Posted on 01/24/2002 7:06:14 AM PST by SAMWolf
SALEM -- Gov. John Kitzhaber proposed a variety of tax increases Wednesday to help balance the state budget, chiding lawmakers for trying to plug an $830 million shortfall with "funny financing."
The Democratic governor's plan to rebalance the $12 billion budget would increase taxes on beer, wine and cigarettes. And he suggested lawmakers repeal Measure 88, an income tax cut voters approved in 2000 that is scheduled to take effect for the 2002 tax year.
Republican leaders swiftly denounced the plan, saying it doesn't have the votes to pass the Legislature. "This is not the time to raise taxes," Senate President Gene Derfler, R-Salem, said of Oregon's recession. "When you raise taxes, you just slow down the economy."
Kitzhaber, who is unencumbered by re-election concerns in his last year as governor, laid out a revenue-driven long-term approach to repairing the state's budget problems and underlying economic woes. In addition to shoring up the 2001-03 budget with fresh revenue, he proposed a rainy-day fund filled by a new real-estate tax and diverted lottery money, and a $750 million transportation bond program that he said would create 2,500 new jobs. To pay for the bonds, he proposed doubling car registration fees to $60 every two years.
Legislators, many facing tough re-election fights this year, want to close the budget gap without going to taxpayers. The bipartisan plan legislative leaders released last week would tap surpluses and other one-time revenue sources and cut budgets more deeply than the governor wants.
"He knows he's flying in the face of political reality," said Jack Kane, a Republican political consultant. "Control is up for grabs in both chambers. Republicans would love a fight over taxes, and the Democrats aren't going to let that happen."
Kitzhaber said he would call a special legislative session Feb. 8 to decide on a new budget. The two sides will spend much of the intervening two weeks trying to craft an agreement.
A deal on spending cuts shouldn't be too difficult, because Kitzhaber's spending plan is within $112 million of what lawmakers proposed. But an agreement on revenues will be harder to reach. For one thing, Kitzhaber's tax increases would need a three-fifths vote of the Legislature, where Republicans control the House 32-28 and the Senate 16-14.
Kitzhaber scolded lawmakers for suggesting one-time fixes such as borrowing from the Common School Fund -- calling them "funny financing" -- for a budget problem that has been a long time in the making.
"The legislative proposal is a continuation of shortsighted proposals we pursued in the 1990s, by which we were able to delude ourselves into believing we could cut taxes yet still maintain and, indeed, expand our programs and services," he said.
Kitzhaber cited 1990's Measure 5 property tax limit and the surplus income tax kicker refunds as examples of tax cuts in the past decade.
"If we want to preserve programs in the face of the budget deficit, we need to pay for it, not with borrowing, not by raiding trust funds established for other purposes, not by accounting tricks, but by real revenue options," he said.
To help stabilize the state's finances, Kitzhaber suggested the Legislature send a constitutional amendment to voters that would create a rainy-day fund, an idea lawmakers discussed during the 2001 session but never approved. Kitzhaber would fill the fund with a combination of lottery money and a 1 percent tax on the transfer of property, exempting the first $100,000 of value. He said lawmakers could tap the fund only with a three-fifths vote and voter approval.
House Speaker Mark Simmons, R-Elgin, said Kitzhaber's proposed tax increases are unnecessary because lawmakers can tap existing revenues. And if the governor didn't agree with the budgets that previous Legislatures passed that increased services, Simmons said, he should have vetoed them.
"We can lead this state through this economic shortfall with a combination of cuts and using existing resources," Simmons said. "What the governor has proposed could potentially derail the process that has worked so well."
Signs of cracks The legislative plan already is showing signs of cracking, however. Derfler said there aren't enough votes to pass a proposal to tap an energy conservation fund and he doesn't support using money from the Common School Fund.
House Minority Leader Deborah Kafoury, D-Portland, said Democrats would have trouble with some of the cuts in the legislative proposal. She said Kitzhaber's plan probably wouldn't pass but praised him for "rejecting some of the funny money schemes" that have been proposed.
With the governor's proposal, the general fund and lottery budget approved by the 2001 Legislature would drop from $12 billion to $11.5 billion. That's about 8.5 percent bigger than the 1999-2001 budget of $10.6 billion but wouldn't maintain all services at existing levels. The total state budget, including programs supported by fees and federal money, is about $34 billion.
Kitzhaber's most contentious proposal may be the repeal of Measure 88, which increases from $3,000 to $5,000 the maximum deduction allowed for federal taxes on state income tax returns. Repealing it would raise $133 million in the current budget period. Kitzhaber says the tax cut hasn't gone into effect yet and applies to high-income people who already have benefited from a federal tax cut.
Tax activist Bill Sizemore has vowed to refer tax increases such as the Measure 88 repeal to voters.
Another potential trouble spot is Kitzhaber's proposal to increase the state's cigarette tax by 30 cents a pack and boost beer and wine taxes by about 5 cents a drink.
Oregon, which hasn't raised beer and wine taxes since 1983, has one of the lowest beer taxes in the nation. The governor's proposal would increase it more than six-fold. He also would more than double the wine tax. Those moves would boost state revenue by $44 million a year, Kitzhaber said.
Although most of Oregon's microbreweries would be exempt, the tax increases still would hurt the state's thriving beer and wine industries, said Paul Romain, lobbyist for the Oregon Beer and Wine Distributors Association.
"Fortunately, the governor has to get both the Senate and the House to pass it," Romain said, "and I would say the prospects are not very good."
.My family has to adjust our budget to the realities, I can't just "raise taxes" to cover the cut in my take home pay.
The State just blew money changing the hub caps on the new Police cars to wheel covers. (8 to 12 wasted grand there), City of Portland is giving it's employees raises, etc, etc.
Katzenslobber agreed with Kerr about 4 years ago that too many people lived in Oregon and were working at jobs that weren't good for Oregon (like farmers, ranchers, loggers and others daring to live in the nice areas of Oregon!)
When Katzenslobber finishes his eight years of enabling rural cleansing, turning his back on eco terrorism and destroying the economy of a state, he will get a 5 ***** rating from ALF/ELF/PETA/ANARCHISTS, Kerr and other enviral nazis!
Sam it would be interesting to find out how much city/county and state money ends up in the coffers of the Oregon Natural Resources Committee!
Go to this link to see the same disaster unfolding in Kali: (Link)
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