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October 17th, 2012 12:01 am WW Editorial Staff | Cover Story

Risky Business

There’s a time for playing it safe... and our 2012 Endorsement Issue says this is one of them.

State Measures

Measures 77 and 78 - Disaster Emergency Powers

Vote: YES

Measure 77 grants the governor an authority we hope is never necessary: to call the legislature into emergency session and direct response and spending in the case of natural or human-caused “catastrophic disasters.” These special powers would last only 30 days unless lawmakers extend the governor’s authority. Measure 78 is purely housekeeping, making spelling and grammatical changes in the state constitution. The Legislature sent both measure to voters, and they deserve an easy—and important—yes vote.

Measure 79 - Real Estate Transfer Tax

Vote: NO

This measure is one of the most cynical and unnecessary initiatives we’ve seen in years. Real estate agents—middlemen—want to amend the constitution to ban a real estate transfer tax that’s already been illegal under state law since 1989. (Washington County had one before that, and it would continue regardless what happens to Measure 79.) 

If Oregon someday wants to consider a transfer tax, lawmakers should be able to debate the idea, and local voters can make their own decisions. But in the past two decades, no one has even gotten close to enacting a tax on the sale of property. Why is this coming up now? Realtors want to protect their own interests, spending more than $5 million in a misleading campaign to do so, and a handful of political consultants saw a fat paycheck by ginning up fear. Vote no.

Measure 80 - Legalizes Marijuana

Vote: YES

Measure 80 is the first Oregon ballot measure in 26 years that puts the question of legalizing marijuana in the state back in front of voters. It’s about time.

Pot prohibition has long been a costly failure for the justice system, even amid ever-broadening social acceptance of the drug.

This measure seeks to legalize, regulate and tax marijuana sales in Oregon. Opponents worry that legalization could expand drug use among teens, increase “drugged driving” and lead marijuana users to experiment with more dangerous drugs.

Nonetheless, DUII arrests did not increase consistently after the medical-marijuana law was made legal in Oregon in 1998. 

The measure is flawed—lawmakers will have to fix provisions, and it may not survive a test in court because of the way it could conflict with federal drug laws. It would also create an Oregon Cannabis Commission stacked with marijuana growers—not a great idea.

But passage will force lawmakers to confront reality. No one benefits—least of all the state coffers—from the prosecution of otherwise law-abiding citizens who use a drug that is already in wide circulation.

Measure 81 - Bans Gillnetting

Vote: NO

Is it too much to call this whole proposal fishy? Sport fishermen have pushed this measure to ban gillnet fishing in the lower Columbia River. (Gill nets are so called because they’re designed to snag fish by the gills.) Most other states ban gill nets; Oregon strictly regulates them.

But the argument for this proposal is weak. Native American tribes, who also use gill nets but wouldn’t be affected by the law, stand with commercial fishermen against it. And sport fishermen, who want more salmon, already take more fish than commercial fishermen. What’s more, the proposal would create inequalities between commercial fishermen from Oregon and Washington.

After this measure qualified for the ballot, Gov. John Kitzhaber announced he’s seeking a compromise—a far better course.

Measures 82 and 83 - Establishes a Private Casino

Vote: NO

These measures, taken together, would amend the Oregon Constitution to allow for a 3,500-slot machine casino at the defunct Multnomah Kennel Club dog track in Wood Village, just east of Portland. Voters thumped a similar idea in 2010, but two Canadian gambling juggernauts are making us all go through this exercise again.

We could talk about whether Oregon already depends too heavily on gambling to fund government, whether the state’s nine tribal casinos deserve protection, or if foreign investors should get a virtual monopoly over gambling in the Portland area. Or we could talk about 2,000 jobs “created” by this plan that would come at the expense of existing jobs and businesses stomped on by a casino masquerading as an “entertainment complex.”

Let’s talk instead about why the deal proponents are offering Oregon is a bad one.

