I think that we will have a lot more luck completing Anne and Chubby Gazelle's idea of replacing our state constitution than getting a sales tax in Oregon.

Funny how you live in Oregon and the idea of a sales tax is a political taboo (it's been on the ballot and failed about nine times, if I recall correctly), but you cross that mighty Columbia and talk of an income tax becomes just as sacred.

Oregon's open political system gets some of the blame for this, I think. Since it's relatively easy to get things on the ballot here, national antitax organizations (Grover Norquists' and Dick Armey's come to mind) come here and spend big money to defeat any measure that addresses taxes.

At some point, Oregonians do have to realize that we're being manipulated by people whose stated purpose is to "shrink government to the point that it can be drowned in a bathtub," as Grover Norquist likes to say.

Sales taxes are regressive, and do fall a lot harder on the poor. Even if it would fix the problem, Oregon will get one just about the time we get self-service gasoline. Sacred cows.

Oregon "gives back" about $.42 on the dollar in tax collections. The givebacks are in the form of subsidies, tax credits, and corporate welfare. Our tax laws allowed PGE to collect state taxes from ratepayers, hide their profits in Enron's accounting system, and pay $10 to Oregon. If the legislature would close up some of the tax credits and loopholes, the money would be there. We wouldn't all be happy about some of the changes--for example, they could get rid of the $50/person credit for political contributions.

That said, we rely too much on income taxes. Even though people in other states often pay more taxes in total, they don't feel it as much because they're adding a dime or a quarter to a purchase rather than writing a big check. Income taxes are a tough sell.

I agree the sales tax is regressive and for that reason wouldn't be too supportive.

As for eliminating tax credits, getting rid of some of them would be great and solve a lot of Oregon's money woes. This is something that needs a good look but I don't think that we should get rid of them all. For instance the $50 per person tax credit Jenny mentions actually encourages people to get involved politically. It allows people to feel they have that voice in the process but doesn't cost nearly as much as some credits, such as the Oregon Pollution Control Tax Credit, which actually gives tax breaks to polluters just to follow the law. The political tax credit also helps small campaigns compete against big money contributions.

Tax credits should be about encouraging positive behaviors (such as when the pollution control credit was originally passed and people had to go above and beyond the law in order to receive it).

A couple of facts worth considering. Oregon has the second-highest income tax (after NY), given the Sizemores and McIntire's a lot of ammo. But the tax burden--that is, the total amount we pay in all taxes and fees--is well below the national average. (Figures range from Oregon's burden being mid-30s to mid-40s in terms of state rankings.) Thanks to this structure (heavy reliance on income tax), we also have one of the most unbalanced in the country. This makes state budget especially vulnerable to, say, unemployment spikes.

Oregonians are by nature interested in fairness. For 15 years, Sizemore and his chicken littles have sold the state on the notion that any tax plan not explicitly endorsed by Grover Norquist must be bad and unfair. I think there's a growing sense that the way Sizemore defined fairness was corrupt (it was) and that the hardcore right are no longer defenders of the little guy (they're not). Liberals must seize the "fairness" doctrine away from the extremists--Oregonians will support that.

Liberals must seize the "fairness" doctrine away from the extremists--Oregonians will support that.

Liberals on the whole in Oregon need to figure out an effective way to act to advance their sense of Oregon's values rather than always simply reacting to the state's Sizemores.

For the methodology used in the rankings click here. As a comparison, Oregon was ranked number 9 in academic achievement (1999-2000) according to the American Legislative Exchange Council. Justin- you are partially correct. In the 1999-2000 school year the real per pupil (elementary and secondary schools- gross) expenditure was $8,605 per pupil. (If you could source the $10,000 per pupil figure , I'd be very appreciative.) At that time we were ranked #6 in per pupil spending. However, in 2003, Oregon dropped to number 31 at $7,242 per pupil.

Also, Steve, I'm digging for figures for administrative salaries/compensation packages. Without any state by state comparisons it's really hard to make any opinions. It would probably be prudent to look at all 50 states instead of just making comparisons to neighboring states.

As far as Washington is concerned, the per pupil expenditure for the state in 2002-2003 was $7,056 per student. (ranked number 34).

My next question is, what widespread waste do you see in the educational system?

Excuse me, you communist b*stards, but Portland already has the highest state and local taxes of any city west of the Mississippi. Maybe we're building too many empty convention centers, streetcars to nowhere, and aerial trams...

Kenji:

Great post...and good questions. Perhaps its because I also grew up in Connecticut and went to U of O Law School (will it be referred to as U of Zero if the funding trends continue?), but I have also wondered why Oregonians are so cheap. Besides the coincidence of background, its probably that I too have seen the impacts and wonder how bad it has to get for others to connect the dots between taxes and livability and a civil society.

