Few places have felt the twin challenges presented by Oregon’s broken state budget and its knotted tax system the way this old farm town has.
acing $3 million in state cuts and no way to raise money, the school district here cut back to a four-day week last fall. Teachers cram in curriculum. Parents juggle child care. Students sleep in on Mondays.
“The three-day weekends are nice,” said Joe DeFranco, who teaches at Mae Richardson Elementary School here, “but academically, we’re strapped.”
Still more cuts will come unless revenues rise. On Tuesday, voters here and across Oregon will have the chance to make that happen when they decide the fate of two ballot measures that would raise taxes on higher-income residents and on businesses to help pay for public education and other services. Known as Measures 66 and 67, the votes are referendums on $727 million in tax and fee increases that were approved last year by the Democratic-controlled Legislature.
Yet if the measures pass, it will probably not be because of support here in largely conservative southwest Oregon. Too many times the state has proposed too many taxes, many residents here say, and this is no exception, never mind the school troubles.
Instead, experts say, if the measures pass it will be because Oregon lawmakers found a way to narrowly focus a tax increase that more liberal parts of the state could tolerate, even at a time when a tax increase could not be harder to digest.
What happens here may be closely watched elsewhere. While tax increases are probably coming in plenty of other states, most by executive or legislative action, Oregon will be the first this year to ask voters to raise taxes on themselves — or at least on some of themselves.
“What’s the saying? ‘Don’t tax me. Don’t tax thee. Tax the man behind the tree?’ ” said Tim Hibbitts, a longtime independent pollster in Oregon. “The measures were designed and have been sold with the idea that somebody else is going to pay, people who are high-income earners and businesses.”
Mr. Hibbitts added, “They were crafted pretty cleverly politically.”
Supporters, led by teachers and public employees’ unions, point out that the income tax increase affects less than 3 percent of the population: individuals who earn more than $125,000 a year. They say the state’s wealthier residents should pay more to help those with less. They also say that state businesses enjoy a relatively low tax burden and that most small businesses will pay only $140 more in fees.
Opponents say the proposals are the wrong fix at the wrong time. State income taxes for wealthier Oregon residents are already among the highest of any state. But the most notable opposition may have come from powerful business groups and prominent executives like Phil Knight of Nike, which is based near Portland.
Oregon unemployment is at 11 percent and new taxes will make it even harder to hire, opponents say. They say that supporters are underestimating how many people would be affected, and that while some of the increases are scheduled to fade out, some are not.
Complicating matters further, the Legislature has essentially already spent the $727 million in projected revenue by incorporating the anticipated tax increases into the current budget. If the measures fail, lawmakers will have to make new cuts or find another way to raise revenue.
What many people on each side agree on is that, recession or not, Oregon’s tax system is flawed and that passing Measures 66 and 67 is not a long-term solution.
Oregon is one of only five states with no state sales tax, and voters have repeatedly rejected ballot initiatives to create one. In addition, a statewide cap on property taxes limits how much local governments can raise rates each year.
Here in heavily forested Jackson County and in several others, there is another wrinkle. Property taxes were historically low here in part because the counties received payments from the federal government for timber production on federal lands. Yet timber production has declined substantially, and subsequent federal subsidies have not compensated for the decline. That aid, too, is set to phase out.
John W. Tapogna, a former economist with the Congressional Budget Office who now leads an economics consulting firm in the Pacific Northwest, said the situation facing counties in this part of Oregon could soon become a crisis that might help force the state to look more broadly at its tax structure.
Continued
acing $3 million in state cuts and no way to raise money, the school district here cut back to a four-day week last fall. Teachers cram in curriculum. Parents juggle child care. Students sleep in on Mondays.
“The three-day weekends are nice,” said Joe DeFranco, who teaches at Mae Richardson Elementary School here, “but academically, we’re strapped.”
Still more cuts will come unless revenues rise. On Tuesday, voters here and across Oregon will have the chance to make that happen when they decide the fate of two ballot measures that would raise taxes on higher-income residents and on businesses to help pay for public education and other services. Known as Measures 66 and 67, the votes are referendums on $727 million in tax and fee increases that were approved last year by the Democratic-controlled Legislature.
Yet if the measures pass, it will probably not be because of support here in largely conservative southwest Oregon. Too many times the state has proposed too many taxes, many residents here say, and this is no exception, never mind the school troubles.
Instead, experts say, if the measures pass it will be because Oregon lawmakers found a way to narrowly focus a tax increase that more liberal parts of the state could tolerate, even at a time when a tax increase could not be harder to digest.
What happens here may be closely watched elsewhere. While tax increases are probably coming in plenty of other states, most by executive or legislative action, Oregon will be the first this year to ask voters to raise taxes on themselves — or at least on some of themselves.
“What’s the saying? ‘Don’t tax me. Don’t tax thee. Tax the man behind the tree?’ ” said Tim Hibbitts, a longtime independent pollster in Oregon. “The measures were designed and have been sold with the idea that somebody else is going to pay, people who are high-income earners and businesses.”
Mr. Hibbitts added, “They were crafted pretty cleverly politically.”
Supporters, led by teachers and public employees’ unions, point out that the income tax increase affects less than 3 percent of the population: individuals who earn more than $125,000 a year. They say the state’s wealthier residents should pay more to help those with less. They also say that state businesses enjoy a relatively low tax burden and that most small businesses will pay only $140 more in fees.
Opponents say the proposals are the wrong fix at the wrong time. State income taxes for wealthier Oregon residents are already among the highest of any state. But the most notable opposition may have come from powerful business groups and prominent executives like Phil Knight of Nike, which is based near Portland.
Oregon unemployment is at 11 percent and new taxes will make it even harder to hire, opponents say. They say that supporters are underestimating how many people would be affected, and that while some of the increases are scheduled to fade out, some are not.
Complicating matters further, the Legislature has essentially already spent the $727 million in projected revenue by incorporating the anticipated tax increases into the current budget. If the measures fail, lawmakers will have to make new cuts or find another way to raise revenue.
What many people on each side agree on is that, recession or not, Oregon’s tax system is flawed and that passing Measures 66 and 67 is not a long-term solution.
Oregon is one of only five states with no state sales tax, and voters have repeatedly rejected ballot initiatives to create one. In addition, a statewide cap on property taxes limits how much local governments can raise rates each year.
Here in heavily forested Jackson County and in several others, there is another wrinkle. Property taxes were historically low here in part because the counties received payments from the federal government for timber production on federal lands. Yet timber production has declined substantially, and subsequent federal subsidies have not compensated for the decline. That aid, too, is set to phase out.
John W. Tapogna, a former economist with the Congressional Budget Office who now leads an economics consulting firm in the Pacific Northwest, said the situation facing counties in this part of Oregon could soon become a crisis that might help force the state to look more broadly at its tax structure.
Continued
