A prominent legislator who helped shepherd a massive transportation package through the Legislature earlier this year is meeting resistance from leadership on his calls to prioritize budget and tax reform.
“Spending reform, tax reform and (public pension reform) are in another world of complexity as compared to the transportation package,” said Rep. Cliff Bentz, R-Ontario, in a meeting with the Pamplin Media/EO Media Capital Bureau Wednesday, Sept. 13. “We should be starting now.”
His comments came hours after a coalition called Priority Oregon announced it had filed an initiative petition to make state and local public agencies use excess revenues to pay down unfunded obligations of the Public Employees Retirement System.
The state faces potentially dramatic shortfalls for Medicaid and PERS in the next two years.
Instead, Gov. Kate Brown and House Speaker Tina Kotek, D-Portland, want to focus on passing a “cap-and-invest” carbon program in the 35-day legislative session early next year. The program would set a limit on the amount of carbon a business could emit and put a price on any excess. It would yield an estimated $700 million per year in revenue to invest in projects to slow climate change.
“If they pass cap and invest to pull $700 million a year out of our economy, are we going to go back a short year later and say we want another $2 billion to address PERS?” Bentz said. “How much can our economy stand?”
Bentz and three other lawmakers — Rep. Phil Barnhart, D-Eugene; Sen. Brian Boquist, R-Dallas; and Sen. Mark Hass, D-Beaverton — convened in late August to discuss a format for pursuing revenue and spending reform.
The Ontario lawmaker said he approached Brown and Kotek about pursuing reform ideas now.
“What I have been told is wait until March,” Bentz said.
Hass agreed that “cap and invest” policy should wait until 2019, when instead of 35 days, lawmakers have more than five months to pass laws. (The Oregon Legislature convenes for the shorter session in even years and the longer session in odd years.)
“Policies of that magnitude should be dealt with in the long session, and the short session should be to add changes that require prompt attention,” Hass said.
“I think it is fair to say we can start a process to look at that, but I think it is something we should pick up in 2019,” he added.
There are a few reasons why leadership may want to delay an overhaul of the state’s interconnected budget, public pension system and tax structure.
For one thing, it’s unclear how Congress may reform health care and tax policies that affect the state budget.
There’s talk that Medicaid funding for states could move to a block grant format, Bentz said. That potentiality and any changes to tax policy, such as policies surrounding deductions, could affect the amount of revenue Oregon brings in.
There’s also the complexity factor: simply put, tax policy is hard.
Hass, a consistent advocate for tax reform, said last month that legislators needed to address tax reform sooner rather than later, rather than risk future fiscal crises.
The Beaverton Democrat has advocated for an overhaul to the state’s tax structure, a move he believes could help address the pension system’s $24 billion unfunded liability — the amount of money that the state owes retirees that its assets cannot currently pay.
Meanwhile, Gov. Brown has convened an advisory task force looking at ways to reduce the unfunded liability of PERS by $5 billion.
“Nobody disputes the need to do this (revenue and spending reform); it’s just a question of when to start,” Bentz said.