A Review of the Special Session


House Speaker Tina Kotek
D-North/NE Portland
District 44

Phone: 503-986-1444    900 Court St. NE, H-269, Salem Oregon 97301
Email: rep.tinakotek@state.or.us     Website: http://www.leg.state.or.us/kotek

Dear Friends and Neighbors,

Last week, the Legislature completed a three-day special session (September 30-October 2). Called back to Salem by the Governor, legislators worked hard to craft and pass a package of bills in order to do more for education. No one was 100% satisfied with everything we did. But, in doing the work we were asked to do, it was important to make sure the perfect did not become the enemy of the good.

We did good things. We accomplished a bipartisan deal, something that is very rare these days. We prioritized more money for education, mental health care, and programs for seniors. We helped working families. But we also made some decisions that have to be watched very closely. I won’t sugarcoat the imperfections, but I hope you can help me make them better in the months ahead.

Before summarizing what was accomplished, I first want to say thank you. Thank you for the hundreds of emails and phone calls you sent my way after the Governor announced he had reached an agreement on a “grand bargain” framework with legislative leaders. While I’ve only been able to respond to a few of you personally over the last two weeks, I want you to know I did hear you and did my best to incorporate your hopes and concerns.

I apologize in advance for a longer-than-usual newsletter. A special session of this complexity deserves a detailed explanation.


The “Grand Bargain” Framework – All or Nothing


On September 23rd, the Governor issued a proclamation calling the Legislature to convene on September 30th to “boost education funding, restore school days, turn the corner on teacher layoffs and provide tuition relief.” With only a week to hammer out all the details, legislative leaders worked to draft a package of bills that would, if passed together, secure the necessary support to raise additional revenue for education and reduce the unfunded liability in the Public Employees Retirement System (PERS).

Achieving these two main objectives alone proved difficult, thus the “deal” grew to include a small business tax cut, some additional PERS policy changes, and legislation to address local agriculture policy regarding genetically modified organisms (GMOs).

The Governor stated he would veto all the bills if any of them failed to pass.

On Day Two of the session, five bills came out of the Joint Committee on Special Session:

  •          Senate Bill 861 – modifies cost-of-living adjustments under PERS
  •          Senate Bill 862 – makes policy changes in PERS related to health insurance payments, convicted felons, and legislators in PERS
  •          Senate Bill 863 – preempts the local regulation of agriculture
  •          House Bill 3601 – changes tax policy, including raising corporate income taxes, reducing taxes for certain types of small businesses, expanding the Earned Income Tax Credit, and raising cigarette taxes to fund mental health services
  •          House Bill 5101 – allocates new dollars to schools, community colleges, universities, senior programs, and mental health programs

On Day Three, we voted. All five bills passed. SB 862 and HB 5101 passed nearly unanimously. The other three bills were more contentious.


Reducing the PERS Unfunded Liability


Despite the rebound in the stock market, retirement systems across the country are still struggling to make up for the Wall Street excesses that caused the Great Recession. Unfortunately, public employees – both current and future retirees – continue to have to step up to bear the burden of fixing the problem. The Legislature approved some changes to the cost-of-living adjustment (COLA) when we met in the regular session earlier this year.

Those changes helped us invest $1 billion more in K-12 education.

However, the potential impact of the system’s problems in future biennia caused the Governor to push for more from PERS. While we had already cut the unfunded liability by $2.6 billion, he wanted us to do another $2.0 billion more in savings.

As we did in the regular session, we tried to be as fair and legal as possible in further adjusting the COLA, recognizing that retirees would be affected by the changes. This year all PERS retirees receive a 1.5% COLA. Next year, the first $60,000 in benefit dollars will have a 1.25% COLA, with any dollar over $60,000 getting a 0.15% COLA. To alleviate some of the immediate impact, retirees will receive a supplemental check equal to a 0.25% COLA, capped at $150. That check will not roll up into their cumulative benefit. Lastly, retirees with benefits under $20,000 will get an additional 0.25% COLA supplemental payment to help them make ends meet. The PERS Board is required to report in 2018 on its recommendations to return the COLA to its previous levels.

