Supermajorities and Tax Reform

Russell Sadler

There are tiny time bombs tucked away in the orgy of initiative approvals during the last couple of decades. The time bombs are supermajorities required to change the provisions of those initiatives or to change laws. Two of those time bombs are about to go off under the Capitol dome in Salem.

The Republican-controlled legislature referred a measure to the ballot in 1996 requiring a three-fifths majority to pass any bills raising taxes.

It also referred a measure to the voters in 2000 “enshrining” the so-called “surplus kicker” in the Oregon Constitution, containing a provision requiring a two-thirds majority in both houses if the legislature wants to keep the kicker cash for any purpose -- a rainy day fund, for example.

There was a motive behind both provisions and it isn’t pretty. The conservatives who sponsored these supermajorities knew that politics runs in cycles. They knew public opinion would change and voters would eventually elect legislators to do things differently. Those supermajorities were deliberately designed to make it more difficult for a majority of new legislators to make any changes in the conservatives pet ideological prescriptions.

That is exactly what is happening under the Capitol dome now. Last November’s election was a stunning repudiation of the conservative ideas behind the orgy of initiative approvals. The election was a very public display of buyer’s remorse.

There is a growing realization that Oregon’s tax system is an unbalanced hodgepodge. Initiatives and special tax treatment have created so many discount passengers on Oregon’s ship of state, the full-fare passengers are unwilling to give them a budget ride any longer. Oregonians want tax reform.

There is also a realization that the state collects enough money in taxes. A recent poll by Moore Information reveals that 68 percent of those polled believe the state has enough money. But there is also a growing awareness that the so-called “surplus kicker” has arbitrary triggers that force the legislature to return unrealistic amounts of money. The result has been the reckless borrow-and-spend policies of Oregon Republicans whom voters reduced to a minority party last November.

There is now a simple majority in the House and Senate for tax reform. But under the supermajority requirements, a simple majority is no longer enough. A minority of two-fifth plus one trumps any majority that wants tax reform. A minority of one-third plus one trumps any majority that wants changes in the “kicker.”

To get any change in the kicker through the the Oregon House, at least nine Republicans will have to join the 31 Democrats. In private, House Republican leaders are threatening a primary purge of any Republican who jumps ship. The Republicans are still in denial about the reason voters tossed them out last November. They are still playing sandbox politics in the face of voter frustration with their adolescent behavior.

The business lobby is well aware of voter frustration. To avoid more damaging consequences, Associated Oregon Industries, the Oregon Business Association and the Portland Business Alliance want the legislature to withhold the record $300 million 2007 corporate refund. Then lawmakers can stash the money in a rainy day fund to avoid borrowing money during the next downturn in the cyclical economy. So far, the business lobby cannot persuade enough Republicans to break ranks and support this one-time-only plan.

But wait! The requirements for supermajorities haven’t totally hog-tied the legislature yet. It still only takes a simple majority in both houses to refer a constitutional amendment to the voters repealing the corporate kicker entirely. If the Republican minority continues to obstruct keeping the kicker for a rainy day fund, the Democratic majority plans to refer a measure permanently repealing the corporate kicker to the voters -- this May. While the legislature is still in session.

If voters approve repeal, it leaves the Democrats with $300 million for their rainy day fund and perhaps education budgets. It also leaves some business lobbyists very angry with the obtuse Republican legislative leadership.

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    As usual Russell gets it right if he includes the tax expenditures and write offs of big corporations and the top 1% in "the state collects enough money in taxes."

    His comments about the super-majority requirements are spot on. It remains to be seen whether Oregon can function, long term, with such rules.

  • G T (unverified)

    It is unfathomable to me that you people can bemoan the fat the government doesn't already get enough of your money in taxes? Why don't you all move to Europe where they take 80% of your income in taxes? You would be very happy there. I don't want to be forced into your communist style of life. Get out of my state.

