Politics & Policy

Sneak Attack in Oregon

The state legislature just piled on the tax increases.

While most Oregonians were finishing up their vacations at the beach and getting ready to send their kids back to school, the Oregon legislature engaged in one of the sneakiest tax hikes in history. After a seven-month stalemate due to insufficient votes to overcome the supermajority tax-hike requirement, five Republican senators and eleven Republican House members joined Democrats in the state to pass a massive tax increase.

Curiously, the legislature used a bit of parliamentary maneuvering in order to pass the tax increase — they revived a dead bill, loaded it with tax increases, and passed it without debate. That’s not exactly the democratic process as taught in your junior-high civics class.

The tax increase is expected to take $800 million over the next two years out of the pockets of Oregon’s families. Now, the same bloated and inefficient state government that increased spending by 45 percent per person between 1990 and 2001, even after adjusting for inflation, will continue to grow.

Amazingly, spending in Oregon increased during this period more than in all but three other states. Aside from throwing money at the already adequately funded public schools, the tax plan would give $87.6 million in tax breaks to businesses, and spend $2.4 billion on social-services spending.

Rather than raising one or two taxes at a time, Oregon’s package is a hodgepodge of changes designed to hide the full impact of the tax increase — in much the same way that the legislature hid its actions by sneaking the increase through at a time when voters were not looking.

A three-year graduated income-tax surcharge, with rates based on a sliding scale of up to 9 percent, will generate nearly 70 percent of the $800 million in revenue over the next two years. The rest of the money will come from an increase in the corporate minimum tax (from $10 to between $250 and $5,000), a reduction in the discount rate for paying property taxes, several corporate tax increases, and a tax increase on medical providers that participate in Medicaid.

In addition to passing a massive tax hike, ostensibly due to the state’s budget deficit, Oregon lawmakers recently saw fit to give millionaire baseball players and owners a $150 million gift at taxpayer expense. Since Major League Baseball officials have demanded subsidies of at least $300 million, taxpayers are not on the hook yet, but it is obvious that the everyday folks who pay big government’s bills come in dead last in Oregon.

The state legislature’s repeated show of favoritism to special interests — whether they’re sports boosters or politically connected businesses — over average Oregonians who will be stuck with the bill for this largess, is indeed troubling. With spending restraint in short supply during the 1990s and continuing to date, it is no wonder that Oregon’s 8.1 percent unemployment rate for July was the highest in the nation.

Clearly, Oregon needs to cut taxes across-the-board for all taxpayers and businesses. Robbing Peter to pay Paul is simply bad economic policy, especially when Peter is an average family struggling to get by and Paul is a multi-millionaire baseball team owner.

Gov. Kulongoski’s signing of the tax increase and the baseball subsidy bill are good indicators that no one in Oregon is ready to apply the brakes to the state’s out-of-control spending. Now, only the people of Oregon, forced to take matters into their own hands via the referendum process, can stop Oregon’s fiscal train wreck. Running a state during tough economic times requires fiscal prudence and priority setting.

Running a state into the ground is, unfortunately, all too easy.

— Paul J. Gessing is director of government affairs for the National Taxpayers Union. Write to him at 108 N. Alfred St., Alexandria, Va. 22314, or visit www.ntu.org.

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