Leaders step forward in Salem

There is something for everyone to like and dislike in the package of bills

In three days of hard work in Salem this week, lawmakers approved a package of five bills that reduce state retiree pension increases and raise some business taxes while reducing others, all to generate more money for schools, colleges and social services. The legislation is an example of what bipartisan horse-trading can accomplish when done properly, but it won't be the last word on PERS reform or on school funding.

Gov. John Kitzhaber deserves credit for pushing both parties to negotiate and for calling lawmakers into session to enact public employee pension reform his own party and its union supporters had long resisted. Union officials say they will challenge the changes in court, which was expected, but that doesn't mean the Legislature should not have acted.

The tax measure increases the tax rate on "C" corporations while lowering rates on "S" corporations, partnerships and other small business taxed at the personal income tax rate. It also eliminates the personal exemption for high-income taxpayers, boosts the cigarette tax and adjusts the state's senior medical deduction.

The Public Employee Retirement System bill ends the state's longtime practice of giving a 2 percent cost-of-living increase in pension payments every year. Instead, the first $60,000 will increase by 1.25 percent each year and any amount above that by 0.15 percent. Low-income retirees — those receiving $20,000 or less — will get a supplementary payment to ease the transition.

That formula protects the lowest-income state retirees, the ones Democrats said they were most concerned about. But the carefully drafted reform could be tossed out entirely by the Oregon Supreme Court, which would require lawmakers to come up with new revenue to sustain the pension system in the long term. Even if the court upholds the changes, the bill passed Wednesday, combined with changes enacted in the regular session, will reduce the PERS shortfall by only about 25 percent.

Kitzhaber has declared he's through making cuts to PERS. But Republicans aren't giving up. House Minority Leader Mike McLane, R-Powell Butte, called the new measure "a step in the right direction," but noted it doesn't fix the system's unfunded liability once and for all.

Even if the courts reject the changes, lawmakers were right to pass them because that question will be settled for good, and the factions can stop arguing over whether it's legally possible to cut away the shortfall and start looking for the money to make up the difference.

School districts and local governments will be looking for that long-term solution as their pension costs continue to climb.

The special session package will generate about $200 million in the current budget. Of the total, K-12 education will get half, with smaller amounts dedicated to higher education and health and human services. The 13 cents-a-pack cigarette tax increase will be dedicated to mental health services — a long-neglected part of state government.

The money for schools is welcome, but it's not enough to make a dramatic difference in local districts' fortunes. Still, every dollar helps.

One of the five bills enacted has nothing to do with schools or public employees or taxes. It bars local governments from regulating genetically modified plants. The measure was added to the special session calendar as a sweetener for Republicans, who support the agribusiness position that a patchwork of local ordinances would be unworkable. While it's always preferable to have consistent rules statewide, it's also a political fact of life that big-business lobbyists find it easier to fight proposed laws they don't like at the state level where they can put pressure on legislators.

Jackson County, where voters have placed a GMO ban initiative on the May 2014 ballot, is exempt from the new limitation, and a local ban would be allowed to take effect if the measure passes. GMO opponents in other counties, such as Benton and Lane, are out of luck.

All in all, the five bills contained some elements for both Democrats and Republicans to celebrate and some for both sides to swallow with reluctance. But that's how lawmaking is supposed to work. Our representatives in Washington, D.C., could learn a thing or two from this week's performance in Salem.

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