Economy is the wild card in Measure 30

SALEM — Read carefully the fine print in Measure 30, and you’ll find a small sweetener.

The centerpiece of the tax package, which appears on the Feb. 3 special election ballot, is a three-year income tax increase.

But there’s a possibility the tax surcharge could be assessed for just two years.

The wild card is the state’s economy, and how it performs in the coming year.

When the 2003 Legislature passed the tax package, it included an escape clause that ends the surcharge a year early — provided the state’s economist anticipates a sufficient rebound in tax collections to keep the budget balanced.

“It’s a 3-year surcharge unless certain economic benchmarks are met,” said Sen. Ben Westlund, R-Tumalo, one of the architects of the revenue package. “When we enacted the surcharge it was based on poor revenue forecasts, but if the revenue forecasts recovered to the point we don’t need the surcharge, we thought it would be unfair to tax Oregonians for that third year.”

Still, opponents of the tax measure say it’s unlikely the public will be swayed either way by that provision.

“Most people don’t even think the temporary surcharge will be temporary — there’s that level of distrust,” said Russ Walker, state director for Citizens for a Sound Economy and one of those who successfully referred the tax hike to the ballot.

And further, Walker believes the higher taxes proposed under Measure 30 would actually be a drag on the economy — meaning the state would be less likely to collect enough extra revenue to halt the income tax surcharge after two years.

Measure 30 gives voters the opportunity to decide whether to enact a hodgepodge of taxes that are part of the 2003-05 balanced budget passed last summer.

If the measure is defeated, agencies will need to lower their spending for the biennium accordingly. Among the cutbacks projected by agency officials: bigger class sizes or lost academic days in the schools, cuts in police forensic labs and parole supervision; and removal of at least 50,000 people from subsidized health care.

The surcharge is similar to a three-year income tax boost used to help weather the early 1980s recession. Other components of the measure include higher annual minimum taxes for corporations and a reduction in the discount for paying property taxes on time.

Under the plan, which would apply in 2003, 2004 and 2005, the taxes people owe would increase on a graduated scale from between zero and 9 percent — depending on their income. The median family in Oregon, which earns $48,680, would pay an extra $36 in taxes.

The surcharge would automatically cancel in 2005 if state tax revenue climbs by 4 percent or more above end-of-session projections by December 2004.

Rep. Tim Knopp, R-Bend, who opposed the revenue package during the 2003 session, said he sees little indication Oregon’s economic recovery will reach that mark.

“It probably won’t get going that good, that fast,” he said.

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

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