Is Oregon ready for a sales tax?

by Dan Lucas

As I’ve noted before, state spending in Oregon doubled in ten years, growing from $30 billion to $60 billion. The Oregon All Funds budget doubled from the budget ending in 2001 to the budget ending in 2011. The state’s General and Lottery Funds’ budget, a subset of the All Funds budget, went up by 35% during that same time. Then for a few years, state spending and taxes were generally held in check.

Now in the legislative session that just ended, the state’s General & Lottery Funds’ 2-year budget increased by a staggering $2 billion. It went from $14.7 billion to $16.7 billion. That $2 billion increase was accomplished without a tax increase – it just took an improving economic outlook.

Despite this constant pattern of growth in state spending, there is a persistent cry to “stabilize funding” in Oregon.

Enter Gov. Kitzhaber, who rather than being criticized for his failure of leadership during the regular session, is being heralded for his success in the recent special session. Flush with that perceived success, Gov. Kitzhaber was quick to announce plans to tackle “comprehensive tax reform.”

An op-ed in the Eugene Register-Guard notes that “Tax reform in Oregon is usually code for a sales tax — no other source of revenue is big enough to make a difference.” The Register-Guard goes on to point out that “Oregonians are famously allergic to sales taxes, having rejected them in nine elections over the past 80 years.” Most interestingly, the op-ed then goes on to discuss how the special session actually laid the groundwork for a look at comprehensive tax reform – by removing obstacles like PERS concerns, by bringing Democrats and Republicans together, and by possibly averting a war between business and labor.

The possibility of Gov. Kitzhaber pushing for an Oregon sales tax has made it all the way to the Washington Post.

Adding a sales tax for Oregon would make it easier for state government to grow even when there’s an economic downturn, and it would give politicians in Salem one more knob to turn to extract more dollars from Oregon taxpayers.

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