One year after nixing one tax hike, tax-allergic Oregonians are voting on another one

One year after they voted down one tax hike, Oregonians have again been 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 couldn’t afford any more taxes, noting that the state has had the nation’s highest jobless 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 black mark 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 Portland-based lobbying group.

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 say.

Most voters oppose the tax boost, according to the latest independent polls, 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 haven’t 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 revenues. During that period, about $1 billion has been slashed from state spending to balance the budget.

The Legislature narrowly passed the $800 million tax package contained in Measure 30 in August in a desperate bid to avoid inflicting even more pain on 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 don’t qualify for Medicaid and once was touted as an example for the nation, would lose $182 million.

If Measure 30 fails, close to 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 Gov. John Kitzhaber, 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, Oregon 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.”

Democratic Gov. Ted Kulongoski, who supports the tax hike, says he’s 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,” he said.