Tuesday, January 14, 2003/lk
Measure 28 can be a foundation for future growth, if voters approve it Jan. 28. The temporary income tax surcharge proposal deserves a “yes” vote to give the Oregon economy something to stand on.
The year 2002 was one of the toughest economically since the Great Depression for Oregonians and the agencies providing education, services to the disabled and underprivileged, police protection, and other services.
No one wants additional taxes, but Measure 28 offers reasonable assurances they will be spent as needed. Measure 28 gives the state a small, but new, start and a way out of the morass. The hole is so deep, the state needs temporary relief.
“Last resort” and “Nowhere to go but up” are tempting clichés to describe the situation we’re in. But Measure 28, while no savior, should be looked upon as a starting point.
Gov. Ted Kulongoski — the “elect” tag finally discarded — took an optimistic approach in his inaugural address Monday.
Kulongoski said, “The budgetary tremors that are shaking the ground beneath our feet are also our best hope for shaking up the status quo. As governor, I intend to use this challenging time as an opportunity to set new priorities and make government a more reliable and better friend for working families and a more trusted watchdog for taxpayers.”
The Silverton-based Oregon Center for Public Policy claims “failure to enact Measure 28 will damage Oregon’s economy,” based on an analysis it published in December.
The study states that Oregon’s economy will lose $1.5 billion over the next 2 1/2 years if Measure 28 fails. The study, “A Step in the Right Direction,” states that state budget cuts triggered by Measure 28’s failure will result in hundreds of millions of dollars in decreased state spending, lost federal matching dollars, and decreased spending among workers laid off due to state budget cuts, the report shows. The report also documents $205 million in decreased consumer spending that would likely result because of the increase in income taxes in Measure 28.
In the words of the Center for Public Policy statement, “The small corporate income tax increase in Measure 28 is inconsequential when compared to the impact of further budget cuts on schools and other public services that Oregonians, including businesses, rely on.” The corporate income tax rate would go up from 6.6 percent to 6.93 percent, under Measure 28.
On the other hand, the group Oregonians for a Sound Economy notes that “by many statistical measures, including the unemployment rate, the Oregon economy ranks dead last in the nation.”
Director Russ Walker stated, “Instead of raising taxes to penalize further Oregon consumers, businesses and their employees, the state should enact pro-growth policies to expand the tax base and increase revenues. To increase personal income taxes on Oregon families at a time when real incomes have stagnated and job insecurity is on the rise is to encourage an exodus of the state’s most talented entrepreneurs and employees and create an economic death spiral as tax rates are continually raised to compensate for disappearing jobs. Increasing corporate income taxes would also speed Oregon’s economic disintegration.”
Walker is partly right. But Measure 28 and “pro-growth policies” are not mutually exclusive. Oregon businesses are not likely to en masse throw up their hands and quit Oregon just because of a temporary half-percent income tax increase.
Walker predicts that “systemic problems with the Oregon Health Plan and Public Employees Retirement System will cause the Oregon budget to more than double in the coming decade if serious reforms are not undertaken.”
The chronic problems with PERS, the Oregon Health Plan, and other agencies including Oregon Lottery are more symptoms than causes of our crisis; using them as reasons not to support Measure 28 won’t fix the problem.
Walker and others are right in saying that the problem is serious; the governor should have called PERS what it is “a crisis,” but this is no time to mince words. Kulongoski made it clear on Monday he intends to tackle the problem, and the entire challenge of Oregon’s economy. All eyes will be upon him, but at this critical juncture in our state’s history, all citizens should not only be watchful of the governor and the Legislature, but also to have confidence that working together we can surpass the morass.
Without the relief that Measure 28 brings, extensive cuts are likely to take place on Feb. 1. So come Feb. 2, that would be enough to forever send the Ground Hog back into his hole.