Your question "Help me understand why Oregonians have a problem comprehending the old adage:'You get what you pay for.' " gets to the nub of the issue. Oregonians, like most Americans, have not made the connection between the taxes they pay and the services they get. Helping them make that connection is the key to eventually getting a better revenue system that brings in adequate resources in a just manner. We need to restore trust in government and constantly point out to our friends and neighbors how government does in fact (warts and all) help each of us every day.

Hey Alexander! Great to see your post. In terms of your first point, you have to remember that most funding for schools does not come from property taxes. Once measure 5 was passed, schools were forced to get most of their revenue from income taxes (the pie is divided in Salem). Thus, even if rural areas are resource poor, they should still receive a proportionate share of money from Salem.

What happens in Georgia or New Jersey schools is not a factor in that.

Actually, I have to disagree with you there. In my opinion it his highly relevant given the fact that states are now competing with each other for investment dollars and businesses. To attract businesses to the state you need to have a highly skilled workforce- which starts with a well educated population. Executives want to see their kids to go to good schools so they can attend elite colleges and universities.

We don't need more revenue. We need more stable revenue, spread out more so as to feel less painful to those who pay it.

Absolutely. If we adopt a sales tax, which has a different cycle than an income taxes, and decrease income taxes, I think we'll have a more stable revenue stream. According to the study cited by CNN in their big city tax burden article, Oregon has a pretty progressive tax structure with a coefficient of .802 (check out the study for an explanation). A proportional tax system has a coefficient of 1.0 and anything greater than 1.0 would be considered regressive. Thus, I think the addition of a sales tax would not turn Oregon's system into a regressive tax structure. I agree that Measure 8 and Measure 30 were band-aids but I felt that they were necessary as stop-gap measures.

According to the source data for the CNN article that Jack points out, the study only looks at the largest city in each state. I'd be interested in looking at more data than was included in the study (e.g. more cities). What's really interesting to see is that the overall tax burden for Portland (family of 4 making $75K/yr) in 1999 ranked it at #30, in 2000 it was at #24, in 2001 it went to #13, and then #8 in 2002. Looking at the figures it seems like the entire jump in 2000 to 2001 was due to an increase in property taxes. The statisticians wrote that the estimated property tax burden in 2000 was $1,972. In 2001, they estimated it to be $3,457. What's really confusing is that the estimated tax burden actually went down between 2001 and 2002 yet we went up in ranking.

Just for fun here are some other stats from the 2002 study: Oregon ranked #37 in maximum rates for corporate taxes, Oregon had the 6th lowest car registration rates.

Source material.

In terms of fairness, I think there's a balance to be struck. A sales tax is not per se regressive. "Factors that make the sales tax regressive include a flat tax rate as well as a tax base which includes tangible necessities but not necessarily services. Factors which can lessen the regressivity of the sales tax include the exemption of groceries and the taxation of certain services."- Tax Rates and Tax Burdens In The District of Columbia A Nationwide Comparison. I think a selective sales tax is what is needed.

There will always be someone who is always 50th. Does that mean that they are bad? In comparison to developing countries? No. In comparison to other states, likely. We need a competitive edge. The competitive edge allows us to attract more people, more businesses, more opportunities, and "increase the economic pie."

Executives are highly important because they make their decisions as to where to locate offices and factories. Not all executives send their kids to Deerfield Academy or Watkinson. Executives are also concerned about managers too. When companies move some of their operations to Oregon, they also want to ensure their managers are happy too. (more productivity)

The question should not be, are our schools producing Princeton grads, but, are our schools preventing those with talent from rising?

Absolutely. I don't disagree with you on that point. I'd ask "are our schools preventing kids from reaching their potential?"

In terms of timber you may be talking about the Common School Fund. State funding sources can be found here. Equalization between rural and metro schools are also discussed in the reports.

Whoa! The CNN figures come from The Tax Foundation, notorious for misleading data. See, for example http://www.cbpp.org/4-7-04tax.pdf

For information on Oregonians' tax burden, see http://www.ocpp.org/2004/rpt040413.pdf and http://www.ocpp.org/2003/rpt030415.pdf

And don't worry about business tax burden in Oregon being too high, its not: http://www.ocpp.org/2004/issue040123.htm

A sales tax, by definition, is regressive, as it is not based on ability to pay. Can regressivity be overcome? It is difficult: http://www.ocpp.org/2003/issue030707.pdf

And remember, Oregon's tax system, when the federal offset for state income taxes is considered, is regressive. see http://www.ocpp.org/2003/2003WhoPaysCol.pdf, from the CTJ/ITEP report Who Pays? available at http://www.itepnet.org/whopays.htm

Hi Chuck! There's actually two different CNN articles. One has to deal with the state rankings (which are sourced from the Tax Foundation) and the city rankings are sourced from the government of DC. Also, the business tax burden is pretty low... and thanks for the links!

In terms of the federal contribution, there's a breakdown on page 6 of the PDF. As far as Washington is concerned, I'm looking at Clark County and I'm pulling a figure of $9,415.85 per pupil.

Dunno about the 30:1 ratio. I have a feeling that ESL and special education have a much lower student teacher ratios (because of special needs). That might account for the difference. I definitely think it would be worth looking in to.

