Kitzhaber Emphasizes Education Investment

Saying Oregon cannot settle for an "uneven, unequal and hesitant recovery," Governor Kitzhaber, wearing his trademark jeans, called for investment in education from pre-school through college by easing "serious fiscal constraints" that keep money from classrooms.

Entering his 11th year as governor, Kitzhaber's State of the State address centered on "difficult choices" that include "reducing the cost of health care and corrections, reducing the cost drivers that are diverting resources from the classroom and undertaking serious review of Oregon tax expenditures."

The former emergency room physician said a new "high-quality, low-cost" care model developed by Coordinated Care Organizations could restrain Medicaid inflation to 3.4 percent in the second year of the coming biennium, saving the state's general fund $100 million. Kitzhaber said shifting public employees, including K-12 teachers, to a similar private health care model could result in a game-changing $5 billion savings over the next decade. 

Stemming the state's rising prison inmate population, the governor said, can avoid spending $30,000 per year per prisoner, compared to the $10,000 per year the state spends on K-12 students.

Kitzhaber repeated his call for changes in the Public Employees Retirement System, which he said is the cause of half of the projected  $1,000 per student increase in the K-12 budget.

Explaining his proposed changes, Kitzhaber said, "This is not about the value of our teachers. It is also not about a major overhaul of the retirement system that continues to be one of the best funded in the nation. It is simply about trying to have a conversation that allows us to strike a balance between the cost of our retirement system and our ability to put dollars in the classroom today to ensure that our students are successful tomorrow."

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7 Things to Watch for in the 2013 Legislature

Oregon lawmakers are trekking to Salem for the start of the 2013 legislative session next week, which will feature heavy-duty issues such as education funding, higher education restructuring, health care transformation, prison sentencing, PERS reform, gun control and funding for a new I-5 bridge over the Columbia River.

Here are seven things to look for as the new session unfolds:

1. Leadership – New versus old 

The three key leaders in the House — Speaker-Elect Tina Kotek, Majority Leader Val Hoyle and Minority Leader Mike McLane — are all new to their posts. They worked together during the historic 2011-2012 power-sharing sessions, but how they relate to each other in this new environment with Democrats in control will be worth watching — and may very well determine whether some big issues will move or stall.

Across the building, Senator Peter Courtney will be sworn in for a historic 6th term as Senate President. Joined by Majority Leader Diane Rosenbaum and Minority Leader Ted Ferrioli, this team has worked together and knows how to negotiate in the tight corners of narrow Democratic control. 

2. Pace of the Session 

The budget has always set the pace of legislative sessions in Oregon. With one of the most experienced Joint Ways and Means co-chair teams in decades, the budget-writing committee possesses the know-how to make early decisions and move the session along quickly.

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Governor Rolls Out "Education Budget"

Governor Kitzhaber unveiled a budget proposal today that he called "first and foremost an education budget."  He said his budget "creates space for front-end investments in education and early learning by cutting back-end spending on health care and corrections." 

His 2013-15 budget, which was previewed by The Oregonian and Salem Statesman Journal today, puts controversial changes to the Public Employees Retirement System (PERS) squarely in the center of an effort to carve out more money for schools. And that could bump into political resistance from the newly Democratically controlled House.

Despite that, the atmosphere in the state Capitol was markedly different than in Washington, DC, where partisan wrangling continues over how to avoid plunging over the so-called fiscal cliff. While there is no looming fiscal cliff here, the governor's budget will only serve as the framework for the 2013 legislature to hash out a final budget with Democrats at the controls in both the House and Senate.

Senator Richard Devlin, D-Tualatin, already named to be Senate co-chair of the Joint Ways and Means Committee, was charitable toward the governor, as quoted in the Salem Statesman-Journal.  "I appreciate the governor's candor about the specific challenges we face in funding education and the Oregon Health Plan in the next biennium," Devlin said.  "With his recommended budget, Governor Kitzhaber has provided a good starting point for the budget negotiations ahead of us."

New House Republican Leader Mike McLane, R-Powell Butte, praised Kitzhaber for addressing PERS, but questioned the rosiness of revenue projections and the lack of any fund reserves to cushion the budget in case the economy falters in the next two years.

The governor's plan for more money for K-12 schools rests on the premise that the legislature will accept his recommendations to reform PERS in two ways:

• By limiting cost-of-living increases to the first $24,000 in retirement income; and

• By closing a benefit loophole for out-of-state retirees. 

