They truly believe that there is no limit to the good that they can do with other peoples’ money
by Sen. Doug Whitsett
Despite having nearly $2 billion more in revenue than ever before, members of Oregon’s majority political party remain determined to spend more money than the state is currently able to extract from its taxpayers. In order to raise that money, they appear to be utterly resolute in their efforts to distort the clear intent of the Oregon Constitution.
Article IV, Section 18 of that foundational document requires bills for raising revenue to originate in the House of Representatives. Article IV, Section 25 requires bills for raising revenue to receive at least a three-fifths majority vote in favor of passage in each chamber.
That unambiguous language has been, and continues to be, parsed in the Legislature and in the courts to be interpreted to mean something quite different.
This year, the majority party and its professional staff are attempting to adopt a brand new meaning of the phrase “a bill for raising revenue.” They intend to make that transformation without amending the Oregon Constitution.
Democratic operatives now suggest that the enactment of a bill that both increases taxes on some classes of Oregonians, and simultaneously decreases taxes an equal amount on another segment of citizens, is somehow not a bill for raising revenue. Their argument is that even though the bill raises taxes on certain classes, it is revenue neutral, because it provides an equal tax break to other classes.
Let me illustrate with an example. Let’s say there was a bill that increases the personal income tax on people in the highest bracket but also offsets that increase by expanding the Earned Income Tax Credit for people in a lower bracket.
The majority party’s reasoning contends that a bill creating this blatant redistribution of wealth would not be a bill for raising revenue. Therefore, it will circumvent the Oregon Constitution and can be enacted with a simple majority vote in each legislative chamber.
There are other methods of accomplishing the same means.
Tax expenditures are defined as tax deductions, exclusions, subtractions, exemptions, deferrals, credits and preferential tax rates. Each tax expenditure reduces state taxes that would have otherwise been paid. Conversely, a bill that eliminates a tax expenditure serves to increase state taxes and is therefore a bill for raising revenue.
It is now being claimed that the enactment of a bill that simultaneously reduces taxes for some Oregonians by increasing tax expenditures, while increasing taxes for other Oregonians by reducing tax expenditures, is not a bill for raising revenue.
Using that logic, a bill that eliminated the home mortgage interest deduction, and increased deductions for employment-related day care, would be revenue neutral.
The majority party is advancing House Bill 2093 for the specific purpose of offsetting tax expenditures.
Its members and professional staff have determined that the bill does not raise revenue and therefore does not require a three-fifths majority vote.
Moreover, the courts have determined a bill that merely reallocates tax revenue that has already been raised, and that is held in the State Treasury at the time the Legislative Assembly enacts the bill making the transfer, is not a bill for raising revenue.
For instance, the Supplemental Employment Department Administrative Fund (SEDAF) is financed by a surcharge on employers’ unemployment insurance (UI) payroll tax. The stated and intended purpose of the Fund is to help pay for the administrative costs of the Oregon Employment Department and to provide funding for employment-related research. The SEDAF surcharge raises more than $60 million, directly from Oregon businesses, during each two-year budget cycle.
The Legislative Assembly has authorized the transfer of more than $30 million from SEDAF to the General Fund, to be spent for unrelated purposes. The only current source of replacement for this repurposed money is further UI taxation of Oregon businesses. However, this “sweep” of SEDAF money is technically not “a bill for raising revenue,” because it “merely reallocates” tax money that has already been collected for one purpose, to be spent for another purpose.
The courts have concluded that a bill reallocating money held in the State Treasury, at the end of a budget period, is not a “bill for raising revenue.” The money can be “repurposed” by the Legislative Assembly through a simple majority vote.
This practice of “sweeping” money that is unspent at the end of a budget cycle into the General Fund has been elevated to a new art form. That reallocation of funds is allowed, even though the money was collected by a tax or fee and for a specific, dedicated purpose.
Finally, the courts do not consider a bill that establishes a new fee, or increases an existing fee, to be a bill for raising revenue. A fee is legally considered to be a charge levied for a particular purpose. Further, it must allow the person subject to the fee to forgo the benefit conferred by paying the fee by choosing not to pay it.
Some examples include fees to obtain a driver’s licenses or register a vehicle, to obtain a hunting and fishing license or to obtain a permit to install a septic tank or a permit to drill a domestic well. The payment of each of these fees can be avoided by not participating in the “benefit” authorized by paying the fee.
Notwithstanding the purpose for which a fee was collected, the courts have ruled that “excess revenue” collected by the fees can be legally “swept” into the General Fund at the end of a budget cycle and can be spent for any other legal purpose. Moreover, a bill authorizing this action does not require a three-fifths majority vote because the money was already deposited in the State Treasury and is therefore not a “bill for raising revenue.”
In my opinion, each of these legal contrivances has been developed to make it easier for state government to extract and keep even more money from Oregonians. Their “end runs” around the clear meanings of language included in the Oregon Constitution do not appear to bother the “revenue collectors.” For the most part, they truly believe that there is no limit to the good that they can do with other peoples’ money.
My strong opposition to this particular philosophy is clearly documented by my 11-year voting record as a member of the Oregon State Senate.
Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls