What Oregonians know about tax and budget basics: Not much

Chuck Sheketoff

2009BenchmarkFiscalIgnoranceAs our state legislature struggles with how to address our revenue problem, the state's "Progress Board" released its biennial benchmarks report showing that 88 percent of Oregonians cannot name the state's major revenue source and major spending category from short “multiple choice” lists.

The Progress Board tagged it a “notable concern in civic engagement.”

I call it one of Oregon’s most serious problems.

Especially in a referendum and initiative state, having a public that understands the basics about the state fiscal system is a crucial part of effective democratic government.

Is it any surprise that anti-government activists and some politicians can make voters think a lottery bond financed parking structure is funded with tax dollars (PDF) or dumb down the discourse with empty slogans like, “it’s your money,” and “the worst thing you can do in a recession is raise taxes?”

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    “the worst thing you can do in a recession is raise taxes?”

    I'm still waiting for the right-wing ideologues to tell us when the right time is to raise taxes. Or which level of taxes is low enough.

    When times are good, they say, "this is no time to raise taxes!" When times are bad, they say, "this is no time to raise taxes!" When taxes are high they say, "we must cut taxes!" When taxes are low they say, "we must cut taxes!"

    So, a question for our anti-tax friends (who will inevitably show up on this thread): How low is low enough? What's the correct overall effective tax rate?

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    Agreed Kari. When the Grover Norquest/Club-For-Growth anti-tax luddites trot out the bogus argument when you cut taxes, tax revenue goes up, by that logic if we eliminated all taxes, Government revenue would be infinite.

    They premise this argument by pointing to the uptick in Federal revenue in 2005-2006, but conveniently fail to mention that we had an increase in Federal spending in the previous two years at almost double what Clinton's last budgets where, and that the amount of spending in the economy on re-fi borrowed capital of course would increase taxable revenues throughout the economy. It is worth noting that the spending was more than double what the tax cuts were that Bush and crew pushed through in early 2001. So Federal revenue went up in spite of the tax cuts, not because of them.

    But of course if that point was made, then it validates that government spending (i.e. outlays) really do stimulate the economy and that is not the reality they want to acknowledge or make people aware of.

  • mp97303 (unverified)

    @Kari:How low is low enough? What's the correct overall effective tax rate?

    With all due respect, your fellow progressive aren't without fault on these type of topics. Try asking the education wing of the party how much money per student is enough? No answer will ever come.

    Now, with regard to your question: What's the correct overall effective tax rate? Depends on what level of services the local community wants from it government. Now how do we come to a consensus on that one.... you got me there.

  • Bobby (unverified)

    Apparently, even if your state is about to implode, it's not a good time to raise taxes.

    At least if that state is California, the proud state that began the tax revolt in the 1970s.

    Maybe Grover Norquist should move to California, because he might just get his wish.

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    MP asks the correct question: what level of service do we want?

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    mp97303 -- I have yet to meet an education advocate who would not be satisfied if the Quality Education Model were fully funded and implemented. The 2008 QEM report here (PDF) tells you the cost.

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    Try asking the education wing of the party how much money per student is enough? No answer will ever come.

    Yeah, I'm with Chuck. The QEM is the answer.

  • Adam (unverified)

    I would say we should want our level of government services to be on average or slightly better than the average of the 50 states.

    Republicans would prefer our level of service to be at or near the bottom, next to Mississippi. They just don't believe in government services, period. They want everything privatized.

    But I think a good point is made that we ought to be able to live with average annual revenue increases of 6%. If over the long term the cost to keep government services at the same level is growing faster than the annual increase in state revenue, then that indicates there is a problem somewhere that needs to be fixed by doing something other than raising taxes. Obviously costs are going to go up faster than revenues during recessions, and the opposite will be true during economic expansions. That's why a rainy day fund is needed.

  • Chuck Butcher (unverified)

    I am petty sure there is an actual curve that relates to tax level and revenue (that is not an endorsement of supply side economics) and general productivity. The disconnect that Chuck is talking about has been very nearly fatal to CA and has brought woe on this State.

    I've made proposals over time about making the initiative process more difficult in regards to the Constitution, one of which was using the Federal model with counties replacing states. I got a lot crap about disenfranchising voters - ie Urbanites get to ammend the constitution whatever the rest of the state thinks about it. I only addressed the Constitution because the bar for correcting failure is so high versus Legislative initiatives.

    What you wind up with is a simple 50%+1 able to create requirements for super majorities Constitutionally and undoing that requiring the same. Explain to me how this makes sense and how someone is disenfranchised more under my model. This also limits the ability of a geographically narrow area to impact an entire state with a very diverse geography.

    The problem with such a proposal is that it'll get bashed from all sides until the consequences are entirely unlivable. See CA.

  • LT (unverified)

    Regarding "cost per student". Is administrator pay of over $100,000 (true in some districts) figured into that cost?

    Perhaps it is time to have a salary cap on administrators? NFL seems to be successful even with their salary cap.

  • billy (unverified)

    Has anyone thought of looking at state spending that isn't for important services?

    Oregon Cultural Trust? (Tax credits ARE tax money.)

    Hundreds of millions for light rail when buses are cheaper and more flexible.


  • Bill Bodden (unverified)

    Why should Oregonians study government and tax issues when its so much easier just to come up with a reflexive "No" whenever taxes are mentioned? Thinking is so strenuous, and facing up to the responsibilities of citizenship is too challenging. Instead of spending all its time figuring out how to tax the people, the guvmint should get to work on fixing our roads and bridges and schools and all that stuff.