Currently the Oregon Lottery generates more than $500 million for the state through video gambling machines. Bar owners fork over 75 percent of the revenues from those slots to the state. In Pennsylvania, private casino operators give the state 55 percent of gross revenues from slots. Among those paying that rate is a casino owned in part by Clairvest, one of the measures’ backers.

But here in Oregon, the plan would only give Oregon 25 percent of gross revenues. You don’t have to be a math major to figure out that’s chump change compared to the rate other states are getting, and what our own lottery now kicks back.

Proponents say casinos in other states don’t come with the big, shiny hotel, theater and water park that investors will have to pay for, and investors deserve a return on investment. But if Oregon is going to sell out even more to the lure of gambling, let’s at least make it worth our while.

It reminds us of an old poker saying: If you don’t know which player at the table is the sucker, it’s probably you.

Measure 84 - Repeals Estate Taxes

Vote: NO

Currently, Oregon taxes estates valued at more than $1 million at rates from 10 to 16 percent. This measure would phase out the estate tax over four years—and, even more generously, allow family members to give unlimited assets such as stocks, bonds or businesses to other family members tax-free.

It’s being pushed by Kevin Mannix, a former Salem lawmaker and gubernatorial candidate. Mannix raised $655,000 for this measure, and, by exploiting the tax code to launder it through his company, hid the money’s true source.

The lack of transparency of who’s funding the campaign is only part of the problem. Mannix says he’s trying to help the heirs of family businesses and farms avoid selling everything to pay estate taxes. But there’s already a $7.5 million exemption from estate taxes for farmers and foresters. And although Mannix talks about protecting small businesses, most of the assets in taxable estates are stocks and bonds.

It’s true that 31 states have no estate tax, but the tax-free asset transfer Mannix wants is unprecedented and would cost the state even more than the $120 million annual cost of ending the estate tax.

Mannix proposes the gutting of state tax policy under the ruse of reform, and would do so without a substantive public debate or a way to replace the money lost to schools, prisons and other services the state pays for. No deal. 

Measure 85 Repeals the Corporate “Kicker”

Vote: YES

The kicker check is one of the most bizarre structures in Oregon tax code. Triggered whenever the state’s revenue surplus is 2 percent more than it predicted, the kicker is divvied between individual taxpayers and corporations. It’s essentially an April 15 version of a Christmas bonus, handed out like packs of Lucky Strikes when Don Draper’s having a boom year.

As tax policy, it’s madness. A coalition of left-leaning tax reformers say the corporate side of that irregular windfall should go to schoolkids. They rightly note that it makes no sense to give refunds to corporations—most of them headquartered elsewhere—in a state where public schools must increase class sizes and shorten school years. They also say that a couple hundred million dollars every now and then will “help Oregon schools get off the financial roller coaster.”

It won’t: The kicker is so capricious, it’s more like building a Tilt-A-Whirl on top of the roller coaster. And the advocates can be rightly scolded for tiptoeing around the sacrosanct stupidity of the personal kicker. But no one is making a serious argument as to why any part of the kicker should survive.

We wish lawmakers would deal with the state’s tax structure in a comprehensive way. But the kicker is such silly policy, it’s exactly the place for half measures.

Local Measures

Measure 26-143 - Creates a Multnomah County Library Tax District

Vote: YES

You know what they say about books and covers. On its face, this is one of the easiest decisions on the ballot: Check yes and the beloved Multnomah County Library system returns to seven-day-a-week service and gets a reliable stream of revenue, taking the library off a string of special levies. The cost? Just 33 pennies added to every $1,000 of assessed value on an annual property-tax bill.

If only it were so simple. Our library is already uncommonly expensive—its annual budget is twice the national average per capita. We’re spending $81 per resident when libraries of similar sizes spend about $38 per person. And administrators have kept spending on capital projects and increasing the budget even after a severe warning from the county auditor that funding was unstable. 

