YES ON 30

[January 14th, 2004] To much fanfare (and a fair share of cynical sniping), Oregon recently adopted a new marketing slogan: We Love Dreamers. But one look at the ballot that's showing up in voters' mailboxes this week reveals that, on the contrary, Oregon is a state desperately bereft of big ideas--or at least good big ideas--and has become a place where political life is a recurring nightmare.

But grownups must confront their apparitions, and Measure 30, to some degree, is just that--an $800 million tax increase that appeared late in the 2003 legislative session and was referred to voters by the state's Republican Party, among others. We strongly urge a yes vote--mindful that most Oregonians disagree with us--because of the belief that the nightmare without these taxes is far worse than the one with. Here's why:

1. Defeat of M30 will hurt.

Talking with those on both sides of this issue, we found agreement on many of the issues facing this measure, which would raise taxes, largely from a three-year bump in personal and corporate income taxes.

Both sides agree that without this revenue there will be pain.

The governor has been very careful not to predict catastrophe if this measure fails, well aware that Barbara Roberts, the last governor to predict blood in the streets while campaigning for a tax measure, became a single-termer. And the opponents of this measure--at least those who aren't bomb throwers--have acknowledged that cuts will be necessary. While each side does not agree on exactly how painful these cuts will be, reducing the state's general-fund budget by 7.5 percent will leave Oregon even less of a place for dreamers.

K-12 schools would take the biggest hit, more than $400 million. Individual districts would decide how to balance their reduced budgets, but that cash could translate to 8,000 teachers. Or 27 school days. Since some districts structured their budgets with the referral in mind, the cuts wouldn't be that drastic, but some schools would definitely lose teachers, and thousands of kids will be starting summer vacation earlier than expected.

Social services also would get hammered. The reduced budget approved by lawmakers would virtually eliminate the Oregon Health Plan, which currently provides coverage for 61,000 adults who are poor but not poor enough to qualify for the federal Medicaid program. In addition, 125,000 low-income Oregonians would lose their dental coverage, and 2,000 women would become ineligible for prenatal care.

State prison officials have little discretion over how long they can keep adult inmates, so the biggest effect on public-safety budgets would fall on county jails, which have already reduced the number of beds being filled each night, and would lose another $18 million in state funds.

2. Big changes don't come easily--or quickly.

Both sides of this debate also agree that Oregon's government and tax systems are in need of structural reform--and praise the Legislature and the governor for having brought about huge savings in the state's Public Employee Retirement System (savings which are being challenged in court by public employees' unions). And we agree that there's more work to be done in Salem.

We think it's outrageous that bar owners continue to keep 32 cents of every video-poker dollar spent. We'd like to see a pilot program to allow early release of those inmates in costly state prisons who are unlikely to commit new crimes. And there's no good reason not to pool the health insurance of public-school teachers.

But we disagree with those who think the failure of Measure 30 will bring reforms to reality much sooner. All of these changes face uphill political battles, and few would deliver the cash needed to forestall the cuts outlined above. Similarly, the "quick fixes" touted by M30 opponents during our endorsement interview are elusive. Some ideas, such as not filling a purported 4,000 vacant state jobs, evaporate upon closer inspection. Others, such as selling the state-run workers' comp provider, are politically unrealistic.

M30 would give Oregon the breathing room, though we are mindful that much of our faith has to do with the still largely untested leadership of Gov. Ted Kulongoski. Will he--if given this reprieve--be willing to bring about real change in state government?

3. This won't kill the economy.

There are two arguments made by opponents of this measure that strike us as completely without merit. The first is that this measure will be bad for the economy.

While opponents say that implementing a tax hike during a recession will kill business, they offer little proof. In fact, Nobel Prize-winning economist Joseph Stiglitz came to Oregon last year and said that the tax hike would have negligible effect on Oregon's economy--far less of an adverse effect, he said, than if the measure were to fail.

Besides, this idea that the tax measure will make us less competitive with other states is hooey. All over the nation, states have responded to this recession by raising taxes. Seventeen states have increased their sales taxes while another 10 have raised income taxes.

Oregon's largest home-grown business, Nike, is supporting the measure, while the state's largest business lobby, Associated Oregon Industries, and largest private employer, Intel, remain neutral. (The Oregon outpost of the National Federal of Independent Businesses opposes M30, while the Oregon Business Council supports it.) As Nike spokesman Paul Kelly told our editorial board, business owners don't like paying more taxes, but what they really fear is the uncertainty that Oregon's constant budget battles have put on our schools, local governments and bond ratings.

4. It's fair, and affordable.

The second bogus argument that opponents make is that the tax is unfair and unaffordable.

M30 eliminates a few deductions across the board (it reduces, for example, the discount for prepaying one's property taxes), but the lion's share of this measure is a progressive income tax, which hits the wealthy harder than it does the middle class. And, it doesn't hit it anyone very hard. The typical Oregon taxpayer (a joint filer earning $59,000 annually) would pay an extra $8.17 per month. In fact, as the Oregon Center for Public Policy has documented, the extra state taxes we're being asked to pay are much smaller than the tax break we're being given by George Bush (see chart, page 7).

So is this newspaper a huge fan of Measure 30? Hardly. This is a weary, unimaginative counterpunch offered by those who defend government as something more than a necessary evil.

It is not a visionary plan but a politically practical way to drive away, at least for a while, Oregon's fiscal phantoms. For that reason, we urge voters to pass this measure but also implore its proponents, regardless of the outcome, to not only dream about long-term solutions, but bring them to reality.

The Multnomah Factor:

Voters in Multnomah County face an interesting choice on M30. Last year, following the defeat of Measure 28--another effort at raising state taxes, which failed--Multnomah County voters approved a local tax hike to shore up schools, social services and jails. (The Beaverton School District did the same for its schools.) If Measure 30 passes, Multnomah County will refund about one-fifth of the local tax increase. That might sound like scant relief, but because M30 places more of a burden on wealthier taxpayers than does the local tax surcharge, county officials say about two-thirds of county taxpayers would actually pay less overall if M30 passes.