A Bleak Election Day for Oregon Taxpayers

Right From the Start

Election Day 2012 was not a good day for conservatives anywhere and particularly not in Oregon. The Democrats, backed by Oregon’s public employee unions, swept every statewide office. They re-took control of both houses of the state legislature.

The slate of Republican candidates for statewide office, with the exclusion of Knute Buehler, was so weak that it was brushed aside with no significant effort. The Oregon business community was so stingy with its contributions to Knute Buehler that he was forced to provide for a significant portion of his campaign from his own pocketbook while his opponent, Kate Brown made her leisurely three calls to the public employee unions (AFL-CIO, SEIU and OEA) to obtain all of the funding directly and indirectly she needed to win. The opportunity for Republicans to win in Oregon is practically non-existent and will remain so as long as state and local governments collect and remit all the campaign resources required by the public employee unions on a quarterly basis.

Here are three things that you can expect from the Democrat controlled government over the next two years.

1. Individual income tax rates will increase for those earning above $100,000. The current level of taxation simply does not provide sufficient revenues for all of the programs adopted by the legislature in the past. This shortfall has been double downed by the massive increase in the cost of PERS for the benefit of the public employee unions.
2. A sales tax will be proposed by Governor Kitzhaber and the legislature will approve referral of it to the voters. There will be a sufficient number of Republicans to meet the supermajority requirement as there always is. That sales tax will be sizeable because, in order to garner the votes of those who do not currently pay taxes, significant exemptions will be required – food, drugs, and rent. The alternative will be to provide a “means tested” exemption from paying the taxes. (Newspapers will also be exempted in order to ensure their support of the measure.) While the sales tax will be described as tax reform, it will simply add a third leg to the stool with no significant diminution in either the income tax or property tax.
3. Mr. Kitzhaber has established a “blue ribbon” commission to deal with the loss of federal “timber payments.” Those timber payments were originally adopted as a temporary support mechanism when the withdrawal of federal forests from timber harvests threatened local governments who were heavily dependent on the timber industry as their dominant employer. The theory was that the timber payments would allow local communities to “realign” their economic development to provide employment opportunities for displaced loggers – that’s one of those “head up your butt” ideas originated from Washington, D.C. by people who have never visited a rural community that would have never existed but for the timber that surrounds it.

The blue ribbon commission is composed of timber people and environmentalists. The commission has not been formed to find a workable solution to increase timber harvests and thus again provide a revenue stream to local governments. Instead, because the environmentalists will never agree to a timber harvest for profit, the commission will stumble along until midway through the legislative session when it will be presented a “solution” by Mr. Kitzhaber. Mr. Kitzhaber’s solution will have the state government replace the lost federal funds but in order to so, the members of the commission will have to support one or more of the tax increases Mr. Kitzhaber will propose. The effected rural communities (traditionally Republican strongholds) will be forced to support the tax increases or face elimination of services (including public safety services) by local governments.

Make no mistake, Oregon is on the path toward continuous tax increases coupled with continuous spending increases – mostly for the benefit of the public employee unions. And this path will continue so long as the Democrats are able to convince voters that only the rich will have to pay for their excesses. Meanwhile good paying jobs will continue to decline and businesses will look elsewhere to locate, continue and expand their enterprises.