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Harmful tax hikes not necessary

Two Views • Oregon's tax-altering Measures 66 and 67 stir passions of both supporters, opponents
by: L.E. BASKOW, Voters this month are being asked to ratify or reject Measures 66 and 67, a referendum on the 2009 Legislature’s income and business tax increases.

Supporters of Measures 66 and 67 present Oregon voters with a false choice. They claim these permanent tax increases were the only way to balance Oregon's budget. They claim there is no 'Plan B' and that we'll see 'further dramatic budget cuts' to education, health care and public safety if voters reject these measures.

Don't believe it.

First, the 2009 Legislature actually increased overall spending by $4.7 billion or 9 percent and passed a $733 million tax increase - the largest in Oregon history.

Yet the legislative leadership talks about making '$2 billion in cuts.' The leadership's 'cuts' were only cuts in anticipated spending growth, not an actual reduction in the budget. That's not how most businesses and families define budget cuts. The false cuts go along with the false choice supporters of Measures 66 and 67 now present to voters.

It's also important to note that neither of the tax increase measures is specifically tied to a particular expenditure, so the defeat of one or both will not lead to specific cuts. Legislators will choose what programs or services to cut, if cuts are necessary.

That's a big if. The Legislative Revenue Office's September 2009 report on the tax measures makes clear that the defeat of the $733 million tax package won't lead to a $733 million shortfall. It points out that legislators could tap the $391.4 million in Oregon's rainy day (It's raining!) and education stability funds, and the 2009-11 budget's ending balance. Doing so would leave a $318 million shortfall, according to the Legislative Revenue Office. That would require just a 2 percent adjustment in the general fund budget. Most Oregon families and business have trimmed much more than that from their budgets during this recession.

In addition to the rainy day funds, the Legislature could draw on the excess money built up in agency's cash accounts or reserve funds. Legislators did this last February. They could do so again this February.

There's debate about the precise amount available in these funds, but the Legislative Fiscal Office says there's at least $100 million that could be used. The point is there ARE other solutions that would balance the budget and avoid both excessive cuts to vital services and damaging permanent tax increases.

Finally, as advocates for Oregon schools and social services we need to remember this: A vibrant public sector depends on a thriving private sector. Leading economists estimate these two measures - including the new tax of up to $100,000 on businesses that aren't making a profit - could mean the loss of up to 70,000 Oregon jobs. Tax revenue to fund schools and social services will disappear along with those jobs. So, too, will donations to Oregon charities and foundations.

I'm voting 'No' on Measures 66 and 67. I urge you to vote no as well to stop these ill-conceived, permanent increases and ask the Legislature to come back in February with a more reasoned approach that better balances the needs of both the public and the private sector.

Judy Peppler is president of Qwest Communications. She lives in West Linn.