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Stuck in Low Gear

The latest quarterly revenue forecast drew a sigh of relief from lawmakers who won't face the prospect of immediate spending cuts. But the accompanying economic forecast confirmed what people feel — Oregon's economic recovery is stuck in low gear.

If nothing else, the forecast served as the opening act of the 2013 legislative session.

New House Republican Leader Mike McLane seized the moment to underscore that 160,000 Oregonians are out of work and may have slim prospects if the state economy continues to limp toward recovery. "Without stronger private-sector job growth," he said, "the next legislature will have difficulty funding education and other services at the levels Democrats promised to voters in the recent election."

"As 2012 winds down," said State Economist Mike McMullen, "Oregon's economic expansion persists, but remains stuck in low gear. Growth continues to come in fits and starts — a strong quarter or two followed by a weak quarter or two, with the underlying trend remaining slow and steady." 

The forecast, which Senate President Peter Courtney said shows "signs are positive," means lawmakers won't have to break out their budget axes. But the weak recovery is certain to fuel a more intense debate in the 2013 legislative session about stimulating the economy and restraining spending.

A focal point of that debate will be changes that Governor Kitzhaber seems prepared to advance to the Public Employees Retirement System (PERS), which is projected to soak up a sizable percentage of tax revenue growth in the next biennium.

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The Results of Election Results

As Monday morning quarterbacks dissect Tuesday's election results, political operatives are busy figuring out what can happen as a result.

By virtue of Democrats reclaiming the Oregon House with a projected 34-26 margin, one party now controls both houses of the legislature, the governorship and other statewide offices. Questions abound on whether that is good or bad for various issues.

For example, will Democratic control throttle any effort to stem rising Public Employee Retirement System changes, which are squeezing K-12 schools, state agencies and local government? Public-employee-union financial and grassroots support played a major role in giving Democrats a majority in the House and may frown on any major changes.

Or, will the advent of Rep. Tina Kotek, D-Portland, as Speaker of the House help the sagging fortunes of the Columbia River Crossing project, which she strongly supports? Clark County voters dealt the latest blow by rejecting a funding measure for the extension of light rail north of the Columbia River.

And, will the legislature feel empowered to tackle thorny issues such as liquor privatization, marijuana legalization and same-sex marriage to forestall proposed initiative drives in 2014? Washington action on all three subjects could serve as motivation, as well as pressure on Kotek, who is poised to become the first lesbian Speaker of the House in the nation.

Add to that stew the frothy ingredients already on the table, including a set of expiring health care taxes, K-12 reform proposals, early childhood learning recommendations, postsecondary institutional aspirations and prison sentencing options. Not to mention a simmering concern — and debate — about how to stimulate job creation, which ranks highest on most voter priorities.

It does seem obvious that tax reform, the subject of a work group named by Governor Kitzhaber, will be an unlikely topic in the 2013 session. There isn't enough agreement in the work group, let alone among voters, and there may not be enough time to tackle the topic in an already congested 6-month legislative session.

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The Battle for the Gavel

The general election is a month away, but the plot is already thickening over who will be in control in the Oregon legislature after all the votes are counted. What's happening out of public sight is a combination of inside baseball and roller derby.

If Democrats regain control of the Oregon House, there appears little doubt Portland Rep. Tina Kotek will ascend to become House Speaker. Rep. Arnie Roblan, D-Coos Bay, who served as co-speaker in the 2011 and 2012 sessions, is running for an open Senate seat.

The bigger question is who takes over for Kotek as Democratic leader. Rep. Val Hoyle, D-Eugene, is the only declared candidate, but rumors have circulated that Rep. Tobias Read, D-Beaverton, is considering a bid for the post, which is complicated by his departure from Nike and search for a new job. 

Another logical option could be Rep. Peter Buckley, D-Ashland, but he may prefer to keep his job as co-chair of the Joint Ways and Means Committee for a third consecutive term. Another candidate who could emerge is Rep. Chris Garrett, D-Lake Oswego, who assumed the co-chairmanship of House Business and Labor after Rep. Mike Schaufler, D-Happy Valley, was stripped of the role after a scandal.

