rooms. Several Senate Republicans already are on the record supporting the tax, although they've complained about the timing.
"I know that most of them realize there is no backup for the hospital tax and the long-term care tax, and that without those two the budget won't balance," Devlin said.