A front-page article in today’s The Oregonian purports to set out the “hard choices” that await the next governor and legislature as they confront our state’s fiscal woes. Unfortunately, it fails to even mention one clear choice for the legislature, cutting tax code spending, while summarily dismissing another clear choice, raising new revenue.
The article states,
Raising taxes isn't on the table. Services already have been cut, and further reductions to schools, prisons and the poor will spark great debates and surgical strikes.
Then it goes on to review several ways to wring savings out of public sector employees. In other words, the article proceeds as if the only choice is balancing the budget on the paychecks of thousands of middle-class Oregonians.
Fortunately, there are better choices.
The starting point in confronting Oregon’s revenue shortfall should be a review and overhaul of tax code spending. The tax code is riddled with deductions, credits and exemptions, many of which leak money in unproductive ways, and many of which provide unnecessary subsidies to wealthier Oregonians.
The legislature should begin with the tax code when looking for spending cuts and see how much revenue can be saved from that (maybe-not-so) hard choice.
Beyond that, consider raising new revenue. Raising revenue ought to be “on the table,” and the article offered no good reason for why it “isn’t.” No matter what your position was on Measures 66 and 67, there shouldn’t be any doubt that the measures are helping us today and into the future. Had they not been approved, we’d be in worse shape today and tomorrow.
Like just about every state, Oregon confronts a revenue problem caused directly by the Great Recession. When the 2009 legislature was in session they had before them the state economists’ 2008 projection that revenue would match or exceed expenditures well into the future. But the recession turned out to be worse than originally thought, and the recovery more anemic, so revenue shrunk. It was the Great Recession, not budget decisions, that caused the current projected shortfall.
The legislature knows that some very large and profitable corporations are paying too little in taxes, even after Measure 67.
The legislature also knows that wealthy Oregonians are still paying a smaller share of their income in state and local taxes than do middle- and low-income Oregonians, despite Measure 66 (PDF). That’s an upside down tax system and makes no sense.
Contrary to The Oregonian’s suggestion, squeezing paychecks is not the only choice. Cutting wasteful and inappropriate tax code spending and raising new revenue may be hard, but certainly better choices for our state to pursue first.