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    Oregon Tax Measure On Table

    BY Charles E. Beggs
    02/01/2004
    by Charles E. Beggs on 2/1/04.

    SALEM, Ore. -- One year after they voted down one tax increase, Oregonians are facing a decision on whether to raise their taxes by $800 million to avert sharp cuts in state funding for schools, the needy and law enforcement.

    Ballots in Oregon's unique vote-by-mail system will be counted Tuesday. Voter rejection of the Measure 30 tax package would automatically trigger $544 million in spending cuts, putting even more of a squeeze on a state that has become known for incessant budget turmoil.

    The core of Measure 30 is a temporary income tax surcharge. A household with the state's median $41,000 annual income and filing a joint return would pay about $36 a year more in tax.

    But opponents of Measure 30 said Oregonians cannot afford any more taxes, noting that the state has had the nation's highest unemployment rate for much of the past two years.

    "You can't tax your way out of the slump," said J.L. Wilson, Oregon director of the National Federation of Independent Business.

    Supporters of the package argued that failure of the tax increase would be yet another loss for Oregon, one that could scare away investors and people thinking about moving here.

    "We, simply as a business community, cannot withstand more negative publicity," said Lynn Lundquist, leader of the Oregon Business Association, a lobbying group based in the Portland area.

    On Jan. 28, 2003, residents rejected a $310 million income tax boost that was intended to balance the last budget. As a result, the school year was shortened, scores of state police troopers were laid off, and thousands of low-income people lost state health plan services.

    If Measure 30 fails, Oregonians can expect more of the same, officials said.

    Most voters oppose the tax boost, according to polls taken in mid-December. Mistrust of government plays a part in that opposition.

    "I feel like I don't know where the money's going," said barber Walt Yoder, who opposes the increase. "They're not giving a very good accounting."

    Oregonians have not voted to raise the state income tax since it was adopted in 1930. Efforts to pass a sales tax -- Oregon is one of five states that lack one -- also have failed.

    Gaping holes opened up in the state budget for the past two years as the recession eroded tax revenue. During that period, about $1 billion was slashed from state spending to balance the budget.

    The legislature passed the $800 million tax package contained in Measure 30 in August in a desperate bid to avoid cutting funds for schools, welfare programs and law enforcement. Anti-tax groups, led by Citizens for a Sound Economy, had no problem collecting enough petition signatures to refer the tax measure to the voters.

    If Measure 30 fails, schools will take the biggest hit -- of the $544 million in spending cuts, $295 million would come from aid to local schools.

    The Oregon Health Plan, which extends health insurance to low-income people who do not qualify for Medicaid and once was touted as an example for the nation, would lose $182 million. If Measure 30 fails, almost 50,000 people would be terminated from the state health plan, returning recipients to just the basic Medicaid coverage required by the federal government.

    "It has enormous human and fiscal implications," said former governor John Kitzhaber (D), who drafted the health plan while a state senator.

    Anti-tax activists argue that threats of deep spending cuts are being used to win support for a tax increase, and that if they tried, lawmakers could find plenty of fat to be slashed from state spending.

    "These are scare tactics," said Russ Walker, Northwest director of Citizens for a Sound Economy. "I'm confident that legislators will come back in and fund the core functions -- education and public safety -- and make sure the most needy in our society manage to get taken care of."

    Gov. Ted Kulongoski (D), who supports the tax increase, said he is not inclined to call a budget-juggling special session but to let the cuts take effect: "I'm trying to get the public to believe that when the government says something in fact will happen that, in fact, it will happen."