19 Jan

On street tax, there’s no way around going to the voters

For months, the Portland City Council has been considering how to ask citizens for more tax revenue.

Now, it’s decided instead to ask for advice.

At least advice is always free.

After months of unsuccessful efforts to devise a tax for street improvements that could get three votes to pass the Council and not go to the voters, the Council decided to hold – for the first time in Portland history – an advisory vote. Next May, Portland voters will be asked their advice on several potential taxes to produce the money.

Public input is always a good thing, especially in Portland, which cherishes process over pavement. But we might wonder whether the Council is asking the wrong question.

The right question might be not what kind of tax Portlanders prefer, but why one tax isn’t presented to voters for final approval. Reluctance to do that, it seems, is what kept the council from finding three votes.

It’s unlikely that an advisory vote will tell the Council that voters are overwhelmingly thrilled with one particular tax.

With luck, one might be least unpopular.

NOTE: This commentary appeared on KGW-TV, 1/17/15.

If the Council finds that out, it should still go back to the voters for a final vote, before a petition refers it.
The Council can have that advice right now.

19 Jan

Washington state problems make Oregon look like Northwest ideal

Last week’s opening of the Oregon Legislature seemed a relatively cheerful occasion, despite the new innovation of keeping three officials away from the Capitol in case of disaster. There was no threat of shutting down schools, there hadn’t been a special session in more than a year, and it was still six hours before Oregon played Ohio State.

And this time, everybody could be glad they weren’t the Washington Legislature.

Oregon’s legislators, as always, face winds of change and uncertain seas. For Washington’s budget, it’s more like the perfect storm.

And in all directions, there are numbers going overboard.

Last September, the Washington Supreme Court threatened to hold the legislature in contempt – insert your joke here – because it had “not complied with its Article IX, section 1 duty to make ample provision for the education of all children in Washington.” Similar lawsuits trying to make the Oregon legislature increase education funding have failed, possibly because the Oregon constitution doesn’t call education the state’s “paramount” duty.

The justices ruled that the legislature had not been keeping on track with a 2012 ruling ordering that school funding meet the constitutional requirement by 2018, requiring additional funding of $3.5 billion to $7 billion. In September, the court ordered, “On the date following adjournment of the 2015 session, if the State has not complied with the court’s order, the State shall file in the court a memorandum explaining why sanctions or other remedial measures should not be imposed…”

This prospect has provoked considerable anticipation, although nobody is entirely sure what sanctions or other remedial measures the court can impose on the legislature.

Still, it’s stirred considerable resentment. The Legislature cancelled the chief justice’s annual speech, and when the nine Supreme Court justices walked into the Washington House for the governor’s State of the State speech, Rep. Matt Manweller, R-Ellensburg, refused to stand.

At least when the Oregon’s seven justices walked into our House chamber Monday, everyone nodded approvingly.

But wait, there’s more.

Catching up with the court’s schedule would require the legislature to come up with at least $750 million. But last November, Washington voters passed Measure 1351, requiring smaller classes. If the Legislature doesn’t block it, that would take another $2 billion.

But finding any more money is likely to be a particular challenge. Although Gov. Jay Inslee asked for another $1.4 billion, Senate Republicans, who have just won control, have changed the Senate rules to require that any tax increase have two-thirds support to get a vote.

Oregon Democrats complain about needing a three-fifths supermajority on taxes, and they comfortably control both houses.
Last week brought another complication for Washington’s tax situation, as the annual report of the Institute on Taxation and Economic Policy, in the other Washington, found that once again Washington has the most regressive tax structure in the country. Since Washington is so heavily dependent on the sales tax, the poorest fifth of Washingtonians pay 16.8 percent of their income in state and local taxes, dramatically more than the 12.9 percent the same group paid in the second-most regressive state, Florida.

To change the balance a bit, and also to bring in some more revenue, Inslee has asked the Legislature for a capital gains tax. He shouldn’t count on progress toward either goal.

The institute found that Oregon, almost entirely dependent on the income tax, has one of the nation’s least regressive systems. Oregon’s tax structure may be unstable, but it’s not particularly unequal. This is especially striking considering that, as Chuck Sheketoff of the Oregon Center for Public Policy noted about the survey, ”Income inequality is the defining challenge of our time.”

As Washington’s legislature opens, assesses John Burbank, executive director of the Economic Opportunity Institute in Seattle, its situation is “dismal.”

Also really unclear.

“We don’t know what the Supreme Court will do,” Burbank notes. “Are they going to put legislators in jail for contempt? They have the moral authority, but you’re dealing with a co-equal branch of government.

“I think it’s going to be very muddy for the next four or five years, at least.”

As to the Institute on Taxation report, “I think it adds fuel to the fire, but it’s pretty much, we knew that already.”

So there were all kinds of reasons why Monday’s inauguration day in Salem had a fairly amiable feel. The state budget is more or less balanced, the three branches of government are on speaking terms with each other, and Oregon did solidly win the Pac-12 championship.

And at least we’re not Washington.

NOTE: This column appeared in the Sunday Oregonian, 1/18/15.