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Rep. Tobias Read: Budget stability must precede tax overhaul

State Rep. Tobias Read says budget stability, especially for public schools that rely on state aid, should take priority over an overhaul of Oregon’s tax system.

Read, a Democrat who is leaving the Legislature to run for state treasurer, said his hometown school district is a prime example of why stability should take precedence.

Beaverton has hired hundreds of teachers as lawmakers increased the state school fund from $6.5 billion to $7.4 billion in the current two-year cycle. But when the economic downturn hit a few years ago — and state aid dropped — Beaverton laid off hundreds of teachers.

At the Washington County Public Affairs Forum on Monday, Read said the question is not about whether Oregon taxes are too high or too low.

“I’m fairly confident about what the answer is going to be,” he said. “It’s a more productive conversation to ask what kind of state and community we want to live in, what kind of programs are required to build that, and how best we pay for those — and then we talk about taxes.

“We have a lot of work to do to increase confidence in how our taxes are spent before we will be successful in asking for more.”

Oregon relies on personal and corporate income taxes for about 90 percent of its general-fund budget, which pays for most state services and the lion’s share of operating costs for 197 school districts.

According to a Legislative Revenue Office report, Oregon was in the middle in overall taxes in 2011-12 — 27th as measured by percentage of personal income, 29th as measured per capita — but it is among the top five states in personal income taxes.

Because of an improving economy, collections of personal income taxes exceeded the original mid-2013 forecast and triggered a “kicker” rebate of about $400 million, which taxpayers will get as a credit against their 2015 bills due next April 15. The credit amounts to 6.3 percent of a taxpayer's 2014 tax liability.

Seeking change

Read sponsored a bill that would have diverted half the $400 million to education at all levels and the other half into the state’s general reserve. But the bill (HB 3555) did not get a committee hearing. It takes a two-thirds majority to suspend the kicker, and Republicans — although in the minority — were opposed.

Read says Oregon taxpayers with the lowest incomes stand to gain an average of $10 from the kicker, but those with the highest incomes will get thousands of dollars in relief.

“Is it better for those individuals to have those dollars, or it is better for those dollars to be aggregated and keep a teacher in the classroom and keep a school open longer?” he said. “That is the discussion about the kicker we should have.”

Read also was floor manager for a bill, which passed the House but died on its return to the Senate, that would have diverted into the general reserve any unanticipated tax collections generated by capital gains. Unlike the federal tax code, Oregon law does not give a tax break for the sale of assets such as stock that result in capital gains — which higher-income Oregonians are more likely to reap.

On that bill (SB 567), 21 of Read’s fellow Democrats voted against it; all but one Republican voted for it. The bill would not have affected the calculation of the kicker.

“It’s a lonely place being in the ‘savings’ caucus,” Read said as the audience laughed.

Read has sponsored a bill to limit individual rebates to $250.

“The kicker prevents us from spending money at the top of the (economic) curve that we cannot count on. That part makes sense to me,” Read said. “What does not make sense is the result I talked about with Beaverton school teachers. What is clear is that we have insufficient revenue.”

Education highlights

Read, 40, is vacating the District 27 seat he was elected to in 2006 to run for state treasurer. Also in the race as an Independent Party candidate is Chris Telfer of Bend, formerly a Republican state senator from 2009 to 2013. No Republican has filed so far.

Read spoke mostly about the 2015 session.

He said lawmakers’ biggest achievements were in education, including funding for districts and implementation of full-day kindergarten, which he championed in 2011. He also was a sponsor of the bill that sets aside $10 million to pay community college tuition for some recent high school graduates — the Oregon Promise — based on a similar program in Tennessee.

The session’s biggest disappointment, he said, was lawmakers’ failure to come up with funding for road repairs and other transportation projects that got caught in a partisan dispute over Oregon’s low-carbon fuel standard.