Is tax measure a 'blank check'?
Opinions differ about whether lawmakers would be limited in the ways they could spend new revenue
Two sides of a proposed corporate sales tax on the November ballot are clashing over a fundamental tenet of the measure: how the revenue can be spent.
Measure 97 formerly known as Initiative Petition 28 would levy a 2.5 percent tax on certain corporations Oregon sales exceeding $25 million.
Our Oregon, the nonprofit group backing the proposal, wrote in Section 3 of the initiative that revenue from the tax shall be used to provide additional funding for public early childhood and kindergarten through 12th grade education, health care and services for senior citizens.
And the November elections guide will say the same thing after a committee of state and local officials denied multiple requests last week to change the language.
But opponents of the measure argue that passing the tax is akin to writing a blank check to the Legislature, because the ballot measure is not constitutionally binding. That means that lawmakers may spend the estimated $3 billion in annual state revenue from the tax for any purpose they see fit.
And an opinion released last week by the nonpartisan Office of the Legislative Counsel supports the opponents claim.
Section 3 would not bind a future Legislature in its spending decisions, wrote Chief Legislative Counsel Dexter Johnson in the opinion issued to Rep. John Davis, R-Wilsonville. If Measure 97 becomes law, the Legislative Assembly may appropriate revenues generated by the measure in any way it chooses.
Only a constitutional amendment could restrict how the Legislature spends the money, legislative counsel concluded.
Katherine Driessen, a spokeswoman for Our Oregon, disagrees. She says the ballot measure spells out very clearly where the revenue must go.
As with any law, the Legislature would have to change the law in order to spend the money on anything else, Driessen says. We believe that with the billions needed to boost our schools and critical services, any Legislature would be hard-pressed to spend the money on anything other than those areas.
Sen. Richard Devlin, D-Tualatin, co-chairman of the Joint Legislative Committee on Ways and Means, says going against voters wishes would stir up political backlash.
They could use it (Measure 97 revenue) for anything they want at their own peril, Devlin says. If it passes, the voters would have spoken very clearly that they want these things improved.
The Legislature has modified ballot measures in the past to fix sections that didnt work or to add clarity, but Devlin says lawmakers have generally adhered to the intent of such laws. For example, lawmakers have made several tweaks to Measure 91, which legalized recreational marijuana, after voters approved the law in 2014.
Obviously youll run into some marijuana advocates wholl say we didnt follow what theyd hoped for, and youll probably run into some people who werent advocates who said we went too far, but I think the Legislature actually tried to follow the spirit of the law, Devlin says.
Proponents of the measure and lawmakers already disagree on interpretations of the intent of Measure 97. Lawmakers on the Ways and Means Committee have said some of the revenue from Measure 97 could be used to help offset about $885 million in projected cost increases to the states public pension program, known as the Public Employees Retirement System.
It could be used for reserves or PERS, if its needed to, says Rep. Peter Buckley, D-Ashland, who co-chairs the committee with Devlin.
Driessen says using Measure 97 revenue for PERS would conflict with the intent of the initiative. But lawmakers say that view denies the reality that PERS is part of the budgets for K-12, health care and senior services.
I could put a certain amount into K-12 and say Im not covering the PERS funds; then the school districts dont have that much in additional resources because they do have to cover the PERS costs, so it isnt like there is a barrier between these two, Devlin says.
Lawmakers also want to have the flexibility to repurpose revenue in the event of an economic downturn or other financial crisis, in order to avert layoffs or cuts in basic services, Buckley says.
Youre going to get this from both sides, Devlin says of the battle over IP 28. One side is going to say the Legislature can do whatever they want with this so then you shouldnt approve the measure. The other side is going to say: Voter, youre going to get everything you ever wanted if you vote for the measure.
Brown endorses tax measure
Gov. Kate Brown announced last week that she is supporting a controversial corporate sales tax measure on Novembers ballot. Measure 97, formerly known as Initiative Petition 28, would levy a 2.5 percent tax on certain corporations Oregon sales exceeding $25 million.
I have spent my career fighting to make Oregon a place where everyone can thrive, Brown said in a statement. I support Measure 97 because there is a basic unfairness in our tax system that makes working families pay an increasing share for state and local services, including public schools, senior services and health care. By some measures, Oregon is among the lowest in corporate taxes, and Oregonians expect everyone to pay their fair share.
Our state cannot move forward and meet Oregons growing needs over the next decade without a more stable revenue base, Brown said. Measure 97 is an important step forward, and I will make sure the funds the measure yields go towards schools, health care, and seniors, as the voters expect.
Bud Pierce, Browns Republican challenger in the November governors race, said he was disappointed that Brown is supporting what would be the largest sales tax increase in Oregons history.
If passed, this tax increase would greatly raise the cost of living in Oregon, Pierce said in a statement. Everyone, including low-income families, would be paying on average more than $1,800 per family more for goods and services. A tax increase like this will not help anyone. It will hurt low-income families in Oregon the most.
State Rep. Ann Lininger, a Democrat from Lake Oswego, has publicly announced her support for Measure 97; Republican Patrick De Klotz, who will challenge Lininger for her District 38 seat in November, opposes the tax.
Lake Oswego City Councilor Jeff Gudman, the GOP candidate for state Treasurer, also opposes the ballot measure.