    As for California most of its voters deserve what they have coming. It was obvious for anyone paying attention that Proposition 13 would prove to be unfair. Eventually that unfairness became blatantly obvious with some people paying the old rate on their property while new neighbors were paying as much as four and five times on their taxes. A new proposition was put on the ballot to correct that unfairness, but the majority of voters turned it down. That's when I had enough of California and took a hike and swapped places with an Oregonian who was dumb enough to move south.

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    Fortunately, the righties who screech about taxes no longer have a) the credibility to join the adult table for policy discussion, or b) the power in government to dictate the terms of the argument. They had their shot--they successfully recreated a Hoover economy. Thank you and good night.

  • Zarathustra (unverified)

    Raise taxes, cut taxes, it's all relative! Does anyone understand that people like Chuck are starting tabula rasa and and asking "what should taxes be"? Who cares if making them equitable means up or down; go with the data.

    To argue otherwise is to argue the tax structure is just fine. I think that's the premise of a lot of the naysayers; it would be nice if they would say as much.

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    OK, I will call the bluff.

    The premise of the QEM is that if we funded schools to that level, then 90% of kids would meet standards.

    So here's the deal: I'll support funding schools to the QEM level for five years. If, after five years, 90% of students AREN'T meeting standard, then we establish universal voucher in the amount of the statewide average all-funds per-student spending and let them attend the school of their choice.


  • mp97303 (unverified)


    Thanks for the link to the QEM report. Haven't read it yet, but if Vic Backlund was involved, I trust the conclusions. Greatest educator I ever had.

  • Jefferson Smith (unverified)

    Setting aside the whether-or-not to tax question for a half a moment, and to address the concerning under-information of our folks on our budget realities....

    This is why we need to offer online budget transparency and send out simple annual reports to taxpayers with quick looks at spending and services. (And yes, there are bills on both matters...plug plug.)

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    The California problem which also inflicts Oregon is the "tyranny of the minority" that's created when the voters and legislators establish "super majority" requirements to make decisions.

    Under Oregon's great (not perfect, but damn good) public records law, our budget information is very transparent, albeit some agencies are better than others (DHS has evolved to be a good model of transparency). Jefferson, your bill (HB 2500), which appears to be modeled on Grover Norquist's Center for Fiscal Accountability concept (PDF) (and possibly an ALEC concept) ignores the tax expenditure side of the equation and on the spending side needlessly asks too much, such as a transaction register for all transactions over $100 and too much detail about expenditures. Before we go down that route, let's first figure out if the Open Books Project has had any measurable and effective impact other than feel good and better informing people already in the know about some details. This is the fist year in many that the Oregon Department of Revenue hasn't printed a "simple" graphic showing sources of funds and where money is spent on tax instruction books. There are plenty of ways to distribute the simple information directly to people. Like maybe any company that gets a state subsidy should have to commit to 5 public speaking events where they talk about the important role of government in their lives and explain the basics that 88 percent of Oregonians apparently don't know. Maybe every member of the legislature should commit to using their offices to educate people. I don't see that on legislators campaign or state websites. There are lots of ways to teach the basics without going overboard and putting before folks things that can be blown out of proportion or mis-represented as would happen under HB 2500 (such as the parking structure expenditure from 2007).

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    So here's the deal: I'll support funding schools to the QEM level for five years. If, after five years, 90% of students AREN'T meeting standard

    Rob -- why the five-year mark? Was that part of the QEM concept, or are you just arbitrarily picking a number?

    If we're to be arbitrarily picking a number for this wager, I choose 13 years - so that we can evaluate a full K-12 experience top to bottom.

    No fair blaming the QEM for problems caused by the pre-QEM funding model.

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    Ditto what Kari just said.

  • joel dan walls (unverified)

    OK, so the public is clueless about how the state spends its money. The (wo)man on the street in Oregon is the same clueless (wo)man on the street anywhere in the United States. Good lord, surveys routinely show that John and Jane Q. Public think we spend some vast sum annually on foreign aid, whereas the actual figure is something around 1% of the federal budget, and 10-15% of all foreign aid goes to Israel, not exactly a developing country.

  • Scott J (unverified)

    I think I understand how taxes work.

    I've been watching the proposals on how the Gov't plans to turn things around. This is what I've surmised:

    If I stop paying my mortgage, I'll get a lower mortage amount through the Obama re-fi plan and will pay less in property taxes since I won't be making the full payment any more.

    If I stop working, I won't pay any taxes at all. If I don't work, I can collect welfare and a tax credit(additional welfare payment) as a low income person as part of the stimuls bill just passed.

    Since I own tax free bonds, I can just stop working, fire the people that work for me, and simply choose not to participate beyond a reduced property tax payment.

    If all of us that are subsidizing the transfer payment receivers do this, the Gov't will collapse.

    Thus, Gov't is not the answer. It never will be. See Cuba as an example.

  • Rob (unverified)

    Included in budget literacy should be the fact that the Portland metro area subsidizes the rest of the counties excepting those with major I-5 cities.


    (Same for the Federal tax and spending flows, though they are clouded by borrowing and off budget items)

    <h2>For schools, the largest variable in student performance is parental involvement, including early childhood ready to read activities. This was a major theme of the Obama campaign and needs to be worked into state programs. How?</h2>

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