Were facing a drastic measure
Between now and Feb. 3, you're going to be called on to make a decision about a $1.1 billion revenue package passed last fall by the Oregon Legislature.
Ballots for this vote-by-mail referendum go out this week.
Before you make up your mind, please suspend your political philosophy for a moment while we delve into this topsy-turvy matter. Going into the Measure 30 debate with preconceived notions will only blur your analysis of the arguments that follow.
Let's start by examining some indisputable facts about Oregon's economic situation.
Fact: Ours is a weak economy, further hampered by one of the nation's highest unemployment rates.
Fact: Our services for the most vulnerable among us Ñ the elderly, the ailing and our children Ñ have not kept pace with demand. Most of the eligibility requirements for state government programs that serve this population have been tightened, primarily to save costs but also to wean out abuse.
Fact: The state is burdened by lack of a stable and consistent revenue base to fund public education, public safety and work force development.
Now that we've set the scene, let's look at Measure 30.
The big numbers: After a -tumultuous eight months of partisan gridlock, the Legislature -finally adopted a revenue package that would raise $792 million for the 2003-05 biennium and $311 million for the 2005-07 budget cycle through a temporary income tax surcharge, a raise in the corporate minimum tax and a reduction in some existing tax deductions and exceptions.
From all indications, whether Measure 30 passes or not, it will have lasting effects on our economy. But projected impacts vary. If it succeeds, Oregon taxpayers will face an out-of-pocket loss of $347 million, according to data from the Legislative Fiscal Office.
The big questions: But according to an analysis conducted by Oregon Center for Public Policy Ñ a liberal advocacy group Ñ rejection of the measure could cost almost six times as much. By its calculations, about $1.9 billion would be yanked out of our economy. How? Well, for example, the policy group argues that the state would lose $282 million in matching funds that it receives from the federal government to supplement its human services budget.
The policy group also contends that decreased state government spending will trigger job losses in the public and private sectors. This, in turn, would generate a snowball effect that would lead to further service cuts in education, public safety and human services.
The consequences: Generally, tax increases are bad for a growing economy. Conventional wisdom is that they depress consumer spending and suffocate growth. In his case against the measure, Oregon Republican Party Chairman Kevin Mannix has proposed Ñ among other options Ñ reducing the state's capital gains tax by -25 percent in January 2006 and by 50 percent in January 2007 in hopes of attracting investment.
Naturally, there's a flip side to this reasoning. Tax cuts can serve well as economic stimulus for a state economy not constitutionally bound to a balanced budget. But unlike the federal government, Oregon's state budget has to be balanced, no matter the obstacles. So a decline in potential revenue could put further strain on an economy such as ours.