Oregon Gov. John Kitzhaber (D) addresses the media on Wednesday, Oct. 2 (Photo: Danielle Peterson, AP) Oregon Gov. John Kitzhaber (D) addresses the media on Wednesday, Oct. 2. (Photo: Danielle Peterson, AP)

Weeks of bipartisan negotiating and arm-twisting paid off for Oregon Gov. John Kitzhaber (D) on Wednesday as Democrats and Republicans passed a package of five bills that will lengthen the state’s school year and save billions in long-term costs.

Both sides held their nose to reach what lawmakers and observers called the grand bargain: Democrats joined Republicans in voting to trim cost-of-living increases for state pensioners, while Republicans joined Democrats to hike taxes.

The pension bills would reduce cost-of-living increases for retirees by capping annual adjustments at 1.25 percent on benefits up to $60,000, and at 0.15 percent for amounts above $60,000. It’s expected to save $400 million a year, according to state budget officials.

The tax bill would make adjustments to the state’s senior medical deduction and impose higher rates on some corporations and packs of cigarettes. It would also eliminate an exemption for high-income earners. All told, the new taxes are expected to yield $244 million over the next two years.

Legislators appropriated the savings to the state’s public schools, which has had to cut teaching jobs and school days in recent years. Some of the money will also go toward keeping tuition down at Portland State University, the University of Oregon, Oregon State University and other higher education campuses.

The state legislature also passed a measure that would limit the ability of local governments to regulate genetically modified plants. Two counties in the heart of Oregon wine country were moving to restrict genetically modified agriculture.

Kitzhaber had called the special session last month without knowing whether he would have the votes for a grand bargain, pieces of which had failed in the regular session earlier this year. He had said he would veto the bills if any of the five failed to pass. The special session, which began Monday, had been expected to last only one day, but legislators needed extra time to win over reluctant votes.