Governor Ted Kulongoski ordered across-the-board budget cuts to address the state’s budget deficit. That approach, unfortunately, fails to take into account the state’s spending priorities and leaves off the table misplaced spending enshrined in our tax code.
Now, along comes the Oregon Department of Energy, taking a step in the right direction. A story in Friday’s Oregonian noted that the Oregon Department of Energy has by temporary rules scaled back the state tax credit subsidy for residential solar installations as part of a cost savings plan to help with the state revenue shortfall. The change applies only to residential customers, and the story does not explain why the department didn’t scale back the solar subsidy for business installations, too.
Too bad the Governor didn’t give a directive to all agencies to do as the Department of Energy did and reconsider tax expenditures in a time of a revenue shortfall.
Take, for example, the Governor’s Office of Film and Television. Oregon Film sold out the extra $2.5 million in tax credits the 2009 legislature authorized in just 15 minutes on July 1. Those $2.5 million in credits generated $2.375 million for a special fund that the film office uses to subsidize film production. For every $0.95 the taxpayers put in to the subsidy fund on July 1 the taxpayers will reap $1 in tax credits by April 15, a guaranteed 5.3 percent ROI over the six –nine month period. The Governor’s Office of Film and Television apparently didn’t feel obliged to scale back their sale to help keep priority programs, like schools, services to the aged and disabled, public safety and the like, from having to take even deeper cuts. If this year’s sale was like past years’, nearly three-quarters of the tax benefits from the program go to the highest-income 1 percent of households, who represent about 22 percent of the households that use the tax credit, and the wealthiest 5 percent of households, representing about 62 percent of claimants, reaped about 94 percent of the tax credit sale’s benefits.
Perhaps the Department of Energy’s action will prompt other agencies to look for savings in the tax expenditure programs they administer.
Agencies are constrained as to the amount of savings they can generate from tax expenditure programs that don’t match Oregon’s budget priorities, and many tax expenditures are not dependent on action by administrative agencies. It is really the Legislature’s responsibility, and they have full authority to fix the problems.
Hopefully, the good move by the Department of Energy will give the Legislature the will (they have the means) they need to really comb the messy tax code for other misplaced spending priorities during these tough times.