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Measure would limit state spending

Father of Measure 5 is back with another attempt to trim government
by: File photo, DON McINTIRE

The man who fundamentally altered Oregon's property-tax system 16 years ago is back this fall with another measure to put further limits on government.

Gresham resident Don McIntire, the father of 1990's Measure 5, is campaigning for a state-spending limit based upon population growth and inflation.

McIntire says his proposal, which appears as Measure 48 on the Nov. 7 ballot, would allow reasonable expansion of state budgets from biennium to biennium. His opponents say the measure would damage state programs and result in a projected $2.2 billion spending reduction in the coming biennium.

Measure 48 is a mere 270 words long, but the analysis and debates surrounding it already have consumed tons of paper, hours of airtime and voluminous space on blogs and web sites. The concept behind the measure is relatively simple: Oregon's state government budget can increase each biennium by an amount equal to the growth in population plus inflation. State fiscal experts estimate that, historically, Measure 48 would have allowed 10 percent expansion of the budget. By comparison, the actual growth in spending has averaged 14 percent per biennium.

The gap between actual expenditures and what would be allowed under Measure 48 amounts to billions of dollars over time. McIntire sees his initiative as a way to save money for a rainy day. His critics say it would further tighten what they view as an already-lean state budget.

IN COLORADO'S FOOTSTEPS?

While McIntire's measure means different things to different people, the 68-year-old author of the initiative wants to be clear on two points. 'This is not the same as TABOR,' he says in his emphatic style. 'And TABOR is not a failure.'

TABOR - the so-called Taxpayers Bill of Rights adopted in Colorado in 1992 - is important to the Oregon debate because Measure 48's opponents point to it as an example of what can go wrong with state budget limitations. In 2005, Colorado voters chose to suspend TABOR for five years.

'It didn't work for Colorado, to the point where it was suspended,' says Becca Uherbelau, communications director for Defend Oregon - a coalition that formed to fight both Measure 48 and Measure 41 in this election.

McIntire, however, vigorously disagrees, pointing out that the Colorado measure restricted how much money the state could collect, while Measure 48 limits how much Oregon can spend.

'Colorado's is a revenue limit,' McIntire says. 'Any amount above that limit must go back to taxpayers. Oregon's is a limitation on spending, not a limit on revenue. It doesn't command that anything go back to anybody.'

Uherbelau disputes McIntire's assertion, arguing that, regardless of whether the measures restrict revenues or expenditures, both the Colorado amendment and the Oregon measure use population growth and inflation to slow growth in state government.

'The similarity is that it is the exact same formula,' she says.

That formula is flawed, she adds, because some categories of state spending must increase at a higher rate than population or inflation.

'The prison population grows at two times the rate of the general population,' she says. And with a wave of baby-boomers approaching retirement, the senior population, which also receives state services, will grow at a much faster rate than the rest of the population, she says.

Health care and education costs - two of the state's largest areas of spending - also typically rise faster than inflation, Uherbelau says.

McIntire, however, sees other reasons for government growth - wasteful practices and bloated benefit packages for public workers. Under Measure 48, McIntire says, the government would become more efficient as a result of the 'modest' limitations. Money would begin to pile up in a rainy-day account, and eventually the state Legislature could choose to send some of the money back to taxpayers or invest it in critical needs.

In either case, the state would have the comfort of knowing that it had billions of dollars stashed away in a rainy-day account. The Legislature would be able to break the spending limit only with a two-thirds vote of both chambers, plus a vote of the people during a general election.

Despite that high bar for busting the limit, McIntire argues that in a true emergency, the Legislature would have the support it needed to take such action - and it would have the cash in the bank to actually deal with a tsunami, earthquake or economic crisis.

The fact that TABOR was suspended in Colorado, he says, is proof that limits can be broken if necessary.

POTENTIAL EFFECTS HOTLY DEBATED

Opponents of Measure 48, however, portray the initiative as a dire threat to public schools, higher education and services for the poor and elderly.

