Budget shortfall prompts meetings.

Byline: DAVID STEVES The Register-Guard

SALEM - Gov. John Kitzhaber insisted Wednesday that he "isn't wed" to the idea of a temporary income-tax hike to balance the budget - he just can't see a better way to do it.

"I'm not wed to this. I haven't drawn any lines in the sand," he told reporters during a briefing on the $880 million shortfall in the state's $11.2 billion general fund for 2001-03.

Likewise, the Legislature's two top-ranking leaders each said that as they start negotiating with Kitzhaber today over how to handle the shortfall, they're not ruling out the governor's tax proposal.

Kitzhaber, a Democrat, will meet with Senate President Gene Derfler, R-Salem, and House Speaker Mark Simmons, R-Elgin. In addition, the two presiding officers will meet with other legislative leaders and rank-and-file members over the next three days to determine how best to deal with the shortfall. Plans call for a special session this month, although no date has been set.

Kitzhaber last week proposed a combination of revenue options, including a three-year increase in income tax rates, to close the shortfall in a way that avoids additional program cuts and erases an expected $1.3 billion shortfall for the next governor and Legislature in 2003-05.

He said he was proposing such a tax-raising proposal for voters to consider in September because the size of the shortfall and the lateness of its appearance - midway through a two-year budget cycle - had forced him to rule out other options.

`I don't see what the alternatives are. If someone could come up to me - and maybe this is what Gene and Mark will do tomorrow - and say, `Here's how we're going to balance the budget without using the income tax,' then more power to them,' Kitzhaber said.

Simmons and Derfler, both back on the job for the first time since their return from a two-week trade mission to China, said they did not oppose Kitzhaber's proposals, but they expressed skepticism about whether the Republican-controlled Legislature and voters would go along.

"I'm not interested in putting things to the voters that have no chance of being implemented," Simmons said.

Simmons said he was working out a proposal of his own, which would include a reduction in state spending and a boost in the cigarette tax - something Kitzhaber also has proposed. Simmons declined to disclose other details, saying he would wait until he releases his complete plan today.

Derfler said he was not ruling out any options.

"I'm willing to look at options where we can get 16 and 31 votes," he said, referring to the bare majorities in the Senate and House. "That could include an income tax, it could not include one. It depends on what it takes to get the votes."

The Legislature and Kitzhaber already have confronted an $845 million shortfall. During two special sessions in February and March, they closed about half of that shortfall with program cuts and the rest with one-time revenue from reserve accounts and trust funds.

Kitzhaber objected to the use of one-time money, saying it only delayed the tough decisions about how to bring ongoing spending in line with revenues.

Derfler said he wasn't interested in reconvening the Legislature in a third special session if no agreement could be reached first. He said under such a case, if Kitzhaber were to use his constitutional authority to order lawmakers back to Salem, he would seek to cancel the process by immediately adjourning or recessing the Senate.