All of these changes will have an expedited review by the Oregon Supreme Court. If the Court finds these changes to be unconstitutional, I agree with the Governor that no further changes should be pursued.


Raising and Cutting Taxes 


Almost every Oregonian would agree that we need to prioritize dollars for education and for essential services like mental health care and programs to help seniors live independently. The revenue bill we passed helps us do that.

By requiring corporations with profits above $1 million to pay more and eliminating the $183 personal exemption credit for higher-income households, we can put $150 million more into schools, community colleges and universities during the current two-year budget. With an increase in the cigarette tax, there will now be a dedicated funding source for mental health.

The state’s Earned Income Tax Credit will be expanded to provide greater tax help for low-income working families. Lastly, over 70,000 more seniors will have access to the state’s special senior medical deduction because it will now be a capped subtraction versus an unlimited deduction for people who itemize. 

Since revenue measures require a 3/5 vote (rather than a simple majority), the tax package included two tax cuts to garner votes: one for certain export-based companies and one for small businesses who file as partnerships or S-corporations. The small business tax cut caused a lot of consternation because several legislators, both Democrat and Republican, were concerned about how it is structured, who it helps, and what it might cost in future years. This new tax policy will need further refinement and greater accountability. I look forward to working with my colleagues to improve it. That’s the commitment I made to the three members who changed their votes to help pass the bill.


Grappling with GMOs and Local Agricultural Regulations


The odd man out in the deal was an agricultural policy bill almost identical to one that didn’t pass the House during the regular session. Depending on your point of view, Senate Bill 863 was either a way to ensure policies regulating agricultural production are set by the state or an infringement of the rights of citizens to pass county-level measures to protect farmland from genetically modified seeds. I was glad we were able to include language to allow Jackson County’s already-approved local measure to go to voters this coming May. I was unsuccessful, however, in my effort to keep the bill from becoming effective upon passage, thereby denying citizens their right to pursue a referendum to overturn the bill.

The upside of this entire debate has been greater public awareness about GMOs and a commitment from the Governor to exercise his current authority to protect non-GMO farms, study the issues (such as labeling and consumer choice), and bring forth possible statewide legislation in 2015.


Investing in Education and Other Essential Services 


In a recent survey of Oregonians about their values and beliefs, education (both funding and quality) was the top issue that people thought state government should address. We did that in the regular session, and the special session continued that prioritization. The special session provided $150 million more for education, as well as more dollars for mental health care and programs for seniors. Here’s the breakdown:


K-12 State School Fund - $100 million for the 2014-15 school year to hire additional teachers and/or other educational professionals in order to decrease class sizes and to add back days to the school year in order to increase instructional time for students. 

Community Colleges - $15 million for 2014-15 to freeze or limit the increases in tuition and fees.

Public Universities - $25 million for Winter and Spring 2014 terms and for 2014-15 to limit tuition increases.

Senior Programs - $41 million, including Oregon Project Independence and senior and disabled transportation.

Community Mental Health Services - $20 million, including full funding for children and adolescent mental health, community-based crisis services, supported housing, and peer delivered services.

Children, college students, seniors, and people living with mental illness will all benefit from the actions the Legislature took this week. It’s one more step to keep Oregon’s future on track.


Striving for Transparency

Many of the complaints about the special session involved concerns about the process. While it was certainly an abbreviated process, it’s also important to point out that all of the issues considered in the special session had some level of discussion during the regular session. There wasn’t a lot that was new, but the packaging of them all together certainly was. My office made sure there was as much opportunity for public participation as possible. While the Governor exercised his authority to convene the Legislature to take up certain issues one more time, we did our best to balance efficiency and transparency.

Hopefully, history will judge this week’s special session kindly, not just for the bipartisanship and cooperation to achieve a goal, but by the lasting benefit to the state. It will be up to all of us to be vigilant in making sure the good attempted does in fact yield real positive results in the long run.

As always, it is a pleasure to represent you.


Best wishes,



Tina Kotek

State Representative

House District 44

Speaker of the House