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Editorial: Governor Brown wrong to back Measure 97

Brown took the path of least resistance -

FILE PHOTO - Gov. Kate Brown Oregon’s long-running game of “Wait for Kate” came to a sudden but all-too-predictable and disappointing end last week. On Thursday, Gov. Kate Brown announced she’s backing all six statewide measures on the November ballot. And on the top of her list was Measure 97, the single-largest tax increase in Oregon’s history.

We weren’t surprised, but the news was, nonetheless, disheartening.

We understand the political calculus. The measure is backed by a coalition of public employee unions, including Brown’s top two political contributors.

And yes, an infusion of $6.1 billion a biennium would certainly make it easy — far too easy, in fact — for the next governor to balance the budget. But we had held out a glimmer of hope that Brown would acknowledge that Measure 97 is absolutely the wrong answer to Oregon’s revenue needs.

From the beginning of this debate we have been clear that the state needs new revenue, and that all businesses should pay their fair share. But this tax far, far exceeds what’s needed and puts an unnecessary burden on all Oregonians.

Proponents of the measure are no fools. They know that it’s easier to sell something when the buyers think they don’t have to pay for it.

So, they structured a deceptive money measure that would appear to stick fewer than 1 percent of the state’s 416,000 registered businesses with the bill.

These proponents would have you believe that these “one percenters” are all big-box retailers based in Arkansas. And yes, Walmart would have to pay. But so would many others, ranging from Oregon’s largest employer (Intel) to Portland’s most iconic retailer (Powell’s City of Books).

All told, more than 1,000 businesses would be hit with a 2.5 percent tax on all sales above $25 million, according to the state’s nonpartisan Legislative Revenue Office. The current rate is 0.1 percent and capped at $100,000.

Supporters of the measure make it sound as if these corporations would just pay an extra $3 billion in taxes every year without any effect on ordinary Oregonians and the state’s economy. However, the Legislative Revenue Office already has demonstrated why that won’t be the case. The 1,000 or so businesses — Fred Meyer, Safeway, Portland General Electric and the like — account for 88 percent of all corporate retail sales in Oregon. That’s why the Legislative Revenue Office has projected that two-thirds of the effect of this consumption tax — $2 billion per year — will be passed on to Oregon consumers in the form of higher prices, with a disproportionate amount hitting the lowest-income Oregonians.

Measure 97 would generate a pile of cash while raising the cost of basic goods and services and erasing thousands of private-sector jobs.

Even more perplexing is the sheer amount of the ask.

Earlier this year, Oregon Chief Operating Officer George Naughton noted that rising costs of the state retirement system and health care could combine to greet lawmakers with a large deficit next year. He pegged the shortfall at up to $1.5 billion over the two-year budget cycle.

Measure 97 would raise four times that amount.

Where would the extra $4.6 billion go? Again, there’s a difference between the sales pitch and the fine print. Proponents point to language in the measure stating that it will fund schools, veterans and health care.

But last week, the Oregon Legislature’s legal office confirmed that lawmakers can simply ignore that and spend the money as they see fit.

Brown, of course, knew all this when she decided to endorse the measure. That’s why we hoped she would say its flaws are too big to ignore and that she’d lead the effort next year to come up with a more reasonable, equitable and honest plan for raising taxes.

We would support a revenue package that would generate what’s needed — $1.5 billion per biennium. Measure 97, however, goes beyond anyone’s wildest dreams for new revenue and does so in a non-transparent manner.

Instead of tackling the more difficult job, Brown took the path of least political resistance, lamenting that no one had been able to come up with an alternative that brought “the business community” and government spending “advocates” together.

Well, someone could have tried.