Oregon Rejects Tax Increase as States Set Ballot Fights


Oregon voters overwhelmingly rejected a tax hike Tuesday, discarding the wisdom of the legislature and granting a victory to national anti-tax groups who fought against the measure.

About 60 percent of Oregon voters rejected the $800 million tax increase, initial vote-by-mail results showed. Last year, a similar increase was rejected 55 percent to 45 percent. [See Stateline.org, Jan. 29, 2003, Oregon voters reject tax hike, face cuts].

Measure 30's failure triggers cuts of $299 million for schools, $58 million for public safety and $188 million from the Oregon health plan, according to state data.

Last year, Oregon was the butt of jokes for having to cut short its school year 17 days or run out of money. In this year's vote, Oregon faced much the same situation: tax or face the consequences.

The special election comes after voters second-guessed the legislature by blocking its attempt to raise taxes and gathering signatures to force a statewide vote.

Opponents, backed by national anti-tax groups that helped sink Alabama's proposed tax increase last fall, said the plan would have cost Oregon jobs and hurt its economy, while backers predicted citizens want to do their part to soothe the sting of state budget cuts.

Oregon's referendum was among the first batch of statewide ballot measures this election year. More referenda follow next month -- on the same day that Georgians and Californians pick a Democratic nominee for president, they also will decide ballot questions with consequences for state flags and budgets.

Georgians will choose March 2 between a red-and-white striped state flag that began flying in 2003 and its predecessor, a blue-and-gold flag. Backers of a 1956 flag with the Confederate battle emblem that flew until 2001 were unable to find a legislative sponsor to put that flag on the ballot.

On the same day, California voters will consider two measures to raise bonds and require a balanced budget that are being pushed by Gov. Arnold Schwarzenegger to patch up the state's dire financial situation. [See Stateline.org, Jan. 14, California budget fix hinges on twin ballot issues.]

North Dakota voters will decide whether to let the Republican-controlled legislature decide how fiscal impact statements are created June 8. Another North Dakota ballot measure would let companies sell more stock without shareholder approval.

In several states, signatures are still being gathered to get measures on the November general election ballot, but initiatives in a handful of states have qualified already. Click here for a list of 2004 statewide ballot measures.

In Oregon, tax increase supporters said the price of failure on Measure 30 is high: 55,000 low-income people will lose health insurance, class sizes will increase and the school year might be cut short again.

"Many school districts will have to cut teachers or cut days. We'll be back in Doonesbury," said Andi Jordan, Oregon PTA vice president, referring to cartoonist Garry Trudeau's caricature of last year's severe budget cuts that gave Oregon students an early start on their summer vacation. PTA is part of the Yes on 30 coalition.

Measure 30's tax hike would have raised corporate minimum taxes, decreased seniors' medical deductions, and reduced the discount for early payment of property taxes. The state has no sales tax, so corporate and individual income taxes are the bulk of the state's revenue. A middle-income Oregonian would have paid about $81 more taxes a year, according to an analysis by the Oregon Center for Public Policy. Measure 30 also would have extended the 10-cent per pack cigarette tax through 2005.

National anti-tax groups such as Citizens for a Sound Economy led by U.S. House Majority Leader Dick Armey (R-Texas)-- that also fought against Alabama's unsuccessful tax referendum -- worked against Oregon's Measure 30.

To the Libertarian Party and other Oregonians more leery of tax increases, Measure 30 excused legislators and the governor from cutting waste and unnecessary programs. Anti-tax groups contended Oregon's economic downturn, which has lasted longer than the nation's, would only worsen.

The U.S. unemployment rate in December was 5.7 percent, well below Oregon's 7.2 percent posting.

"You don't fix unemployment by taxing the employer and the unemployed. Our big focus has been eliminating vacant state employee positions," said Jason Williams, executive director of the Taxpayer Association of Oregon, part of the Stop Oregon Tax coalition.

A dozen Oregon newspapers endorsed the increase. "No matter what you hear, Oregon has no realistic Plan B' if this tax measure fails," The Oregonian editorialized in support of the tax increase.


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