Oregon voters delivered historic approval Tuesday for a pair of tax increases after a campaign that assured Oregonians they could protect schools and other programs by requiring wealthy individuals and big corporations to pay more.
With 91 percent of the votes counted, Measures 66 and 67 each were passing with 54 percent and 53 percent approval.
Measure 66 raises income taxes on the top 3 percent of filers and Measure 67 boosts business taxes. Both tax increases were approved by the 2009 Legislature but forced to the ballot by opponents’ signature drive.
Oregon House Speaker Dave Hunt called the results “a win for Oregon kids,” whose schools will not face the 5 percent cut in state spending they would otherwise have confronted. The Gladstone Democrat acknowledged that Tuesday’s vote broke from Oregonians’ history of rejecting general tax-raising measures, which were similarly promoted as ways to preserve vital services.
The core difference was these measures were crafted to hit the bank accounts of only the most well-off individuals and the deepest pocketed big corporations — not all Oregonians and businesses across-the-board, as past tax measures have proposed.
“These are asking people who are doing well — even in this economy — to pay a little bit more,” Hunt said. “I think that’s what made the difference.”
The last time Oregon voters approved a general tax increase was in 1930, when they adopted the state’s income tax.
The approval of the two tax increases prompted ominous warnings of economic woe by opponents.
“I think the voters made a huge, huge mistake,” said Oregon Republican Party Chairman Bob Tiernan. “We’re going to have more businesses leave this state and we’re going to have a lot more businesses who are never going to come here.”
Measure 66 raises the marginal income tax on personal income above $125,000 for individuals and $250,000 for couples. It’s projected to pull in $472 million for the current two-year budget cycle.
Its approval means Oregon will have the highest state capital gains tax in the United States and will be tied with Hawaii for the highest state income tax in the country. But when all taxes including sales taxes (which Oregon does not impose) are accounted for, Oregon’s overall per-capita tax burden will be the 34th lowest — up two places from 36th lowest before the two measures were approved.
Measure 67 increases business taxes by a combined $261 million for the biennium. It replaces the 79-year-old $10 corporate minimum tax with a graduated version that will start at $150 and reach $100,000 for those with in-state sales above $100 million. Measure 67 also increases the corporate income tax rate for four years for most corporations, but would set a permanent increase for those with annual profits above $10 million.
Both the pro and anti-tax campaigns waged furious, brief and very expensive media campaigns to sway voters.
According to the most recent campaign finance disclosures, the “yes” campaign, which got more than 90 percent of its money from public employee and teacher unions, reported spending $5.67 million. The opposition campaign had spent $4.6 million up to that point. The majority of its money came from trade associations for banks, grocery-store chains, contractors and other businesses and industries.
Both sides funneled most of those dollars into TV ads, which repeated the themes they thought best made their case to voters. Backers of the tax increases emphasized that they would ensure full school years and prevent classroom overcrowding by making banks and credit card companies and wealthy residents pay their fair share of taxes. Opponents made the case that raising taxes in a recession was a sure way to kill jobs and hinder Oregon’s economic comeback.
Pat McCormick, spokesman for the “no” campaign, said that while the voters may have “bought into the messages of the proponents,” the results won’t likely meet their expectations. He said wealthy individuals, being counted on to generate most of the projected revenue, will likely move out of the state to avoid higher taxes — resulting in lower-than-projected revenue collections.
The revenue from the two measures accounted for 5 percent of the general-fund spending plan assembled by lawmakers for 2009-11 — primarily for education, health and human services, public safety and the courts.
Leaders of the Democratically controlled House and Senate insisted throughout the campaign that if the tax increases failed, they would deal with the resulting budget hole by trimming programs. That likely would have meant cutting state workers and passing big financial cuts along to school districts, to deal with as they might. The Legislature already was scheduled to meet for a month-long session starting Monday.
Senate President Peter Courtney, D-Salem, said he was physically shaking earlier Tuesday while meeting with other lawmakers to discuss possible cuts, which would have included termination of state-funded medical coverage for more than 15,000 seniors and disabled people.
He said voters delivered their approval of lawmakers’ choice to avoid such cuts by creating higher taxes.
“It’s a statement that they had enough faith in the Legislature, that if this is what you want to do we’ll go with it,” he said.
Chuck Sheketoff, an advocate of the taxes and head of the Oregon Center for Public Policy, said the vote was being closely watched by other states where the recession has similarly cut into their ability to stretch tax dollars to pay for education and public services.
“It’s absolutely a road map for other states,” he said. “The road map is to ask those who are still doing well during the downturn to contribute more to the public infrastructure that helped them create their wealth.”
Tiernan, the state GOP chairman, scoffed at such a notion.
“I think only the truly stupid states would follow that model,” he said.
Thursday, January 28, 2010
Citizens of Oregon votes to address their revenue problems...
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