  • David (unverified)

    I am one of "You People" I have Voted Demil the last Two Cycles.Oregon Pays more in taxes and "user Fees" than almost any other State including our Nieghbor To the North. And the folks that foot the bill Get Nothing in Return. We either Make Too much(barely) To Qualify or we speak English Or Of The Wrong Race or Sexual Orientation To Qualify. So Even Though The Republicans in this State are little More than Dems Themselves I am Happy as Hell That we can Stem The Flow Till we Get The world back the Way it was meant to be.

  • THartill (unverified)


    Even with the fees Washington pays more in taxes.

    Although with the Beer Tax, the Cig Tax and the Gift Card Tax we are closing the gap fast.

  • G T (unverified)

    Who cares if we pay less in taxes than Washington? That doesn't justify us being forced to pay MORE, does it? So I hear they charge people a lot more for housing in California than we do, too. Does that mean we also should have to pay more for that, too? I am so tired of these whining self-important politicians and government workers who are just out to line their own pockets. They don't care about the rest of us. They are of a more priveledged class and look down on the rest of us suckers to have to foot the bill for their life of luxury.

  • THartill (unverified)

    Calm down GT

    I didn't say anything about justifying. I you read my posts here or on my website, I've been harping on these fees (tax-hikes) for a while.

    But as to the point of the post, what does everyone mean when they say "Tax Reform"?

  • TR (unverified)

    Like seatbelts are to auto safety, the super majorities protect the taxpaying public from over zealous politicians wanting to raise taxes at every bump and turn in the road. Supermajorities have little effect on open and honest leadership.

  • G T (unverified)

    They need to cut taxes and cut back on the # of government workers. Why on earth do we need so many layers of government in this town? I inquired about something recently and they all referred me to the other agencies, then the other agencies referred me back to the original one I asked.

  • Pencil Neck (unverified)

    You are being absolutely fleeced by those DMV agents and the state janitors and the lone guy who keeps all the computer systems for an entire school district running.

    Your inability to understand that the DMV cannot issue you hunting tags suddenly makes all state employees terribly overpaid and unnecessary...

    The reality is that statistically you probably work for a fink and a liar who doesn't pay as much in taxes as you do, at the end of the day.

    But you can go ahead and blame the university research technician who has had her paycheck effectively shrink for seven straight years due to runaway healthcare and inflation while under a pay freeze.

    Go ahead and blame her, if it makes you feel better.

  • G T (unverified)

    There is more honor in working for a private employer. The government is wasteful and self serving. Actually at this moment I am not employed. I got fed up with my work situation and I am fed up with how expensive it has gotten to live in this stupid ultracramped town. I am planning to relocate to a rural area. I cannot afford the repeated monthly increases to my rent and the salary not keeping up with it. But the politicans seem to have all the money in the world to pay themselves, their retirement accounts and their stupid transit projects and trams.

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    OK, GT, you've had your say. Let everybody else have their chance at the open mic.

  • BlueNote (unverified)

    The idea of placing repeal of the corporate kicker before the voters sounds good at first, but I hope that our Dem leaders are getting some good strategic advice on this. Right now I don't think you could find 30% of voters oppose repeal of the corporate kicker, but once you schedule an election, every Oregon anti-tax guru will be out there in force, plus the usual national suspects. With Grover Norquist and Loren Park's money and Bill Sizemore and Lars Larson's big mouths, it won't take more than about three weeks before public sentiment starts to swing against repeal of the corporate kicker. And when that happens, lots of progressive ideas and perhaps some progressive candidates may get caught up in the cross-fire.

    I don't have a brilliant solution to this, but I hope that the Dems in the legislature can do some horse trading with the Repubs to avoid a vote.

  • dddave (unverified)

    Russ "I never met a tax I didnt like" Sadler, please describe how much money would be enough for your style of government and society. I mean really, would 80% of our money do it for you? PICK A NUMBER, so we can all contrast that to todays numbers, etc.

    Then, just what the heck would you use this money for? State Health insurance? Would you like PERS retirees to get more than 108% of base pay at retirement? Or maybe 2n d tier PERS to get "ONLY" 80% ?

    The kickers are taxes that were over-collected, way over collected per the actual budget that was submitted for that biennium. So your solutions will just say that if the State has managed to collect your money, regardless of the budget, that it can keep it? The same budget that is never allowed to decrease, even when the (private) taxpayers personal revenue can swing wildly in the regular economic cycles?

