LOS ANGELES -- Oregon's governor is leaning toward calling a special legislative session next spring to craft a tax overhaul package for coping with Measure 5, the property tax limitation initiative that requires the state to replace billions of dollars of reduced local property tax revenues.

Gov. Barbara Roberts said recently that she hopes to place a measure on the state ballot next year, in mid- to late summer, once legislators approve a tax proposal.

Gov. Roberts "is really trying to push for a tax overhaul," not just implementation of piecemeal steps such as instituting a sales tax, said John Kreft, an assistant administrator of the executive department's budget and management division.

Budget cuts and stronger-than-expected revenues helped the state address Measure 5 in its budget for the current biennium, which began July 1.

The tax measure phases in property tax limits over the next five years. It also requires the state to replace local property tax revenues lost by the public school system as a result of the initiative.

Oregon officials initially estimated the state would have to provide $633 million to schools in the current biennium because of Measure 5. An updated legislative estimate puts that figure at $560 million.

But state officials already are working on budgeting projections for the 1993 to 1995 biennium, when Measure 5 will require the state to replace an estimated $1.7 billion in school funds. The estimated replacement funding requirement for 1995 to 1997 is at $2.9 billion.

Gov. Roberts hopes to receive input from citizens on potential tax solutions through a "conversation with Oregonians" program that will kick off in September, Mr. Kreft said.

She also has created a task force to scrutinize the state government's structure and effectiveness, a process that will include studying whether certain functions can be eliminated, merged, or restructured.

Measure 5 has crimped new issuance of state bonds. Anthony Meeker, the state treasurer, has imposed a moratorium on general obligation and certificate of participation sales.

The Legislature in its recent session "did not do anything comprehensive" to address problems created by Measure 5, Mr. Meeker said Wednesday, adding that his office is studying a debt management strategy that should be completed in August.

The state could do refunding under the moratorium, Mr. Meeker said, but its plans for new money issuance remain uncertain.

Mr. Meeker said the debt management strategy will be an important part of any presentation to rating agencies.

Rating agency officials previously have noted that Measure 5 allows a phase-in period during which public officials have an opportunity to adjust to reduced revenues.

Mr. Kreft said state leaders agreed to leave Oregon with a projected $179 million ending balance on June 30, 1993, up from an initial figure of $132 million.

The state's adjusted revenue forecast in May provided an additional $217 million over estimates made in December. But state leaders "didn't spend it all," Mr. Kreft said, and the higher ending balance is intended in part to assure citizens and investors that the state recognizes "there is some uncertainty out there."

Mr. Meeker also had proposed the creation of a strategic reserve fund to help protect the fiscal integrity of the state. The fund would have been staked at $83 million, an amount equal to one year's principal and interest payments on the state's net debt.

The fund would have sent "a strong message" that Oregon's combined leadership is taking steps to protect the state beyond the current biennium, said Michael Ryan, an assistant treasurer. The strategic reserve fund also would have allowed access to general fund monies without requiring a special legislative session, he added.

After considerable discussion, however, legislators favored the unallocated ending balance of $179 million as proof they are taking into account the uncertainty created by Measure 5.

Because of potential rating implications, municipal market participants are watching Oregon and its localities closely to see how they adjust to Measure 5. Oregon's GO debt is rated Aa by Moody's Investors Service, AA-minus by Standard & Poor's Corp., and AA by Fitch Investors Service.

Unless new revenue sources are made available, Mr. Kreft said budget officials are contemplating 25% reductions in state programs for the 1993 to 1995 biennium.

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