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Published in Print: February 20, 2002, as Gov. Kitzhaber, Lawmakers At Odds Over School Funds

Gov. Kitzhaber, Lawmakers At Odds Over School Funds

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After clashing over how to address Oregon's $715 million budget shortfall, state legislators ended a three-day special session with a bailout plan that Gov. John Kitzhaber has vowed to veto, at least in part.

At the heart of the debate is disagreement on whether to tap in to millions of dollars of public school trust funds.

The special session ended in stalemate Feb. 11 when most Republicans refused to sign off on the Democratic governor's proposed tax increases, which included a 50-cent-a-pack cigarette-tax hike. The GOP legislators opted for a plan of their own.

The Republican-controlled House and Senate passed a budget-balancing blueprint that would, among other provisions, cut K-12 education funding and draw from the trust funds.

Gov. Kitzhaber opposes using school trust funds to help fill the budget gap. In an effort to bring lawmakers closer together, the governor announced that public hearings would be held as the next step toward trying to balance the state's two-year, $12.3 billion budget.

A public hearing on the education impact of the legislature's package was slated for Feb. 15. A second special legislative session seemed likely sometime later this month

Meanwhile, the rhetoric has been heated. Mr. Kitzhaber was joined by representatives of several education groups at a Jan. 31 news conference at which he expressed opposition to borrowing from the 143-year-old common school fund. Money in the fund is invested, and the proceeds go to help local schools.

"Use of the common school fund would constitute borrowing from the future to meet our current needs," the governor said. He backs beer, wine, and cigarette taxes, and a repeal of a 2000 voter-approved tax cut.

During the special session, the House and the Senate voted to borrow $120 million from the common school fund and take another $100 million from a separate school endowment fund used mainly to support school construction bonds. Those votes fell mainly along party lines. Republican lawmakers defended their plan. For one thing, they say that they didn't have the two-thirds vote needed in each chamber to raise taxes. They added that the trust funds were not being "raided," because the state could repay the loan from lottery proceeds.

The legislative plan also would put a measure on the May ballot seeking voter approval to convert the educational endowment fund into an educational stabilization fund to help local schools during tough economic times.

Lawmakers also passed a bill that would allow the state to borrow $120 million from the common school fund if the ballot measure failed—a bill the governor is expected to veto.

"It's a classic political standoff," said John Marshall, the director of legislative services for the Oregon School Boards Association.

Mr. Marshall said that other cuts proposed by the legislature would eliminate funding next year for a new program that earmarks state aid to help low-performing 3rd and 5th graders in reading and mathematics. Scheduled to testify at the public hearings, he promised a simple message: "No cuts, no gimmicks—that is the short of it."

Vol. 21, Issue 23, Page 16

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