Kitzhaber surprises at sales tax hearing

The Taxpayer Association was present at the SJR 36 Sales Tax hearing this week.   KGW-TV quoted  Executive Director,Jason Williams,  as saying, “This is a tax voters have already said no to nine times. It disproportionately hits seniors and the poor, and it only contributes to their spending problem.”  That sums up our feelings quite well.

However, the surprise of the SJR 36 Sales Tax Hearing came from Governor Kitzhaber (who even though he generally is open to a sales tax) took considerable time to talk about Oregon’s spending problem. His words were very opposite from the same Governor who held office 10 years ago and represents part of the change everyone is talking about.  To hear Kitzhaber say we have a “spending” problem is quite eye opening.  I showcase some of his words below in this edited transcript mixed with summary so you can read for yourself.  His words also reveal his strategic insight into passing a sales tax which is important to know.

Select comments from Governor Kitzhaber on SJR 36 Sales Tax Bill:

In the past we have arrived at solutions without engaging the electorate until we actually ask them to vote on these measures. We need to put the views of the electorate before the outcome goals. We need to better understand what the voters understand the problem of Oregon’s tax structure, so we begin to tackle a majority problem rather than starting with a minority solution. It makes sense on many levels to add a retail sales tax and use to reduce income taxes. The voters have rejected that 8 times. As A biology major I can tell you that white rats can learn faster than that. There is something about that particular tact, although is compelling to people in the Legislature ,that it doesn’t seem to move the voters to any great extent.

I consider this very important, our success is not only tied to revenue and our tax structure but also on our spending decisions. If we are going to raise additional revenue from this measure to meet our objectives, which we need, then we need to be clear on what that revenue is going to be spent on. Everything about my budget is designed to have this conversation.

Voters need to be assured of two things. First, voters need to be assured that the tax dollars we are raising are going into the classroom and early childhood learning programs. Secondly, that voters are getting results for the dollars spent.

One of the reasons I suggested changes to our government retirement (PERS) system is to meet that particular challenge. Our retirement fund lost 27% of its value in 2008 and that has created a significant increase in employer contributions. In k-12 system alone we are looking at $1,000 per pupil full in increased cost and half of that is from PERS. I think it will be difficult to convince voters to accept generating new tax revenue when a significant portion of that is not going into the classroom or important public services. The crisis in school funding and the crisis in funding child protective services is not just a revenue problem it is also a cost problem.

Summary of SJR 36
“Proposes amendment to Oregon Constitution directing Legislative Assembly to adopt sales tax at rate of five percent on sales of tangible personal property and services and use tax at rate of five percent on purchase price of tangible personal property. Requires exemption from taxes for necessities. Preempts local sales and use taxes not approved on or before November 4, 2014. Refers proposed amendment to people for their approval or rejection at next regular general election.”