Oregon Tax Hike Plan Faces Uphill Climb

Oregon voters are likely to reject a proposed $724 million temporary income tax hike in a referendum in January despite their selection earlier this month of Democrat Ted Kulongoski to be the state’s next governor.

Kulongoski backs the tax increase, which he and other supporters say is better than the alternative of dealing with a budget shortfall by cutting more than $300 million from education, health care and other programs.

But Kulongoski’s narrow 49 to 47 percent victory over Republican Kevin Mannix, who campaigned against the measure, coupled with the November defeat of 18 out of 25 proposed tax increases for local schools, doesn’t bode well for the proposed tax increase, said independent pollster Tim Hibbits.

“It’s very clear that people are not in the mood to depart with additional dollars,” Hibbits said.

Only 37 percent of Oregon voters said they were likely to vote for the proposed tax increase in a poll Hibbits conducted for the Oregonian newspaper and KATU television in Portland during the week before the election. Hibbits said he doubted Kulongoski could use the bully pulpit to turn the numbers around.

“I don’t think it’s very likely he’s going to sway many votes. I don’t think he has the political capital,” Hibbits said.

Opponents also are confident that voters won’t opt for any tax increases as the state’s economy lags.

This measure is in trouble as it should be. Taxpayers are really getting tired of being punished because the state can’t balance its budget,”’ said Jason Williams, executive director of the Taxpayers Association of Oregon.

Unions such as the AFL-CIO and education groups back the measure , and supporters still think the measure can pass once Kulongoski begins highlighting the across-the-board cuts to popular programs that will occur if it fails.

“It’s very much in play,” said Charles Sheketoff, executive director of the Oregon Center for Public Policy, a non-partisan research group. “The campaign is not really going to get underway until after Dec. 1.”

Sheketoff said that he believed Kulongoski’s win in the statewide vote was more telling than the survey conducted by Hibbits of 608 likely voters.

The Oregon legislature voted in September to put Measure 28 as it is known to voters after failing to resolve a budget impasse during five special sessions. The vote will occur on Jan. 28.

If approved, the measure would raise an additional $724 million over the next three years by increasing some personal and corporate income tax rates. The average personal income taxpayer would pay an additional $114 in taxes for the current tax year under the plan, according to the Oregon Secretary of State’s office.

The corporate income tax rate would increase to 6.93 percent from 6.6 percent for the next three years before both personal and corporate income taxes would revert to current rates beginning with the 2005 tax year.

If the proposal fails, lawmakers have identified cuts to state programs totaling $310 million. Among the cuts would be $95 million from kindergarten through twelfth-grade education programs, $90 million from health care and human services programs for the elderly and others and $55 million from public safety programs, according to an analysis prepared by outgoing Governor John Kitzhaber’s office.