    If you want more money, just have the balls to budget for it and stick by your guns. Keeping moneys simply because they were collected is theft. Please also quit this non stop screeching about revenue, put all earmarked tax revenue into the general fund, pass a bill that requires all state/departments to post their budgets on the web for all to see, and then let's talk about WHAT needs funding and what does not. A percentage increase based on an economic forecast does not justify a 20% budget increase.

    BlueNote: Which corporations show a profit? I drive my corporate profit to zero by putting any profit into my personal pocket, thereby avoiding a double taxation with a corporate tax if I left the cash in the company. You would have to be an idiot to do otherwise.

    If the need for more cash is that bad, I am sure all the blueorgs will donate their kicker back to the state. Getting 100% participation from your side would go a long way to persuading the rest of us that the need is real.

  • Steve (unverified)

    I have no problem with the double majority. We really can't trust the politicos to manage things financially without some limits. THey have no foresight whatsoever.

    Recent example, the 20% budget uptick and NO rainy-day and Teddy K wants to hire 2400 more people so the next downturn the state is going to be really hurting.

    Maybe if someone could go to Salem and explain that in order to get, they have to give. Perhaps the legislature could show where they have cut expenses to the voters and we mght be more receptive to a tax increase. Very simple marketing.

    As far as taxes being a hodgepodge, I think the only way to convince Mr Sadler otherwise is if we have a tax in every flavor.

  • Gil Johnson (unverified)

    Uh, did I just log into redoregon? Where did all these "taxes bad, gummint bad" folks come from?

    The overriding fact is that the rise in income inequality and the decline of the general well-being of Americans over the past two to three decades has corresponded with decreasing taxes on corporations and the super-rich.

    I've worked both in the public sector and the private sector and I have to say, most public agencies are run better than most private businesses. Hell, I run my own small business now and I'm grossly inefficient. If I make a grevious error that results in my business spending too much money on goods or services, well, the silver lining is I can write it off on my taxes. Managers in the public sector don't get to do that.

  • Bill Holmer (unverified)


    Only in the public sector can you throw away $123 million on a worthless DMV computer "upgrade" without any consequences.

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    Oregon tax total burden as percentage of state personal income for 2004

    State Tax Burden: ($6,103,071,000 / OR Personal Income) x 100 was 5.56% Local Tax Burden: ($4,371,139,000 / OR Personal Income) x 100 was 3.98% State-Local Tax Burden: ($10,474,210,000 / OR Personal Income) x 100 was 9.54%

    Average State-Local Burden for U.S. was 10.41% State-Local Burden for Washington was 9.85%

    Total tax per capita amounts for 2004

    State-Local • OR at $2,917 • US at $3,440 • WA at $3,452 State • OR at $1,700 • US at $2,011 • WA at $2,239

    Local • OR at $1,217 • US at $1,430 • WA at $1,213

    Does not include user fees

  • G T (unverified)

    I see they torpedoed the planned Democratic repeal of the Corporate Kicker Tax! Maybe there is hope after all. Government in this state needs to be put on a diet. I am so fed up with paying into this system that does little to benefit me. As for the taxes to pay for roads rebuttal, those come out of gas taxes but any more they are siphoning the money to pay for the Max and outlandish Transit projects. I don't understand how they can justify outrageous transit projects, like the tram, or expensive light rail or streetcars yet not take care of the homeless.

  • TR (unverified)

    Comparing Oregonian’s total tax burden as percentage of state personal income with other states sidesteps the crux of what Oregonians pay. Oregon has higher personal tax rates and lower corporate tax rates than most states. Therefore a larger share of Oregon’s tax burden falls on individuals and families than in the majority of other states. Corporations pay only about 5% of the revenue collected at the state level. The business personal split five decades ago or so was closer to a 50 50 split. Yet the legislature continues to fund corporate tax breaks while supporting additional taxes on individuals. Just another reason to to keep the super majority rule that is better described as 25% plus one needed to pass.


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