30 Dec

Legislature could ward off Armageddon, and make some tax progress

Oregon being Oregon, we may not have a close presidential battle next year, even if Donald Trump is the White House choice of the party of Lincoln. We may not even have much of a governor’s race, since nobody who’s ever been elected to anything is running against the incumbent.

But we do have a pretty good chance for a nasty fight.

“It probably will be Armageddon,” suggests state Sen. Mark Hass, D-Beaverton, “or as (Senate President) Peter (Courtney) says, Antietam.”

Being where we are, Oregon didn’t have any Civil War battles back in the 1860s, so to have one come to us would be striking.

Hass is talking about a likely November battle over IP28, a largely labor-sponsored initiative that would sharply increase gross receipts taxes on companies doing more than $25 million in annual business in Oregon. It would bring in $2.5 billion a year, increasing the state general fund by more than 25 percent.

Not, of course, without a fight.

Maybe even Antietam.

“We should see if there’s a way to get everyone to put down their swords,” says Hass hopefully. “There’s a history in Oregon of legislatures putting less extreme measures on the ballot, and Oregonians have chosen the less extreme measure.”

Putting something else on the ballot, either during the February short session of the legislature or in a spring special session, would require a lot more activity than anybody’s seen so far. Hass, chairman of the Senate revenue committee, is trying to stir up interest, but so far the effort hasn’t been crowded.

“We need both chambers,” he points out. “We also need a governor to be out there.”

And you need something to put on the ballot.

In Oregon, where for decades government has been underfunded while the tax share paid by business has dwindled, the answer might well be a gross receipts tax, successful in many other states. With a constitutional limit on the property tax and a practical limit on the income tax, a transactions tax may be the only place to look.

“There’s some common ground,” says Hass. “The only real difference is the rate.”

That is, of course, not a minimal difference. But as Ben Unger, executive director of Our Oregon, the labor-led alliance promoting the initiative, points out, “People who say we should do something else don’t have another idea.”

And it has taken us a while to get to this point. Over 25 years, it has become clear that no level of economic growth is going to solve Oregon’s public finance problems, as we slowly work our way down the state school spending rankings and seem steadily rooted toward the bottom of the state higher education spending rankings.

“Very few people don’t think we need more money for schools and services,” argues Unger. “It’s not like we haven’t had a bajillion conversations on this.”

Any compromise conversation, he says, would have to be at a certain level. “It would have to start with the same principles, and an agreement on the problems we have to solve,” he says, including “a recognition of the scope of the problems we have.”

In other words, keeping the liquor stores open a few more hours a week probably won’t do it.

At this point, Oregon seems headed for a hard, divisive battle next fall, possibly an Antietam – although that bloodiest Civil War battle at least didn’t include TV attack ads, which the tax initiative fight is likely to produce bountifully in October.

Unger anticipates “tens of millions” could be spent against the measure. “I’m confident they’ll have more,” he says of opponents. “We’ll have enough to run a significant campaign.”
Nobody thinks we could arrive at general agreement on a new revenue package; we haven’t managed it in 30 years. But having an alternative on the ballot could ease the atmosphere, and maybe even result in something productive getting passed by the voters.

Without some kind of alternative on the ballot, the Our Oregon measure might win, enacting a historically large tax increase – likely combined with a sizable minimum wage boost – which could have a bad effect on the Oregon economy. On the other hand, the measure might lose, leaving Oregon schools and government in the same underfunded, inadequate state they’ve occupied for decades – which could also have a bad effect on the Oregon economy.

It might be good to have a third option.

Asked when the third option would be needed, Hass suggests, “Yesterday.””

Or, as we’ll be saying shortly, last year.

NOTE: This column appeared in The Oregonian, 12/30/15.

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