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Referendum on tax hike likely

BY James Sinks
11/26/2003
by James Sinks on 11/26/03.

SALEM — In order to ask voters to repeal roughly $800 million in new state taxes and fees, foes faced a seemingly daunting task of gathering 50,420 voter signatures in three months this fall.

At Tuesday's deadline, they almost tripled that goal and delivered 147,340.

Secretary of State Bill Bradbury has until Dec. 9 to determine whether there are enough valid signatures, but political observers say the sheer number of signatures is a virtual guarantee the referendum will qualify for a Feb. 3 ballot.

Anti-tax activists celebrated the submission of the petitions in the Capitol lobby and turned their focus to the election, in which they predicted a defeat of the Legislature's package of permanent and temporary tax hikes.

Early polling shows that voters, if asked to raise taxes on themselves, will decline.

"We have confirmed through this process the citizens of our state are outraged by what the Legislature has done," said Russ Walker, state director of Citizens for a Sound Economy, before helping wheel three loads of boxes into the elections office.

He said it was easy to collect signatures from people who don't like taxes, and it will be easier yet to win at the ballot box.

"This had to be the easiest job on the planet," he said.

Only about one-sixth of the signatures were acquired via paid petition circulators, he said. Most of the rest came through the mail.

Richard Burke, executive director of the state Libertarian Party, said people were eager to sign, even in liberal locales such as Eugene.

"I've never seen anything like it and I've been doing initiative stuff for more than 10 years," he said. "They just flew on the page."

If the taxes are overturned, the biggest drop in state funding would be to classrooms, universities and public health care. Cuts are also scheduled to occur in the criminal justice system, including courts and prisons.

The prospect of more service reductions is unsettling so soon after the last round of cuts in 2002, said Ellen Lowe, an advocate for low-income people and who lobbies for the Oregon Food Bank and United Way.

"The initial hit will be to those who are most vulnerable and are dependent on services, but all of our children in K-12 are dependent on a quality system," she said.

At the end of an acrimonious eight-month session, lawmakers narrowly passed the tax increases in order to maintain many — but not all — government services despite a decline in tax revenue due to the sluggish economy.

Gov. Ted Kulongoksi, who supported the compromise package, said in a press statement that the referendum undercuts a balanced budget deal and causes uncertainty on the part of the state's schools and businesses.

In addition, he rebuked sponsors for seeking to overturn taxes on cigarette companies and maintain a minimum tax of $10 annually for companies like Enron.

"The organizations that funded this petition drive believe that it is better to give tobacco companies a tax break than keep people on the Oregon Health Plan," he said.

The centerpiece of the package is a three-year income tax surcharge that would raise an estimated $544 million in the current budget cycle, which ends June 30, 2005.

The median Oregon family earning $48,680 a year would pay an additional $36 a year in taxes. A family that earns between $70,000 and $100,000 would pay an additional $177 annually.

The state relied on a similar income tax surcharge to help weather the early 1980s recession.

The Legislature spent the past two years cutting spending by $1 billion, resulting in shorter school years across the state, trooper layoffs and cuts in benefits for the poor and the elderly.

If voters reject the referendum — it will be Measure 30 — a new round of reductions would ensue.

Sen. Gary George, R-Newberg, who attended Tuesday's press conference, said voters think they spend plenty on government — something that was abundantly clear when they defeated Measure 28 — a similar tax hike — in January.

"What part of no didn't we understand?" he said.

In their final budget negotiations, lawmakers identified where $544 million in cuts will automatically occur in the event of a repeal.

The remaining budget reductions would be across-the-board, unless the assembly reconvenes for a special session.

Walker said the anti-tax coalition, the Taxpayer Defense Fund, has raised $600,000 so far to defeat the referendum.

And assuming it fails, as he hopes?

Walker said lawmakers will be forced to come up with different solutions that will be more palatable to taxpayers and businesses, such as borrowing money and cutting state jobs.

Sen. Rick Metsger, D-Welches, whose district includes Hood River County, said the public doesn't want to slash services further or come up with "funny money" solutions like putting the state deeper in debt.

"There is not an easy way out," he said. "After months of debate, this is the solution we found. The problem hasn't changed from what we dealt with, but now it will be debated in a different forum."

Rep. Tim Knopp, R-Bend, who opposed the tax package during the session, said voters will decide that they can spend the money better than government can.

"We are starting to come out of a recession and taking more revenue out of private hands and putting it into public hands would slow that recovery," he said.

"There's no question the Legislature and state government would have to get by on a reduced budget if it is repealed, which I think is likely based on the people I have talked with in Central Oregon," he said.

The money at stake will eclipse Measure 28, which triggered about $310 million in cuts when it was defeated.

After that measure failed, state courts were reduced to a four-day week and criminal cases were postponed, schools closed their doors early and state aid was eliminated for some elderly people.

Jacqueline Zimmer Jones, of the Oregon Association of Area Agencies on Aging and Disabilities, said Tuesday that many of those programs cut earlier were never brought back — and now more cuts are a possibility.

Many of those lost services just push the elderly into nursing homes faster, she said.

"I had a person call me today who is 61 years old who had back disk surgery and had never called anybody from the state before, but is in real pain and needs help," she said. "I'm about to call him back and say we don't help people in Oregon anymore."

Bend-LaPine Schools Superintendent Doug Nelson said Tuesday there's little doubt the measure will qualify for the ballot, but he's holding out hopes that voters might ultimately support the taxes — much like lawmakers did.

"I don't think school districts or other agencies have explained what the effect of a defeat will be on schools or other state agencies," he said.

Bend-La Pine alone would have to cut about $5.2 million from its budget next year, according to figures from the state Department of Education. In Bend-La Pine, the district's current $82.6 million budget would be reduced to $77.4 million next year if voters give the referendum a green light.

Karen Rawnsley, financial officer for the Redmond School District, said Monday that the district would need to cut $4.1 million from its projected 2004-05 budget of $37.1 million.

In Jefferson County, Superintendent Phil Riley said he hasn't worked out all the details, but projects a $2 million cut to his district's $25 million budget in 2004-05.

Crook County Superintendent Gary Peterson said that he planned to discuss the issue with board members during the board's Dec. 8 meeting.

James Sinks can be reached at 503-566-2839 or at jamess@cyberis.net.