Negotiator-in-Chief Issues Challenge

In a rare pre-May forecast press conference, Governor Kitzhaber challenged lawmakers to agree to a grand bargain on PERS and new tax revenue or face a shriveled budget for education. He also called on lawmakers to take a bipartisan look at tax reform.

In his third term, Kitzhaber has become known for his keen negotiations skills that have helped to ensure bipartisan passage of his major policy initiatives during the last two sessions.

His methods have included bipartisan legislative leadership meetings at Mahonia Hall, weekly meetings with presiding officers, one-on-one diplomacy with key members, attending caucuses of both parties and, when necessary, public pressure to break logjams in negotiations. He clearly resorted to the latter yesterday.

Signaling that the legislature is at a crossroads and faces a “partisan impasse,” the governor used his public “bully pulpit” to call on legislative leadership to take on two major challenges:

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Tax Measures and Tax Reform

When Oregon voters receive their ballots this weekend, they will confront three very different tax measures, which could have an impact on the prospects of comprehensive tax reform in the state.

The ballot measures deal with prohibiting more real estate transfer fees, phasing out the estate tax and modifying the corporate income tax kicker. Proponents of comprehensive tax reform in Oregon worry the measures could remove issues from discussion that could sweeten a broader tax measure.

So far, none of the tax ballot measures has stirred much public debate, overshadowed by the higher profile and more costly fight over two measures to allow privately owned casinos in Oregon.

The three tax measures have received spotty editorial support. Measure 79, which would place a ban on future real estate transfer fees in the Oregon Constitution, has been called overkill since there already is a statutory ban in effect. Measure 84, which phases out the estate tax, has been questioned because there already is a $1 million estate exemption. Measure 85, which redirects corporate income tax kicker rebates to K-12 schools, has been criticized because it won't automatically mean more money for education.

Local government officials seem resigned that the constitutional ban on real estate transfer fees will pass, with financial backing by the National Association of Realtors. Washington County is the only Oregon municipality with a real estate transfer fee in place. While there weren't any nascent plans to challenge the statutory ban on such fees, some local officials have suggested the tool would be appropriate for capital projects such as restoring and modernizing county courthouses.

Backers of the estate tax repeal have branded their effort as ridding the state of a "death tax" that cripples family-owned small businesses. However, the Legislative Revenue Office estimates the repeal, when fully phased in, would result in an annual tax savings of $120 million, suggesting it would have a fairly limited impact.

Opponents of Measure 84 also have identified a potential flaw, which they say could create an unintended capital gains loophole.

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Digital Dialogue on Public Issues

Oregonians and their political leaders have some large, looming conversations on education, health care and taxation.  An Internet "uncaucus" could be the answer.

It figures groups in Iowa, which is synonymous with presidential caucus politics, would be the creators of the uncaucus. The Des Moines Register, Reddit and Dwolla have scheduled the Iowa Internet Uncaucus 2012 this Saturday and expect to draw thousands of Iowans in person and online.

The nonpartisan event will feature 15 speakers who each will have five minutes to present an issue of relevance to Iowans. After the talks, in-person and online attendees will have a chance to engage on those issues. The goal, sponsors say, is to "crowdsource a platform for raising awareness on issues that matter most in the Iowa community."

"The Iowa Internet Caucus wasn't meant to draft legislation or advance delegates," explains Jordan Lampe, who works for Dwolla, which offers an online service to transfer money. "It was created to inform our representatives, inspire civil discourse and key in our neighbors on the issues that matter most to us as Iowans."

In the back of the organizers' minds is creation of a new format that can engage a wide swath of citizens in a discussion of public issues. Lampe told Mashable reporter Alex Fitzpatrick, "We're laying the foundation, a pre-packaged structure for somebody that's motivated to go out and create something new. There is no reason why Minnesota or Ohio couldn't have an Internet caucus."

The event is a bit like Technology Unleashed on Public Policy. The speeches will be streaming live and there will be themed video chat rooms, Google hangouts, online voting systems and document sharing on Google Docs and Dropbox. The event also has its own Twitter account (@IowaUncaucus) and hashtag (#uncaucus2012).

Online access and editing tools are part of the organizers' goals of openness and transparency in public discussion. "It's very similar to how the Internet works," explains community organizer Ben Anderson. "I think that's the way it's going to be in the future."

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Oregon Loses Strong, Moderate Voice

When Frank Morse announced his resignation from the Oregon Senate last week, the 30-member body — and the entire state — lost one of its most competent members. The Senate and the state also lost one of its most dedicated moderates whose hopefulness seems to be flagging.

"I have thought long and hard about this decision and I believe it is time for new energy," Morse told a hushed Senate chamber. "While serving in the legislature, I’ve worked harder than I have ever worked, but there comes a moment in one’s life when energy fades, and you know it is time to go. I love this state and I cherish the many friendships I’ve made in the legislature and throughout the state. While the work is not done, it is time for new energy to carry our state into the future."

In his final speech on the Senate floor, Morse also made a statement that, in retrospect, will characterize his state service. He urged lawmakers, one last time, to solve Oregon's tax and spending problems for "the sake of our children." Failure to do so is "destroying our state," he said. "It's destroying our schools."

Following a career as president and CEO of Morse Bros. Inc., a construction materials firm, Morse won election to the Oregon Senate in 2002. As The Oregonian put it in a story last weekend, he "was fit and well-groomed at 69 and always wore business suits and ties on the Senate floor. All business, he showed little patience for partisan antics or issues he deemed trivial."

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Time Short to Launch Tax Reform Debate

Democratic Senator Ginny Burdick surprised many political observers when she came out against Our Oregon's proposed 2012 ballot measure directing all corporate kicker refunds to K-12 education. Our Oregon, the political arm of Oregon public employee unions, proceeded and successfully placed its initiative on the November ballot.

What was surprising is that Burdick had supported past Our Oregon proposals, such as Ballot Measures 66 and 67 in 2009 that raised income taxes on corporations and wealthy individuals. Burdick didn't criticize the substance of what Our Oregon was doing. She was unhappy because it wasn't a more comprehensive tax reform proposal. Burdick told Willamette Week, “All I can hope is, it doesn’t make the ballot. It will throw a monkey wrench into real financial reform.”

Burdick and other leaders believe only dealing with the corporate kicker with take the wind of out the sails of a larger discussion on restructuring Oregon's tax system, which relies heavily on income taxes that can sag when the economy tanks.

It is too early to tell how Our Oregon's corporate kicker ballot measure will fare at the polls this fall, but it appears Burdick could get her wish about a larger tax reform discussion.

Governor Kitzhaber and his top aides have been holding closed-door meetings with business and labor leaders about what tax reform might look like. Legislators for the most part have been left out of these conversations, which has riled many, especially in Republican ranks.

Kitzhaber is at the point where he needs to decide how he wants to lead on a tax overhaul initiative. He certainly talked about it as a priority during his 2010 campaign.

Tax reform brings a whole lot of hot-button issues to the table: the kicker law (corporate and individual), capital gains taxation, a rainy day fund and even a sales tax. States with more balanced tax systems (around sales, property and income taxes) arguably have a better chance to weather economic downturns. Is Oregon finally ready to have a tax reform discussion that centers on implementing a sale tax?  Oregon voters have rejected sales tax proposals nine times.

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