Anti-Tax Groups Take Their Battle to the States

An upcoming referendum asking Oregon voters to choose between higher taxes or millions of dollars in spending cuts could reverberate across the nation.

The state is the latest proving ground for national anti-tax groups that have set their sights on state capitals after gaining clout in Washington under Republican control of the White House and Congress.

Anti-tax groups have shifted focus largely because their work is finished in Washington. In three years, President Bush has signed a series of tax reductions that have added hundreds of billions to the national debt. But most states forbid deficit spending, so pressure to raise taxes is greater when revenues fall short of obligations.

In that regard, the Feb. 3 vote in Oregon serves as a referendum on the anti-tax movement itself — the endurance of its anti-government message and its ability to shape elections from the presidency down to state and local offices.

“We think we’re doing pretty well at the national level — tax increases are off the table,” said Paul Prososki, state government affairs manager for Americans for Tax Reform, a group with close ties to the Bush White House. “The battle has moved to the states.”

Anti-tax advocates predict Oregon voters will reject the $800 million tax increase in resounding fashion. In doing so, they would add an exclamation point to the message that politicians at every level — especially Republicans — risk their careers by raising taxes, advocates said.

Supporters of the tax measure, however, see an opportunity to call the movement’s bluff. After significant state budget cuts in the past two years, they said, Oregon voters at last should be able to see the tradeoff between taxes and the quality of services such as schools and health care.

“The idea that we can tighten belts and do less without inflicting serious harm on vital public services is incorrect,” said Jeff Thompson, an economist with the Oregon Center for Public Policy, a progressive research group in Silverton, Ore. “There is a real choice, and belt-tightening just won’t cut it.”

Since the recession of 2001, few states have escaped the pain of budget deficits. As in Oregon, legislatures have reduced services and benefits. Some also have tapped trust funds or, like California, proposed selling bonds to fill the gap. At least 18 states have raised sales or income taxes in the past year.

But Oregon’s proposal, known as Measure 30, stands out among state fiscal remedies because it presents a clear choice between higher taxes and prescribed cuts of government services. More important for politicians and interest groups, it puts the choice directly in voters’ hands.

Despite signs of economic recovery, many states are wrestling with persistent deficits, and a big win in Oregon could give anti-tax advocates added leverage in other state capitals, as well as in U.S. House and Senate races this fall.

“To the extent that lawmakers in other states are nervous about raising taxes, definitely a lot of people are going to have their eyes on what happens in Oregon,” said Matthew Gardner, an analyst with the Institute on Taxation and Economic Policy.

Immediately before Oregon, Alabama was the focus of the anti-tax movement. And the outcome of that state’s referendum in September was resounding.

Alabama’s Republican governor, Bob Riley, last year proposed $1.2 billion in new taxes. As a congressman, Riley had opposed tax increases on principle. But he tried to build support in the deeply religious state by casting the plan as a moral duty to help the poor.

Leading up to the vote, Americans for Tax Reform issued a series of “fact of the day” media statements to counter Riley. In one, the group seized on a quote from a frustrated Riley aide who said the proposal was foundering in opinion polls because Alabamians were “too stupid to know better.”

The proposal lost by an overwhelming 2-1 ratio. The loss crippled Riley politically, and his failure became an example that Americans for Tax Reform will use to intimidate Republican politicians in other states, including Oregon.

Shortly after the vote, the group’s leader, Grover Norquist, told The Washington Post, “Every Republican governor who thinks of raising taxes next year will walk past Traitor’s Gate and see Bob Riley’s head on a pike.”

In Oregon, Citizens for a Sound Economy has emerged as the most prominent national anti-tax group opposing Measure 30. The group became involved at the request of members in Oregon, said Brenna Hapes, a spokeswoman at the group’s Washington headquarters.

The group’s main goal in Oregon is to draw attention to its view that taxes threaten economic growth, she said. And on a purely political level, its ability to help gather 118,000 signatures to put Measure 30 on the ballot should serve as a lesson to leaders in other states.

“There were a lot of governors that were turning to taxes when that’s not the problem,” Hapes said. “People don’t want you to raise their taxes. They want you to start spending their money more efficiently.”

The success of the anti-tax movement in Oregon and across the country has been particularly frustrating for progressive groups that see government cutbacks as a threat to the welfare of society’s poorest and least-educated citizens.

Several said they fear that voters will be swayed by the simplicity and self-interest of the anti-tax message but will discount the consequences of budget reductions — bigger classes in schools, limited health care and poorly maintained roads.

“We’ve seen several solid signals that people want more government services,” said Thompson, the Oregon Center economist. “But they tend not to want to pay for them. So there is a disconnect.”

Jan. 26, 2004

(Dave Hogan of The Oregonian staff contributed to this report. Jim Barnett can be contacted at