Voters will decide tax increase

SALEM- The Legislature’s tax increase package will go to voters at a Feb. 3 special election, Secretary of State Bill Bradbury announced Wednesday.

The development was no surprise because tax opponents turned in many more signatures than needed to put the measure on the ballot.

Based on a sampling of the referendum petitions, Bradbury said, there were 118,000 valid signatures from registered voters – far more than the 50,000 needed.

The referendum drive’s success means the $800 million tax increase package, including a $544 million income tax surcharge, is blocked until voters decide the fate of what will be Ballot Measure 30.

Lawmakers passed the tax increase in August, with most Republicans opposed, to balance the 2003-05 state budget and end a record-length session.

Opponents quickly launched the referendum attack, which was led by Citizens for a Sound Economy, a Washington, D.C.-based group that advocates lower taxes and less government.

A potentially expensive campaign is expected as backers of the measure try to counter voters’ usual dislike of higher taxes. Early polls have indicated most people oppose the measure.

Lawmakers who supported higher taxes said further cuts would do too much harm to core government programs, especially in the wake of repeated spending cuts made in special sessions last year as revenue declined.

Legislators opposed to the tax measure said spending should have been further reduced.

“We’re seeing a predictable voter backlash,” said House Speaker Karen Minnis, R-Wood Village, who opposes the tax increase.

A similar special election was held last January, with voters rejecting a $313 million income tax increase, triggering more cuts in the last two-year budget.

Opponents say a tax increase would stifle the economic recovery.

“I think voters are overwhelmingly opposed to this measure,” said Russ Walker, Oregon director of Citizens for a Sound Economy.

Defeat of the tax boost would trigger $544 million in automatic spending cuts in education, social services and other programs.

Balancing the budget would require either additional spending cuts of about $240 million by Gov. Ted Kulongoski – as across-the-board reductions – or holding a special legislative session that could reduce spending or take other steps.

The three-year income tax surcharge would cost a household with the state’s median annual income of $41,000 and filing a joint tax return about $36 a year, according to legislative revenue analysts.

The third year of the surcharge would be dropped if the economy improves and increases state revenue by a designated amount.

The ballot measure also would increase taxes on businesses and shave some income tax breaks, such as a medical expense deductions for seniors.

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