Earlier this year it looked as if there could be a rebellion in the House Republican caucus, with a handful of new lawmakers eager to be more aggressive in opposing Democrats, including Governor Kitzhaber. However, events — including a scandal that led Rep. Matt Wingard, R-Wilsonville, to drop his bid for re-election — seem to have cemented Roseburg Rep. Bruce Hanna's position as GOP leader or speaker if Republicans claim 31 or more House seats this fall.

Hanna, who enjoys a warm working relationship with Kitzhaber, which eased passage in 2011 of major gubernatorial initiatives, could still face a challenge from Rep. Dennis Richardson, R-Central Point, who favors a harder-line approach to policy issues. Richardson has served as the GOP co-chair of Ways and Means.

The sudden retirement of Senator Jason Atkinson, R-Central Point, and the primary victory of Tim Knopp over sitting GOP Senator Chris Telfer from Bend have sparked conversation about Senate Republican caucus leadership. Senator Ted Ferrioli, R-John Day, has mounted what could be described as loyal opposition in the Senate, but some expect Knopp, a former House majority leader, to inject more fire in caucus debates. Knopp has made no pubic gestures to unseat Ferrioli, but the caucus has edged to the right and may want a fresh voice leading it.

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Contrasting Views on Jobs Legislation

The Oregonian headline tells the story: "Congratulations and complaints."  Congratulations for handling the big issues of health, education and early learning reform. Complaints about the failure of a number of jobs bills.

Issues directly related to Oregon's economy tended to take a back seat during the short session in Salem, notwithstanding claims to the contrary in various post-session communications by legislators to their constituents.

In floor speeches on the Health Insurance Exchange (House Bill 4164), achievement compacts for school districts (Senate Bill 1581) and health care transformation (Senate Bill 1580), Democrats painted a picture of those major reforms mattering to small businesses in Oregon. Major business associations supported all of the reforms, but it is not clear that any of the bills will create jobs on their own. 

Democratic leaders said as health care costs go down, businesses will have more money to invest in creating jobs. Legislators on both sides of the political aisle and Governor Kitzhaber deserve credit for taking on big issues such as health and education reform.  

House Democratic Leader Tina Kotek, D-Portland, continued that theme in a piece in the Statesman-Journal, "We promised to give businesses the tools they need to grow and hire, stand up for middle-class Oregonians and prioritize the essential services Oregonians need most. Now that the dust has settled after last week's adjournment, I am happy to report that we delivered on those promises."

Republicans pointed out what was left on the cutting room floor during the legislative session and pointed the finger at Democratic opposition.

“With 190,000 unemployed Oregonians, the legislature’s inaction on jobs and the economy is inexcusable,” said House Republican Leader Kevin Cameron, R-Salem. “Nonetheless, House Republicans continued to work with the Governor and legislative Democrats to find common ground on other issues. We’ll continue to provide lea

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Legislative Control Center of Political Battles

Candidate filing day produced one clear conclusion — the political battles in Oregon this year will center on House and Senate races key to determining which party is in control when the 2013 legislature convenes. The House is split 30-30 and Democrats narrowly control the Senate 16-14.

Republicans failed to field a candidate for state treasurer or attorney general, even though the latter will be an open seat. Republican Bruce Starr is challenging Labor Commissioner Brad Avakian, a Democrat, but it is a non-partisan post.

Republicans and Democrats see the battle for control of the House through different lenses. Rep. Kevin Cameron, R-Salem, told The Oregonian, "I want to avoid the one-party situation in the future so at least there's a healthy balance in the policy coming out of this building."

Rep. Tina Kotek, D-Portland, said, "Democrats were blocked from passing stronger consumer legislation and from more closely scrutinizing tax breaks that take away money for services. We are going to get a lot of national attention... Oregon is one of the most likely legislative chambers in the country to shift to Democratic control."

Retirements could play a significant role in tipping the partisan balance in both the House and Senate. Two GOP senators are calling it quits — Jason Atkinson, R-Central Point, and Dave Nelson, R-Pendleton. Both seats tilt heavily Republican. However, the Senate seat held by retiring Joanne Verger, D-Coos Bay, could prove pivotal. 

House Co-Speaker Arnie Roblan, D-Coos Bay, is running for the seat against Scott Roberts, a Coos Bay physician. Roblan beat Roberts in 2010 in a House race. If Roblan wins again, the seat will remain in the Democratic column and it may be difficult for Republicans to control, or even earn a 15-15 split.

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