Budget woes still rising as veto showdown nears.

Byline: DAVID STEVES The Register-Guard

SALEM - Regardless of how lawmakers deal with Gov. John Kitzhaber's vetoes of a pair of budget bills, there's one thing they - along with parents, students, educators and others - can count on:

More budget uncertainty.

Thanks to a shaky economy and a pair of measures on the September ballot, the Legislature could be faced with a budget hole of up to $500 million or more. And that's if lawmakers deliver a stinging, unprecedented rebuke to Gov. John Kitzhaber on Friday by overriding his vetoes of two budget bills they approved in a June special session.

Should the Legislature fail to rally the two-thirds majorities in both chambers for the two bills, an additional $317 million will be added to the tally of budget woes.

On paper, that adds up to $817 million. Should additional forest fires force the state to burn through its $43 million wildfire insurance policy, it could end up exhausting what's left of its emergency fund, adding a few million dollars more to the red-ink tote board.

The $817 million figure isn't as large as the $860 million shortfall lawmakers faced in their June special session or the $845 million budget gap they spent two special sessions filling in February and March.

But it's big enough to cause legislators to shudder at the thought of once again returning to Salem for a special session.

"We have not had good choices in front of us and have had difficult choices to make every step of the way," said Sen. Susan Castillo, D-Eugene, as she reviewed the long road leading up to next week's special session and the possibility of another session in September. "And then, here we go again."

With Friday's showdown between Kitzhaber and the Legislature looming, it's difficult for statehouse players to separate the fate of the two budget bills on the agenda from the possibility of more bad budget news just around the corner.

Kitzhaber's chief of staff, Steve Marks, said lawmakers are whistling past the graveyard if they think they can make their problems disappear by undoing the governor's two vetoes.

"If they override the governor's vetoes, we still anticipate that they'll be back here in September to deal with the shortfall," he said.

Kitzhaber's vetoes struck down one bill that sells $50 million in bonds to pay for education and another that lets the state put off $267 million in payments to public schools and community college districts until the next budget cycle, then lets those districts borrow money until the delayed funding arrives.

Marks said that if legislators side with the governor and let his vetoes stand, they will have a chance at a subsequent special session in September to craft a temporary income-tax referral that could replace money lost to the vetoes and offset an anticipated drop in tax revenue caused by the poor economy.

Those who oppose Kitzhaber's vetoes, however, contend the upcoming budgetary wild cards are precisely the reason his decision to veto two key bills is a problem.

Kitzhaber, who could have vetoed the bills in early July, instead waited until just before his 30-day deadline was set to expire, as it did Friday. Now, when lawmakers return to Salem next week, they will be only two weeks removed from the date that mail ballots start going out to voters for the Sept. 17 special election.

Those ballots will ask voters to approve a $150 million appropriation to schools from a rainy-day fund and to increase tobacco-tax revenues by $115 million for the current budget through a 60-cent boost in the tax on each pack of cigarettes. The cigarette-tax increase also would provide new money to pay back the $50 million in bonds that Kitzhaber vetoed. If his veto is overridden but the tax measure fails, the state would have to repay the debt through its existing cigarette tax.

Castillo, who was elected in May as the next state schools superintendent, said she's worried that lawmakers won't be able to concentrate on campaigning for those two measures.

"What's so frustrating for me right now is, we're focusing on these vetoes when all of us should be working on a united effort to assure that everything we sent to the ballot passes," she said. "That's where all of our focus and energy should be."

Even with the vetoes, the anticipated revenue shortfall and the uncertainty surrounding next month's election, some lawmakers are holding out hope that they might be able to limit their time in session to one day next week to deal with Kitzhaber's vetoes.

For them, the best-case scenario works like this: Lawmakers override both of Kitzhaber's vetoes. When the next revenue forecast comes out Aug. 29, it shows a shortfall of $175 million or less. Voters pass the two measures on the Sept. 17 ballot and the fire season calms down.

Thanks to a last-minute addition to the bonding bill - which under this scenario would be revived by the Legislature - the state can sell up to $175 million in lottery-backed bonds to cover revenue shortfalls during the remainder of the current budget cycle.

Chuck Bennett, a lobbyist for school administrators, said that would be an ideal scenario.

Bennett is confident the Legislature will override both vetoes. And after that, he and other education advocates are counting on a winning streak that keeps lawmakers out of the Capitol until the next regular session convenes in January.

"We would like to have them come to the Capitol for about a two-hour special session and then a vote and go home, and not come back again," Bennett said. "If they have to come back again, that would be just genuinely a mess."

WHERE THEY STAND

Here are the positions of Lane County legislators on whether to override or sustain Gov. John Kitzhaber's vetoes of two budget bills. One of the bills would provide $267 million to schools by shifting a state payment to schools and community colleges from the current budget to the next one.

Sen. Susan Castillo, D-Eugene:

Shift bill: override

Bonding bill: override

Sen. Tony Corcoran, D-Cottage Grove:

Shift bill: sustain

Bonding bill: sustain

Rep. Bob Ackerman, D-Eugene:

Shift bill: override

Bonding bill: sustain

Rep. Phil Barnhart, D-Eugene:

Shift bill: undecided

Bonding bill: undecided

Rep. Terry Beyer, D-Springfield:

Shift bill: undecided

Bonding bill: undecided

Rep. Cedric Hayden, R-Fall Creek:

Shift bill: override

Bonding bill: override

Rep. Al King, D-Springfield:

Shift bill: sustain

Bonding bill: sustain

Rep. Jeff Kruse, R-Sutherlin:

Shift bill: override

Bonding bill: sustain

Sen. Bill Morrisette, D-Springfield:

Shift bill: sustain

Bonding bill: sustain

Rep. Vicki Walker, D-Eugene:

Shift bill: undecided

Bonding bill: undecided