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Oregon budget talks gain momentum with econ report

Jonathan j. Cooper, Associated Press

SALEM, Ore. (AP) -- Discussions about funding for schools, safety-net programs and all the other functions of state government in Oregon will take a big step forward this week.

Economists are scheduled to tell the Oregon Legislature on Thursday how much money they expect the state to collect over the next two years. Armed with those numbers, lawmakers will accelerate the tough balancing act of divvying up the money.

The discussions are likely to revive the debate over tax increases and public-employee pensions.

The last quarterly revenue estimates, released in February, projected the state general fund and lottery would earn $16.6 billion over the next two years. Lawmakers said they expect this week's forecast — the one used to craft a budget — will be up slightly.

Democrats have proposed raising $275 million in new revenue from corporations and the wealthy, a move they say is necessary to increase funding for schools without devastating other areas of the budget. Republicans in the House last month blocked a bill that would have increased taxes on corporations and the wealthy.

Democrats control the House and Senate but need at least two Republican votes in each chamber to reach the supermajority required to raise taxes.

An uptick in projected revenue could be a significant boost to budget negotiations. It would relieve some of the pressure for tax increases, allowing Democrats to accept a smaller revenue increase without cutting back on spending.

Budget leaders in the House and Senate have pledged to push for $6.55 billion for schools, an increase of about 14 percent over their current funding, no matter what else happens with pensions, taxes and funding needs for other services.

"We'll do everything we need to do to make sure that we at least get that number for the schools," said Rep. Peter Buckley, D-Ashland, chief budget writer in the House. "It's a priority."

A bipartisan group of senators is working on a compromise that could raise additional revenue and cut public-employee pensions beyond the level they were cut last month. It's too soon to know whether the negotiations will bear fruit, and whether they'll result in a bill that could get through the House, where Speaker Tina Kotek has consistently said she opposes steeper pension cuts.

"It's my belief that it would be hard for the House to ignore a bipartisan solution that comes out of the Senate," said Sen. Tim Knopp, R-Bend, who is negotiating pension issues.

Democrats are already moving ahead with one key piece of the budget, the "provider tax" on hospitals and nursing homes that provides a big share of the state funding for Medicaid. The tax is matched by federal dollars, so the money ultimately comes back to providers at a higher rate. Some Republicans complained Friday that the Democrats are moving the measure too soon.