Because of the mechanics of property tax limits, this measure will also cost the City of Portland at least $7 million in lost tax receipts. So not only is Multnomah County squeezing other jurisdictions by disguising a revenue grab, but it’s taking the most popular service it provides and making sure it never has to compete with other services come budget time.

So why vote yes? The Multnomah County Library system really is one of the finest in the nation. Its popularity is earned by circulating twice as many materials per resident as the average library: 34 books, tapes and DVDs each year. Though we’d rather see librarians forced to compete on the county’s general budget, here is the rare case of a public entity striving for excellence, not racing to the bottom.

We hate how the county crafted this measure, but we think it tells a compelling story.

Measure 26-145 - Reforms the Portland Fire and Police Disability and Retirement Fund

Vote: YES

This measure ends a loophole that has allowed police and firefighters to juice their lifetime pensions by retiring when there’s an extra pay period in the calendar year, inflating the final pay used to calculate retirement benefits. This change and other needed fixes will save taxpayers $46.6 million over the next 25 years. Not much, considering that the city’s unfunded FPD&R liability is $2.7 billion, and this troubled fund needs more reforms. Given that about a quarter of every dollar in property taxes paid to the city feeds this fund, any momentum toward change is welcome.

Measure 26-146 - City of Portland Arts Tax

Vote: NO

The backers of the “arts tax” begin with a valid premise. Arts education in schools is dwindling: 28 percent of schools within city limits have no arts education of any kind; Portland Public Schools has cut all arts instruction from the curriculum of 22 schools in the past two years. This measure, crafted by an arts lobby called Creative Advocacy Network and backed by Mayor Sam Adams, would begin to address this gap for elementary-school kids—guaranteeing one art or music teacher for every 500 public school students between kindergarten and fifth grade within city limits.

To get there, this measure requires every income-earning resident to pay a $35-a-year tax. People in households below the poverty line would be exempt, but tens of thousands of low-income Portlanders would still have to pay.

We love the arts, but the bigger policy question here is: Why should the city launch a new tax to fix a problem in public schools? And why this problem, and not, say, improvements to math and science?

Here’s the answer: It’s not all about the kids. The backers have finger-painted this as all about education, but a sizable chunk of the money—possibly as much as half—would end up with nonprofit arts organizations such as the Oregon Symphony, the Oregon Ballet Theatre, the Portland Art Museum and about 40 smaller groups. These organizations already have the means to raise funds; latching them onto the city’s spigot is unwise. 

This measure is being sold as a solution for schools, when the original (and as far as we can tell, primary) motivation was to provide a new subsidy for nonprofit arts groups that already enjoy tax breaks and have other ways to raise money. Even the City Club of Portland, in endorsing this measure, called it misleading. Backers have given fuzzy and contradictory claims about how this measure works—not a vote of confidence for approving a new tax.

Many arts organizations are small and deserve help; we suggest you write them a check right now. But should we tax low-income Portlanders to help support a night at the opera? Horsefeathers.

Measure 26-144 - Portland Public Schools Bond 

Vote: YES

It comes down to this: Portland Public Schools is one of the few districts in Oregon that has not issued bonds to build or repair school buildings. Even opponents—in this case the late Don McIntire, who brought Oregonians Measure 5, the property-tax limit that has helped starve public schools—don’t deny the district’s buildings are in bad shape.

Last year, voters narrowly rejected the school district’s $548 million bond request critics said was flabby and unfocused. The district reduced the request to $482 million and stretched out the payments so the hit on property taxes would be about $1.10 per $1,000 of assessed value. The board smartly chose a much more targeted approach: The schools with the most needs—Franklin, Roosevelt and Grant high schools and Faubion School—will get the first round of fixing.

It’s still a lot of money. But there’s a lot to do. Critics of this measure are right to note the district has been slow to sock money away for these kinds of repairs. A new capital savings fund has been created, but it’s not enough and it’s too late. Lesson learned, and the district could still use budget reforms. But students and teachers shouldn’t be held hostage in substandard buildings in the meantime. 

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