CITIZEN PANEL HEARS MEASURE 85 ARGUMENTS

From The Statesman Journal:

By: Peter Wong

Supporters and opponents agreed on one point Tuesday when they pitched their arguments about Measure 85: Oregon’s “kicker” law, which dates back to 1979, leaves a lot to be desired. Two dozen citizen panelists heard the arguments at the Salem Conference Center.

They will have their say Friday, when they wrap up a weeklong review of a measure that would effectively end rebates of excess corporate income taxes when actual collections exceed 2-year-old projections in the state budget cycle.

The refunds, which are triggered by a “kicker” of 2 percent, would go instead to state aid for public schools. The change, if approved by voters Nov. 6, would not affect personal income taxes.

“It’s not good public policy to base this state budget on a revenue estimate that happens long before the fact and gives money back if that forecast is off,” said John Mullin of the Human Services Coalition of Oregon, which has been critical of the kicker.

Measure 85 would amend the Oregon Constitution, where voters placed the kicker in 2000.

Supporters did not embrace Measure 85 as the solution to Oregon’s dependence on income taxes for state services and aid to public schools.

“But it fixes one piece of what’s wrong with our tax system,” said Jody Wiser, executive director of Tax Fairness Oregon.

Among those opposing Measure 85 is Sen. Frank Morse, R-Albany, who has advanced alternatives for diverting excess income tax collections into reserve funds for the state budget. None has reached a statewide ballot.

“The kicker does have a dampening effect on the growth of government,” Morse said. “That’s a good thing. But what it does is create a hurdle for establishing stability funds.”

Morse conceded that Measure 85 was likely to pass, “and voters will think they have solved Oregon’s problems.” If it fails, he added, “we probably have buried any possibility of a (legislative) referral to voters to amend the Oregon Constitution and suspend the kicker.”

Supporters and opponents also argued about the measure’s implications for business.

John Calhoun, a Portland entrepreneur who spent 19 years with Intel Corp., said most small Oregon businesses do not benefit from corporate refunds because they do not pay corporate income taxes. He said 80 percent of the current refunds go to businesses based outside Oregon. “No business will make investment decisions based on the fact that it might get a kicker refund sometime,” Calhoun said.

Calhoun said according to a study by the Council on State Taxation released last month, based on 2011 data, Oregon is tied with North Carolina for the lowest rate of business taxation at 3.5 percent of gross state product.

Oregon has a high personal income tax rate, Calhoun said, but it is offset by low property taxes and no general sales taxes. He said businesses’ share of Oregon tax collections is 41.8 percent, less than the 45.9 percent national average.

Steve Buckstein, senior policy analyst and founder of Cascade Policy Institute in Portland, offered a differing view.

“If they can do this to big corporations, they can do it to you,” he said, referring to the possibility of a future attempt to change personal income-tax refunds under the kicker.

Although Buckstein is also opposed to Measure 85, he said he would prefer a stricter state spending limit, linked to population growth and inflation, rather than the kicker.

“But that is what we have,” he said. “Without it, we would have much less control over the growth of government in Oregon.”

Buckstein said there’s nothing in Measure 85 to prevent lawmakers from using excess corporate income taxes to offset other sources of money in the budget for state education aid, leaving schools no better off.

What was notable about the two presentations at the Salem Conference Center was that neither the union sponsors of Measure 85 nor major business organizations took part.

The measure’s sponsor is Our Oregon, a union-funded group, whose spokesman said last week it would not make a presentation. Oregon’s major business organizations have not taken a stand on the measure.

This year marks the third election cycle in which selected ballot measures are studied by citizen panels overseen by Healthy Democracy Oregon.

A different panel will consider Measures 82 and 83, which would authorize Oregon’s first private nontribal casino, at similar sessions Aug. 20-24 in Portland.

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