Oregon revenue surplus came without Gov’s tax hike

A recent editorial in the Wall Street Journal entitled “States of Plenty” noted:

“America’s governors must feel as if they’ve won their own state lotteries. Thanks to the snappy growth of the U.S. economy over the last three years, state treasuries are now overflowing with tax collections.”

The article went on to describe how at least forty of the fifty states are now in the black with primarily the Gulf states in the aftermath of last year’s hurricanes and perpetually corrupt and hapless New Jersey still in the red. High on the list of states with significant surpluses is Oregon with a $1.1B surplus.

You can expect Gov. Ted Kulongoski to take credit for this remarkable condition and trumpet his stewardship of the ship of state. However, in the immortal words of Pres. Richard Nixon, “. . . but that would be wrong.” As the WSJ notes, the dramatic turnaround for states near bankruptcy four years ago is due to the Democrat hated Bush tax cuts. WSJ states:

“They prove that among the biggest beneficiaries of President Bush’s 2003 tax cuts have been state and local governments, even though tax cut opponents predicted states would be losers.”

Gov. Kulongoski has routinely joined the Democrat chorus about the horrors of the Bush tax cuts so don’t count on him to give credit where credit is due. But the governor is hard pressed to provide any other explanation for Oregon’s economic recovery since he has been basically AWOL with regard to any statewide initiatives. Oregon’s economic recovery parallels those of its sister states and gives proof to the adage that a “strong tide floats all boats.” At best, Kulongoski can claim that he was just standing there when the “economic freight train” ran over him.

Even more damning, however, is that had Gov. Kulongoski had his way, Oregon would not be facing a $1.1B surplus but would rather be facing yet another projected deficit for the next biennium. In the 2003 legislative session, Kulongoski, along with every Democrat member of the legislature advocated and adopted an $11.4 million budget which would have required an $800M tax increase to fund it. Had they been successful, the $12.5B budget for 2005-07 budget would have been closer to $13.5B. At that level the surplus would be nonexistent and Oregon would be looking at an effort to extend the “temporary” tax increase in order to avoid yet another budget deficit. Worse yet, had those taxes increased, many of the businesses that decided to stay in Oregon would have left and the economic recovery in Oregon may have, in fact, resisted the national recovery even longer than it did. (If you have any doubt about the accuracy of that assumption, just look at Kulongoski’s recent demands to keep and spend the $880M “kicker” in addition to the $1.1B surplus.)

The WSJ noted in its story that many states have acted aggressively in the aftermath of strong economic growth to reinforce their economic recovery through additional tax relief. Rhode Island, one of the most taxpayer friendly states in the nation, further reduced state income taxes and offered taxpayers the option of a flat tax. Maryland cut property taxes after its governor rejected three budget busting tax increases proposed by its Democrat controlled legislature. And in Arizona, the governor and legislature agreed to a 10% reduction in the income tax and a three-year suspension of a portion of the statewide property tax.

So what is it about the economic impact of tax cuts that Kulongoski and his Democrat colleagues in Oregon don’t get? Not only did the Bush tax cuts spur the national economy (just like they did under former Presidents Kennedy, Reagan and Clinton) but the most cherished Democrat institution – big government – is one of the chief beneficiaries of those tax cuts. How many times will this phenomenon need to occur before Oregon Democrats understand that it is better to have a smaller portion of a larger pie than a larger portion of a smaller pie. One need look no farther away than Portland where Oregon’s uber liberal enclave voted to increase its taxes by about 15% and then watched tax revenues fall below what they experienced prior to the tax increase.

So Ted, don’t be taking credit for something you resisted. Don’t be criticizing Bush for making your life easier. And don’t be trying to fool the voters again about your long time love affair with tax increases and undisciplined spending.