Representative Bruce Hanna: Costs go up to fund high spending

by House Republican Leader Bruce Hanna
Guest Opinion, The News Review
September 13, 2009

In the face of record unemployment and the worst economic environment since the Great Depression, the 2009 Oregon Legislature passed over $1.6 billion in new taxes and fees, and increased new government spending by more than 9 percent. Recently, House Speaker Dave Hunt criticized Rep. Tim Freeman, Sen. Jeff Kruse and I for expressing concerns about Salem’s unsustainable spending and permanent, job-killing tax increases. The people of Douglas County should know that these tax and fee increases affect everyone, from the minimum-wage worker to the underemployed dad. Speaker Hunt told The News-Review that Democrats are asking certain Oregonians to “pay a little bit more” during this recession. In fact, they are asking Oregon businesses to pay 36 percent more whether they’re profitable or not. They are also asking certain Oregonians to pay in excess of 20 percent more in income taxes. That doesn’t sound like “a little bit more” to me. Many businesses operate on small margins and can’t afford to send more dollars to Salem. Because the corporate tax increase targets gross sales, not actual profits, many businesses will be forced to lay off workers or reduce hours to pay this new tax. Randall Pozdena, a nonpartisan economist, found that the corporate tax increase will cost 43,000 jobs alone. These jobs don’t belong to corporate “fat cats,” these jobs belong to average hard-working Oregonians.

Speaker Hunt is correct when he says that inflation would bring the corporate minimum tax to $300. Many Republicans, including myself, supported bringing the minimum tax to this level. Unfortunately, this was not enough for Democratic leadership, who decided to create a new massive and permanent corporate tax structure.

Speaker Hunt also suggested that the income tax increase is only targeted at wealthy individuals. However, the state’s own tax data indicates that 70 percent of the taxpayers affected by the income tax increase are small business owners. Bill Conerly, another nonpartisan economist, found that the income tax increase will cost 36,000 jobs by 2015. The income tax increase will also give Oregon the unfortunate distinction of having the highest income tax burden in the nation. With 230,000 unemployed Oregonians, we simply can’t afford to send capital, innovation and jobs to other states.

It’s not “unfair” to criticize a state budget that grew by more than 9 percent in 2009-11. While federal stimulus helped boost overall state spending, 2009-11 General Fund revenue also grew by 4.9 percent compared to the previous biennium. The state’s revenue forecast estimates that new government revenue will grow by 15 percent and 16.4 percent, respectively. In addition to increasing state spending, the 2009 Legislature increased state debt by over $1.4 billion this year.

During this recession, Oregonians expected the 2009 Legislature to make the same tough decisions that Oregon families and businesses are making every day. This includes tightening the state’s fiscal belt and spending tax dollars more efficiently and effectively. This didn’t happen. In addition to providing pay raises to state employees, Oregon will spend $55 million per month in taxpayer-subsidized benefits to state employees. While Oregon has lost hundreds of thousands of private sector jobs, the 2009-11 budget actually increases the government’s payroll by 1,500 full-time positions. Some of those jobs went to legislators who have left the Capitol for high-paying positions in state government. One of these positions pays $122,000 per year in wages alone.

Oregon will suffer as a result of the Legislature’s permanent, job-killing tax increases. The tax increases won’t just affect corporations and wealthier individuals; they will also hurt small businesses and unemployed Oregonians looking for work. If Oregonians reject these tax increases, the Legislature will be forced to address the state’s unsustainable spending. Republicans will show that massive and painful budget cuts won’t be necessary if the referendum succeeds.