Voters should ask why we need Measure 97 tax increases

Dan Lucas_July 2012_BW

by Dan Lucas

Oregon’s Measure 97 will significantly increase the amount of tax revenue for the state.

It is projected by the state’s Legislative Revenue Office to generate $6 billion in tax revenues per biennial budget cycle. That’s a lot – Oregon’s current General and Lottery Funds budget is $19 billion per biennium, and just two budget cycles ago, in 2011-13, it was $14.5 billion.

Measure 97 began life as Initiative Petition 28, which got enough signatures to make this November’s ballot. The $6 billion per budget cycle would be paid by “corporations with sales of more than $25 million a year in Oregon.” The taxes would be based on sales rather than profits, and would impact “large and out-of-state corporations” as well as cherished Oregon hallmarks like Powell’s Books.

Those taxes on businesses are then expected to be passed on to all Oregonians in the form of “price increases”, “‘staggering’ impacts on jobs” – “a loss of more than 38,000 private sector jobs” and also a small dampening of income growth.

This push for a staggering increase in tax revenue appears to come at an incongruous time. Oregon Legislative Revenue Officer Paul Warner recently told a state senator that it was safe to say that Oregon’s total state tax collections are at a historical high. The Oregon budget is the highest it’s ever been – and it has been growing rapidly.

So why we do we need these huge Measure 97 tax increases?

An editorial in the East Oregonian notes that public employee unions “are heavily financing Measure 97.” Supporters of the measure include public employee unions SEIU, AFSCME, OSEA, AFT-Oregon and OEA.

Why would public employee unions be pushing for “the largest tax increase in Oregon’s history?” The measure’s backers say the tax increase is “to better fund Oregon’s schools, health care and senior services.”

Leaving aside the fact that the Legislature can spend the new tax revenues “in any way it chooses,” why are public employee unions pushing this measure?

One obvious reason is that as a result of the additional tax revenue, “public sector employment is expected to grow.” The more pressing motivations, however, are spelled out in The Oregonian which notes that the tax revenue would cover “employee raises and other personnel costs, a shortfall in the public employee pension fund [PERS] and the cost of expanding Medicaid under the Affordable Care Act.”

Oregon PERS currently has an unfunded liability of $21.8 billion, and PERS contributions will climb to $2.9 billion in 2017-19 for all the school districts, cities, counties and state agencies in PERS. An op-ed in the Eugene Register-Guard recently noted “Of all the additional resources available to government during the next biennium, 41 percent will go to PERS.”

As I noted last year “One in four Oregonians is on Medicaid, the government health care payment system for the poor. That does not include older Oregonians who are on Medicare.” Before the Affordable Care Act (ACA, “Obamacare”), Oregon split the cost of Medicaid 50-50 with the federal government. The ACA gave the states the option to expand Medicaid coverage (Oregon Health Plan in Oregon) – with the feds initially paying 100 percent for the “expansion population.” Oregon chose to expand Medicaid coverage, and has an expansion population of around 450,000. The federal government match for the expansion population starts to decrease next year to 95 percent and then continues to decrease down to 90 percent by 2020. Oregon receives $4.4 billion per biennium in federal dollars to cover the expansion population. The reduced federal match represents a major impact to future Oregon budgets.

Oregon has total state tax collections that “are at a historical high” and record-high budgets, but apparently that’s not enough. Oregon could look at slowing the rapid growth of government, or at least look for ways to make government more efficient and to cut all the wasteful spending and boondoggles like the Columbia River Crossing and Cover Oregon.

But that’s not what’s happening. Instead, with Measure 97, taxpayers and consumers are being asked to do all the work.

To read more from Dan, visit www.dan-lucas.com

Related reading: Jack Dean at PensionTsunami pointed out this column from July where Joel Fox writes “no matter what local politicians tell voters, when you see tax increases, think pensions.”

Post to Twitter Post to Facebook Post to LinkedIn Post to Reddit

Posted by at 05:00 | Posted in Measure 97, PERS, Public Employees Retirement System, State Budget, State Taxes | 3 Comments |Email This Post Email This Post |Print This Post Print This Post

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Catalyst through daily email updates:

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

Twitter Facebook

No Thanks (close this box)