Governor's Plan Includes Tax Increases

Article excerpt

Byline: DAVID STEVES The Register-Guard

SALEM - Gov. John Kitzhaber on Wednesday ordered the Legislature into a special session in two weeks to consider increasing taxes on cigarettes, beer and wine and repealing a voter-passed income-tax cut to help cover a state budget gap.

Kitzhaber's proposal would combine $244 million in taxes with $394 million in cuts and $201 million from dips into one-time revenue sources to close a $700 million revenue shortfall in the state general fund caused by Oregon's recession.

The budget gap increases to $830 million when adding in projected cost increases for such things as food stamps and health care for poor people.

The Democratic governor also unveiled a plan to double the vehicle registration fee to pay for additional road projects - at $70 million a year - and to impose a real estate transfer tax - raising $60 million - to partially capitalize a rainy day fund.

Using his constitutional authority, Kitzhaber called lawmakers back to work starting Feb. 8, but he may have difficulty persuading the House and Senate's Republican majorities to take up his plan.

The state constitution requires a 60 percent supermajority to approve any legislation that raises taxes or fees. House Speaker Mark Simmons said it was "unrealistic" to expect the Legislature to enact the governor's plan.

"He wants tax increases that cannot pass in the House," Simmons said. "That is no way to meet the needs of Oregonians and find a solution to the budget shortfall."

Should the Legislature approve the governor's proposal to repeal last year's Measure 88, anti-tax activist Bill Sizemore said he would gather signatures to campaign for its reinstatement through the ballot. Kitzhaber's idea "borders on a bait and switch" to voters, Sizemore said.

The Legislature should balance the 2001-03 budget entirely through program reductions, Sizemore said, though he added that he wouldn't oppose a cigarette tax increase because it stands a good chance of winning voter approval.

"Cuts is what we want. Just cuts, cuts, cuts," said Sizemore, head of Oregon Taxpayers United and a former gubernatorial candidate.

But Kitzhaber said people shouldn't view his plan as a simple matter of taxes vs. spending cuts.

"It's a message about accountability. Accountability to step up to the plate and pay for those state programs and services we think are important," he said.

"And if they aren't important enough to pay for without borrowing from the future, without accounting tricks, without leaving the decision on how to fund them for somebody else to make, then we should cut them."

Kitzhaber called his approach "pay-as-you-go" and contrasted it to one laid out last week by legislative leaders.

The leaders' plan calls for deeper cuts ($526 million) and a greater reliance on money from one-time resources ($320 million).

Kitzhaber said that approach doesn't ensure that the state takes in enough revenue during each budget period to pay for the programs citizens want, and called it a "continuation of the shortsighted policies that we pursued in the 1990s."

Kitzhaber cited $4 billion in reduced property taxes from 1990's Measure 5 that would have gone to schools and local governments, and $1.5 billion in accumulated tax rebates through the kicker tax rebate law.

Advocates for public spending generally voiced support for the governor's proposal. John Marshall, chief lobbyist for the Oregon School Boards Association, said it would be tough for public schools to absorb a $112 million cut, but that's better than postponing cuts by turning to one-time resources that eventually will dry up.

"This lays the cuts out so we can deal with it next year," he said. …