On May 6, the Oregon Senate gave a second reading to House Bill 3427, the $2 billion education funding package already approved by the House of Representatives. The third reading, which could come any day, will call the overarching question of the 2019 session: Will Democrats use their legislative super-majorities to pass taxes without addressing public pension costs? (On May 7, GOP senators deprived Democrats of the quorum needed to vote on the bill, playing hooky en masse.)
Passing HB 3427 would be like topping off a bucket that has a hole in the side of it—much of the $2 billion would leak into pre-existing pension obligations of the Public Employee Retirement System. But lawmakers could plug the leak by requiring public employees to pay a larger share of their own retirement costs.
Sources in the Capitol say behind-the-scenes conversations between key decision makers have taken the form of a game of high-stakes poker—with each hoping the other won't call their bluff.
Here are the players and the cards they hold:
Gov. Kate Brown
What she wants: To satisfy the public employee unions who have funded the campaigns responsible for her career, Brown needs to deliver the $2 billion education funding package the House passed last week. To mollify business interests and the growing chorus of voices demanding that the money benefits students rather than flowing to retirees, Brown needs to stabilize expenditures on public pensions, which will soar without new cuts.
What she doesn't want: To fail in either objective.
Her leverage: A rarely used veto pen.
House Speaker Tina Kotek (D-Portland)
What she wants: The longest-serving House speaker in Oregon history, Kotek desperately wanted a supermajority, which allows lawmakers to pass new taxes without a single vote from the opposing party. Now she wants to deploy the power of that majority.
What she doesn't want: Kotek's even more beholden to public employee unions than Brown, who is term-limited from running again. The governor's proposed PERS stabilization package includes a poison pill for Kotek's key constituency—it calls on teachers (and, by proxy, all public employees) to begin contributing to their own pension costs.
Her leverage: Unions trust Kotek more than any other elected official. She's best positioned to cajole them into concessions they'd rather avoid.
Sen. Betsy Johnson (D-Scappoose)
What she wants: Significant PERS cost cuts.
What she doesn't want: Johnson, a business-friendly Democrat, hates the idea of filling the education bucket without plugging the hole in it. She also doesn't much like another top Democratic priority, the Clean Energy Jobs bill, aka cap-and-trade or a carbon tax.
Her leverage: Johnson is widely regarded as the crucial 18th vote Senate Democrats need to pass the education funding bill. That gets her almost anything she wants, except the thing even Kotek can't deliver—votes to cut PERS. For that, she'll need Republicans.
What they want: To make the 2020 elections about Democrats' challenges, rather than what the Dems would like to focus Oregon voters on: President Donald J. Trump.
What they don't want: New taxes. But they can't stop them. They also don't want to do anything that would help Democrats or shift voters' focus away from Oregon's structural financial problems, in which the cost of government persistently grows faster than tax revenues.
Their leverage: The most logical path to containing PERS costs is a coalition of Republicans and moderate Democrats. That means GOP lawmakers, rendered mostly irrelevant by Democrats' supermajorities and control of the governor's office, could team up with Brown and Johnson on PERS. But if they help on PERS, they also surrender their hole card—their ability to refer to voters what would otherwise be a giant tax hike.