What Oregon needs is a better umbrella
Back when I worked in the TV news business, I had a boss who insisted that the weather folks do 10-day forecasts. Because weather is a popular segment, the station with the longest-term forecast wins the ratings chase, he reasoned.
The weather people protested, of course: You can't forecast the weather accurately beyond three or four days. But accuracy was not the boss' chief worry. What he cared about was higher ratings.
You can't predict the weather over the long term, and neither can you accurately predict billion-dollar revenue swings in a state battered by recession. Yet that's exactly what we ask our state economist to do, quarter after quarter. And lately he's been predicting sunshine, but Oregon's been getting rainstorms.
Since May 2001, Oregon's chief economist, Tom Potiowsky, has muffed eight consecutive revenue forecasts. The state has collected $2.5 billion less than he predicted at the close of the 2001 legislative session Ñ $2.5 billion! Consequently, the Legislature has met in six special sessions to balance the budget without the tax money that 'Dr. Tom' told us would pile up on the Capitol steps.
To be fair, Potiowsky is a skilled economist with impressive credentials. He has faced the unholy challenge of looking two years ahead during a time that covered the earthshaking catastrophes of Sept. 11, 2001, and war in Iraq. Then he's had to factor in Oregon's 'tech-wreck' and the highest unemployment rates in the country.
Worse, he's saddled with a tax system that goes haywire whenever our economy heats up or cools down. Worse yet, he must endure all those economist jokes ('An economist is just an accountant without the personality').
The accuracy of the state forecast is critically important. People are hired or fired. School years are determined. Bonds are issued. Even the slightest imprecision triggers major hassles.
The Legislature has explored whether to tinker with the econometric models that the state uses to produce quarterly forecasts. But to me, that's like giving the weather forecaster a new suit and hoping the weather gets better.
Instead, let's give the economists a stable tax system to work with Ñ one that's broad-based and predictable. If that means cutting those punishingly high income taxes that make our system so unstable and adding a consumption tax, let's do it.
No other state in the country is as dependent on a single tax as Oregon is with the income tax. When incomes are up, tax revenues are way up. When they're down, they're way down. But schools and prisons need stable budgets in good times and bad. In fact, economic downturns are the times when our citizens most need government services.
We can't do anything about the weather. Inaccurate weather forecasts are the reason that Oregonians always carry umbrellas. But we can do something about our revenue forecasts if we change the way we raise revenue. We can make it more predictable.
That not only will ease the burden for Oregon's economists, but it will do something far more important: It will provide stability for schools and fairness for taxpayers.
And shouldn't we have a tax code that's more reliable than the weather?
Mark Hass is a Democratic state representative from Raleigh Hills. He formerly worked as a reporter for KATU (2) from 1984-99. He lives in Southwest Portland.
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