They say that in an emergency, such as a tsunami or disease outbreak, the state would be unable to respond for months while the Legislature convenes, votes and then sends the matter out for the populace's approval.

'It would be extremely difficult to handle an emergency situation,' Uherbelau says. First, the Legislature would have to convene in special session and two-thirds of lawmakers would have to agree to send the issue to voters in a general election. According to opponents' interpretation of the state Constitution, a general election only can be held in November of an even-numbered year. That means the state would be unable to act for months as it waits for an election, Uherbelau says.

McIntire believes his opponents are trying to scare voters with their interpretation. General elections can be held every November, regardless of the year, he says - and possibly more frequently if the Legislature chooses.

Uherbelau says her information comes directly from the legislative counsel, who defined November of even numbered years as the constitutionally approved time for a general election.

But the question of emergency response is an incidental issue in the much-larger debate about state spending. The real issue is whether Oregon would prosper or wither under the new limitations. And both sides look to Colorado for evidence to bolster their cases.

McIntire, while arguing that his measure is better than Colorado's TABOR, nonetheless produces a list of categories in which Colorado is outperforming Oregon - from median income per household to proficiency in fourth- and eighth-grade reading.

If TABOR was a failure, he asks, why is Colorado ahead on these and other key measures, including employment growth and poverty rates?

'Colorado kicks our butt,' he says.

Uherbelau uses a different set of statistics to back her claims of impending doom. Under TABOR, Colorado tumbled from 35th in the nation to 48th in spending for higher education. Colorado is now 49th in the country in what it allocates for K-12 education as a percentage of personal income in the state.

'And it is dead last in vaccinations for children,' Uherbelau says.

McIntire counters, however, that he has heard claims of doom and gloom before - during the debate over Measure 5 in 1990. That measure, which limited property taxes to $15 of $1,000 in assessed value, didn't bring government to a halt, he says. And the consequences of Measure 5 - such as loss of local control over school funding - were fully anticipated by the measure's authors.

SLOWER GROWTH OR BUDGET REDUCTIONS?

Both sides seem to accept the projection that Oregon will have approximately $2.2 billion less to spend in the 2007-08 biennium than it otherwise would have. Measure 48 excludes some streams of revenue and expenses, but does apply to about $36 billion in spending. McIntire says that the Legislature ought to be able to figure out a way to do without what amounts to 6 percent of the total budget. Even with Measure 48, he says, the state would have 8 percent more to spend than it did in the previous biennium.

Uherbelau, on the other hand, says that the $2.2 billion would hit disproportionately hard on the state general fund, which was $12.5 billion in the last biennium. The Legislature would be less likely to touch spending that occurs outside the general fund, such as transportation projects funded by the gas tax. That means, according to Uherbelau, that the general fund - which pays for education, corrections and the Oregon Health Plan, among other things - would bear the brunt of the funding limit.

The measure's potential effect on the general fund also worries Oregon House Speaker Karen Minnis, R-Wood Village, who says she hasn't decided how she will vote on Measure 48, but believes the $2.2 billion difference in the next biennium would fall most heavily on general fund programs.

'I have grave concerns about Measure 48,' Minnis says.

Ken Noah, superintendent of the Gresham-Barlow School District, has concerns as well. According to estimates provided to the district by the Oregon School Boards Association, the combined impact of Measures 41 and 48 would mean approximately $10 million less for the district in each of the next three years, Noah says. The district's current operating budget totals about $94 million.

"That's a very significant reduction," Noah says.

But McIntire retorts that the school board association's numbers are bogus.

"They can't say that. They do not know," he says.

Measure 48 might not affect the general fund at all, he says, and it is impossible for anyone to speculate on the measure's budgetary impact when the 2007-09 state budget doesn't even exist yet.

"All the measure wants to do is slow the growth in spending and save the state some money," he says.


To view a chart on the projected revenue impact of Measure 48, click the link below

www.localnewsdaily.com/documents/measure_48.gif

- The Gresham Outlook