10

The Kicker Could Kick

If the economy continues to go well, there is a chance that the Oregon kicker law could be triggered. That would send back approximately $290 million of the governor’s proposed $18.6 billion budget back to taxpayers. The Oregon tax rebate goes into effect when revenue exceeds the state’s two-year economic forecast by two percent.

If the kicker goes off, legislators and the governor will have to scramble to recalculate budget priorities. However, there are a number of options open to legislators that would let them kick the kicker. One is that they could vote to reject the state’s economic forecasts and essentially go along their merry way.

9

Ethics Investigation and Cover Oregon

Two sets of investigations launched last year may come back to haunt Kitzhaber.

The state’s botched, $250 million online healthcare exchange is facing an FBI and General Services Administration investigation. A pending lawsuit and counterclaim versus Oracle, the state’s primary technology contractor on the projects, might also, like the investigations, cause damage during Kitzhaber’s next term.

Prompted by two Republican complaints, the Oregon Ethics Commission is still deciding whether or not it will launch a full investigation into the governor and his fiancée Cylvia Hayes. Hayes’ roles both as ‘First Lady of Oregon’ and as a paid consultant have come into question in recent months. A full ethics investigation would create a lot of political friction for the governor at a time when he will be pushing hardest for his agenda--in the first 100 days.

8

$15 an Hour Minimum Wage

Portland-area Democrats, led by Senator Chip Shields, are backing a $15 an hour minimum wage. While there may be bipartisan support for a minimum wage increase in the legislature, a $15 an hour increase might go too far for many. The GOP will probably see the proposal as a jobs killer. The governor, who has managed to keep Salem from polarizing over the last four years, might not want the issue to drive a wedge between his support in Portland and his working relationship with Republicans and business interests.

7

Danger to His Left

The minimum wage issue is just one illustration of how liberal Democrats might kick the stool out from under Kitzhaber’s centrist feet. The Governor has tried to walk the line in appealing to the right, with PERS reform and some major tax deals for corporations like Intel and Nike, while still staying true to his Democratic base.

But with dominating majorities in both chambers, liberal Democrats have clear lanes to push through an agenda that could take Oregon even more to the left. That might make managing the state harder for Kitzhaber.

The issue looms so large that even GOP House Leader Mike McLane recently said at the Oregon Leadership Summit, “The great divide is going to be how Democrats in the Legislature deal with the governor. And I get a front row seat.”

6

PERS Supreme Court Ruling

The union representing state, county and municipal employment predicts that legislation to roll back cost of living expenses for recipients of PERS will be overturned by the court this year.

“The governor and the legislature did something we think is already pretty set in law as unconstitutional,” said Joe Baessler, Oregon AFSCME political coordinator. “They’re going to say that PERS is unsustainable, but you can’t change a deal after someone’s retired.” 

State legislators and the governor worked to enact the decrease in cost of living expenses in 2013. It was hailed by many as a major accomplishment towards reducing the massive state debt the pension fund is creating. But if the courts overturn the effort, it could be back to square one.

5

LNG Terminal in Coos Bay

Before it can move forward, a proposed $7.5 billion Liquefied Natural Gas (LNG) terminal in Coos Bay needs state approval, as it would release millions of tons of greenhouse gases annually.

The export facility, backed by Canadian energy company Veresen Inc., would revive the economically hard-hit region, but has faced widespread criticism from environmental advocates for its estimated emissions. 

Specifically, approval of the project would contradict Kitzhaber’s promise to prioritize carbon dioxide emissions. On the other hand, Kitzhaber, a doctor from Southern Oregon, will have a hard time killing a project that could bring jobs to this economically depressed coastal area.

4

Common Core Rebellion

Oregon was one of the first states to adopt the Common Core standards in 2010, which measure language arts and math skills. The standards are intended to better prepare students for post-secondary success by emphasizing critical thinking.  

Widespread pushback from teachers, parents and legislators includes a bill requested by the Oregon Education Association and backed by Reps. Susan McLean, John Huffman and Margaret Doherty calling for a moratorium on the test. 

3

SEIU Executive Pay Cap 

The union SEIU agreed in February to drop a ballot measure that would limit the salaries of executive directors at Oregon's nonprofit hospitals. The measure called for executives to be paid no more than 15 times the wages of the hospital's lowest paid employee. 

SEIU contends that high pay for executives drives the cost of medical care up, but does not correspond to a higher quality of medical care. 

Kitzhaber most likely wanted to keep what many saw as a divisive labor-versus-business fight out of the political landscape. But SEIU might bring the measure back up for consideration by voters. 

2

K-12 Funding

The Governor’s $9.5 billion education budget was hailed as a milestone for Oregon’s investment in education last December. But amid major new increased spending on Pre-K programs is a mere 4 percent increase in core K-12 grade funding, according to experts.

Educators and school administrators from all corners of the state have been grumbling that the governor’s budget does not fund core services enough to avoid cuts to teachers, programs and school days. 

”People have been pushing back really hard on that [budget] number,” said Tony Fick, executive director of Stand for the Children of Oregon. “It’s our job to make sure that kids don’t have fewer teachers and less days. We recognize that it’s not all about money--it’s about outcomes. And we need to have both conversations in Salem.”

Tax Reform

Kitzhaber has backed away from his talk of having a statewide conversation about tax reform. Oregon’s tax system gets blasted from all sides. Its reliance on income tax makes revenue volatile, while making the state less attractive to investors compared to income-tax-free Washington State. Meanwhile, critics have stated that Oregon has the lowest effective business tax rate in the nation.

Despite Kitzhaber’s apparent apprehension to talk about major tax reform, incoming Senate Revenue Committee Chair Mark Hass has been more than happy to speak on the issue. Hass has said that for him, all tax issues are “on the table” including income tax, the third rail of Oregon politics. Hass and Portland liberal Democrats may make it uncomfortable for the governor if they push for even “revenue-neutral” reforms.