No on Measures 66, 67

The word “fair” is playing a prominent role in the debate over the two tax-raising measures, 66 and 67, that Oregon voters will decide on this month.

But the salient question here is not whether these measures are fair.

It’s whether they’re necessary.

We don’t think they are necessary.

Which is why we urge voters to reject both measures.

First a brief history.

Last year the Oregon Legislature passed a pair of tax increases. One affects certain corporations. The other raises the marginal income tax rate from 9 percent to 11 percent on individual filers who earn more than $125,000 per year, and on joint filers who make more than $250,000.

Opponents gathered enough signatures to refer both tax hikes to voters.

Measure 66 is the individual income tax hike, and Measure 67 the corporate tax boost.

Combined, the measures, which are retroactive to Jan. 1, 2009, would collect an estimated $733 million in new tax revenue for the state over the next two years. More than half  — about $472 million — would come from individuals and families through Measure 66’s income tax increase.

Proponents contend that if voters reject the two measures, then the state will have to slash spending on the Oregon Health Plan, support for public schools across the state, programs that help seniors and the disabled, and the prison system.

We don’t dispute that some cuts would be necessary. After all, the Legislature used the $733 million in expected tax revenue to balance the state’s two-year budget.

The obvious question, then, is why, when the state pulled out its wallet last year, did it come up nearly three-quarters of a billion dollars short?

The answer, to a large extent, is that the Legislature, along with state officials, have for several years spent tax dollars with appalling profligacy.

Yet rather than acknowledge its spendthrift ways, the Legislature chose the path of least resistance: Raise taxes on the rich.

Democratic legislators and other proponents imply that the tax hikes were a last resort, necessary even after the state in effect eviscerated budgets across the board.

Nonsense.

State government has not shrunk. The state budget has grown by 64 percent since 2001, while Oregon’s population has grown by 11 percent.

And state government has continued to bloat even as the economy shriveled.

The number of state employees has risen by about 2 percent since the recession began.

And those employees receive a salary and benefits package that was, on average, more generous in 2009 than the year before by almost $900.

Yet state employees worked fewer days, on average, in 2009.

Even more galling, the Legislature continues to refuse to require most state employees to pay a single penny of their health insurance premiums.

By one estimate, if state workers contributed about $187 per month — as much as the state’s public school teachers, on average, pay for their health insurance — the state could save $131 million during the remainder of the current biennium, and $211 million in a full two-year budget cycle.

The Legislature could have saved even more — $312 million, according to the Senate Republican Office — by canceling pay increases approved for state workers in 2008.

The bottom line is that even as the recession inflated Oregon’s unemployment rate to 12 percent, and even while thousands of private companies cut the pay and benefits of many of the workers fortunate enough to keep their jobs, the state continued to hire more employees and to blithely bestow lavish compensation on them.

Yet legislators and the proponents of Measures 66 and 67 can still muster the audacity to insist that some of the companies and families that have helped to bankroll this spending spree are not paying enough.

That offends us.

And it ought to offend all taxpayers, including the 97 percent of Oregonians who, according to Measure 66/67 supporters, won’t have to pay more if the measures pass.

That is, firstly, a specious claim. We’re not so naive as to believe you can siphon $733 million from the private sector without harming financially some of the people who work for the companies and individuals who will pay more taxes if these two measures pass.

(Nor are we fooled by campaign ads that claim Measure 66 will require individuals and families to pay “a little more.” You don’t need to have graduate-level math skills to understand that to get hundreds of millions of dollars from a measly 3 percent of Oregon’s taxpayers, somebody’s going to be paying a lot more than “a little.”)

If these tax hikes pass and the extra cost prompts businesses to lay off workers — some economists predict job losses could total 70,000 — we doubt the newly unemployed will be consoled by the knowledge that at least their tax bill didn’t go up.

Sticking it to the “fat cats” isn’t so satisfying when one of those fat cats signs your paycheck every two weeks, but suddenly can’t afford to.

Besides which, if businesses, as they typically do, offset their bigger tax bill by raising their prices, then all consumers will suffer.

And the people who suffer most during inflationary periods are of course those who earn less — the very people who Measure 66/67 advocates claim they’re helping.

Ultimately, no one can predict what the Legislature will do if voters reject Measures 66 and 67.

But despite the pro-tax measure propaganda, lawmakers would not have to slash school spending and services.

Although the Legislature failed to make meaningful cuts last year, it’s not too late. The Legislature can still save $160 million by eliminating public employee pay raises that Gov. Ted Kulongoski granted.

Lawmakers could also tap the Education Stability Fund and Rainy Day Fund, which are projected to contain $312 million when the current biennium ends in 2011.

But we have no confidence that legislators will ever spontaneously develop a flair for the fiscal conservatism that could have made unnecessary the current doomsday scenarios about cutting days from the school year and yanking the social safety net from under struggling Oregonians.

We the voters must show them the way.

A pair of “no” votes on Measures 66 and 67 should serve as a useful first lesson.