2nd of 2 parts

Summary: School districts and local governments hustled to deal with less
revenue as the Legislature struggled to provide more When Oregon voters
rejected an income tax increase a year ago, it had an undeniable impact on

Nearly half the state’s school districts ended the school year early. Some 8,000 poor Oregonians lost prescription drug coverage. Thousands of low-level criminals faced little or no prosecution for several months.

But as a vote on yet another measure to increase taxes nears, the big lesson of
the last year is that the threat — and even the reality — of cuts in services
doesn’t necessarily sway most voters.

Just as voters rejected Measure 28 in January 2003, polls show they also may
vote against Measure 30 and its $800 million package of tax increases in the
Feb. 3 special election.

Many voters appear less worried than legislators at the prospect of cutting
services. And many Oregonians say they are convinced that government can
protect the most important services by spending tax money more wisely.

“When my income goes down, I tighten my belt. And I think government ought to
do the same,” said Gregory Shoffner, 46, a welding and metal fabrication
subcontractor who lives in rural Deschutes County.

When Shoffner hears about program reductions, he said, his response is, “Cut it back more.”

Of course, not all voters share that attitude. Martin Richelderfer, 50, a wheat farmer who lives near Wasco, said the tax increase is a small price to pay to protect schools and other services.

“I earn less than $40,000 a year, and it’s not a big amount of money,” he said. On average, families earning between $30,000 and $40,000 would pay an extra $46 annually.

The lessons of Measure 28 have not been lost on campaigners on both sides of
Measure 30.

Critics of the latest tax proposal say voters have made it clear that
government should not be asking for increases during difficult economic times.

“The challenge is we can survive a lot of these cuts,” said state Republican
Chairman Kevin Mannix. Voters have “toughened themselves to the fact that a particular group would not get this or that benefit,” he added.

“I think taxpayers after the failure of Measure 28 saw very little difference
in their lives and the lives of their neighbors,” said Russ Walker of Citizens for a Sound Economy, which led the effort to refer Measure 30 to the ballot.

Supporters say they learned that many voters are indeed unaffected by cuts in

“Most people don’t participate in the mental health system; most people don’t
even have kids in schools,” said Democratic political consultant Mark Wiener. “Most people don’t feel the cuts directly.”

Some government spending is largely invisible to voters, said Chuck Sheketoff of the Oregon Center for Public Policy, which has published reports in support of the proposed tax increase.

In Sheketoff’s hometown of Silverton, “people love the hospital here, but they don’t realize it’s dependent on government money directly,” he said. A key source of revenue for hospitals around the state is the Oregon Health Plan, which provides coverage for the poor and is slated to be cut by about $180
million if Measure 30 fails.

Supporters change tack

Although backers of Measure 30 still talk about cuts in services if the tax
increase fails, they’ve changed their rhetoric in many ways.

Now such supporters as Gov. Ted Kulongoski put more stress on the idea that preserving government services will help the state’s economy. He says
businesses considering whether to locate in Oregon want good schools, stable social services and a strong criminal justice system.

John Marshall of the Oregon School Boards Association said there has been an intense debate among supporters about how much to talk about the “world-is- falling” nature of the cuts.

“We’ve argued that you have to talk about economic development, the importance of having good infrastructure” and of schools that will provide strong educational levels, Marshall said.

He acknowledged that this can be a difficult argument to make in an atmosphere of so much skepticism about how wisely government spends its money.

In fact, Mannix said he wins his loudest applause from audiences when he talks about internal reforms to reduce the cost of government. He’s proposed a long list of ideas that range across government, from indigent defense to the state motor pool.

“I really disagree with the way the cuts were done after Measure 28,” he said, arguing that the Legislature and governor failed to look at more fundamental reforms.

Backers of Measure 28 and Measure 30 have questioned the validity of Mannix’s ideas and said that critics are giving voters false promises that major cuts in services can be avoided.

But another lesson of Measure 28 is that it’s hard to predict just how spending cuts will play out given the complexity of government programs. For example, Gordon Fultz of the Association of Community Mental Health Programs said about 1,800 jobs in mental health, public health and drug and alcohol treatment were cut after Measure 28 failed. As a result, localities shut down a number of
treatment services.

That meant a variety of things to their clients. Some were able to continue
getting drugs to treat mental illnesses through a program offered by the
pharmaceutical industry.

The lack of treatment may have been a factor in some suicides, Fultz said,
adding that some former clients may have wound up in jail when they might not have before. And others went to emergency rooms, where their charity care became another factor in driving up the costs of health insurance.

The situation was complicated because the Legislature also borrowed $300
million to help cushion programs if Measure 28 was defeated and if the economic downturn continued. Legislators agreed to borrow the money against future money from a legal settlement against tobacco companies.

That helped ease some of the most painful cuts, but it also means taxpayers will be paying off the loan for 10 years.

Timing increases uncertainties

In Multnomah County, the failure of Measure 28 had a different effect: It
spawned passage of the state’s first local income tax. Voters in one of the
state’s most liberal counties wanted to avoid big cuts to an already
financially troubled Portland School District, and local leaders fashioned a
measure that also included some money for social services and public safety.

The local income tax was 2-1/2 times the rate increase contained in Measure 28. As a result, there’s much less an air of crisis this time in the state’s
largest county, where supporters know they need a large yes vote to have any
chance of winning.

The uncertainties could be even greater with Measure 30, in large part because
the budget situation is different.

Measure 28 failed in the last six months of the two-year budget cycle. State agencies had to make cuts quickly, and they didn’t have much flexibility. Local schools were in the middle of their academic year, and about all they could cut was the number of days they could operate, Marshall said.

If Measure 30 fails, schools and state agencies can absorb cuts over a period
of more than a year. Agencies also have more time to figure out cheaper ways of
doing things. And the impact will be reduced if the economy picks up, which
will generate more revenue for state government.

An area of uncertainty is the criminal justice system. If Measure 30 fails, the state will put a reduced priority on prosecuting lower level crimes such as auto theft.

Multnomah County District Attorney Michael Schrunk said that at a certain point the state could simply run out of money to handle those cases. And he said it will be hard to predict just how voters would react to that.

But he said he suspects they’ll say, “if Schrunk’s car gets stolen, that’s OK. But if my car gets stolen, they better file on that and send (the perpetrator) to prison.”

Jeff Mapes: 503-221-8209;