Breaking the 4,150 FTE's down, we're looking at 886 classroom support people- librarians, couselors, principals, administrators and suppot staff (which includes people who provide speech services, attendance services, and oversee extracurricular activities.) 283 FTE's deal with building support which includes student transportation, utilities, maintenance, custodial services, printing, purchasing, and technology services. Central support/administration has 126 FTE's that deal with public information, testing, legal, finance, payroll, budgeting, human resources, and supervision of instruction.

These positions are spread out over approximately 98 locations. This means there are approximately 9 classroom support FTE's per school, about 3 building support FTE's per school, and approximately 1.2 FTE's at central per school. Actual figures probably vary because of differences in school sizes. But, when you average it out, it isn't too bad.

In terms of taking a cut, after a contract has been negotiated you can't go back and change it. When contract talks open back up, they can ask for that concession. However, the union will most likely ask for a concession in return. e.g. perhaps some deferred compensation. That would be the fair thing to do. It happens in private industry to- e.g. looking at the Delta negotiations- pay cut in return for stock.

From my point of view, I don't see a lot of waste.

Well, Steve, those of us in the non-profit sector face pay and benefit cuts right along with you--and on a non-profit salary there isn't all that much to cut, believe me.

As for examples of public employees taking pay cuts, how about the Portland Public School teachers who taught unpaid for nearly two weeks last year to prevent PPS from having the nation's shortest school year?

Understandable- the thing that sucks about the private sector right now is the economy is in the tank, thereby giving corporations leverage over employees- take these cuts or be fired. On the flip side, during the 1990's the situation was reversed. Employees had leverage over companies, as jobs were plentiful (especially in the tech sector). Companies were competing for employees. It's cyclical in nature. I really don't think you can make a comparison between Enron and Delta as they are completely different animals. That said, Delta was just an example. Stock or options in exchange for reduced pay is nothing new. They are deferred compensation plans- they are quite plentiful.

Nationally, private employers plan to give out pay increases of 3.3 percent in 2004. Executives will see the biggest average pay raises this year at 3.7 percent, while nonunion hourly workers will see the smallest at 3.3 percent. As far as Oregon state workers go, there are/have been no merit increases nor any cost of living increases. That means that a lot of folks are in effect making less money than they were at the beginning of the biennium. So pay raises aren't occuring at least at the state level.

Another difference is that most private sector jobs are at will, which means that employees have no property interest in their jobs. Classified state employees have a property interest in their jobs- and that stems from a line of cases ruled on by the US Supreme Court. That means a state worker, once past their trial service, can be removed only for cause. However, positions can be eliminated. This month, 21 employees at the Oregon Department of Veterans’ Affairs were laid off. The ODVA director said the department was restructured in response to changes in the demand from veteran clients – specifically, a lower demand for veteran home loans. (KGW report). In addition, unfilled positions were eliminated. That puts more work on less peoples' shoulders.

As far as the ODVA is concerned- the layoffs constitute 20 percent of the agency personnel. Veterans' Affairs also eliminated nine full-time positions that had been vacant, and cut spending in other non-personnel areas.

It goes far beyond ODVA. There's been many individuals who have had to choose between a layoff notice and "bumping" other employees with less seniority. Last year over 100 court employees were laid off. (about 6%). Last year, Public Defenders were subject to a three week layoff along with a 20% paycut. Staff was reduced at Department of Corrections. In 2002, the state cut 3,200 jobs. While total government employment increased by 20% frm 1990-2003, there has been a decline in recent years. In 2002 state government employment figures averaged 66,792, in 2003 it was 66,500, and so far in 2004 numbers are averaging 62,600. Source: OLMIS. There's also a great article addressing government employment (and trends) in Oregon.

Private mortgage brokers have done a better job and consumers have voted with their dollars, is that such a tragedy.

The statement "Private mortgage brokers have done a better job" is not necessarily true. ODVA by law cannot refinance mortgages.

So by listing the case law, you are telling me that no matter how bad our economy gets, we cannot cut the budget?

Read my post carefully.

That does NOT mean more work on less peoples's shoulders. It means less work on less people.

Huh? When positions are eliminated or positions are left unfilled, more work is shifted toward those who are still employed, especially if the amount of work stays the same or increases (as it usually does). I'm talking on a general basis here, not just about ODVA.

Looking at our discussion so far, I'm wondering what would it would take to change your mind? Or is it simply that we agree to disagree?

Nah, not boring at all.

Ahhh... and there's the crux of the issue. I don't see a lot about the trolleys, gondolas, tax breaks, etc. So... I can't comment on them but I do understand where you are coming from. It seems there might be some projects that you disagree with, but on the whole, is your city/state doing an ok job?

However, I have to disagree with you on ODOT. ODOT gets its most of its funds from federal dollars and gas taxes. In terms of maintaing roads, they're revamping a lot of the infrastructure right now.

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