Rep. Smith debates taxation pros, con

Hood River citizens got a taste of the tough budget bites facing the Oregon Legislature during a lively discussion with Rep. Patti Smith, R-Corbett, on Thursday.

Although the debate waged strong over taxation versus service cuts, there was general agreement among the 25-member audience that urban legislators needed to make a visit to the rural community.

That suggestion was raised by resident Brian Shortt, who said Hood River County's high unemployment rate (8.4 in December) had created a financial plight that went beyond "distressed" and into a "crisis mode."

"Let's bring these urban legislators out to this rural economy and have a well prepared `state of the union' presentation," Shortt said. "Otherwise these rural communities will continue to grow to be a bigger burden as we all become unemployed."

Smith agreed that the state's larger cities were just starting to feel the economic pinch that had plagued outlying communities since the state shifted away from a natural resource-based economy in the early `90s. She said because of different "political ideologies and philosophies," urban officials had not always lent a listening ear to their rural neighbors.

"I think Gov. John Kitzhaber has totally lost touch with rural Oregon and we've got to get the message across that we need to bring some jobs out here and then we'll have the tax dollars," she said.

Smith said she planned to approach Rep. Karen Minnis, House majority leader, with that idea and would try to schedule a forum as soon a possible following the conclusion of next week's second special budget-balancing session.

Dave Riley, general manager of Mt. Hood Meadows Ski Resort, said testimony at the hearing needed to be predominantly from private businesses and citizens to provide a true reality check. He said last fall's hearing in Hood River of the Joint Interim Committee on Economic Stimulus and Public Policy, led by Sen. Rick Metsger, D-Welches, had mostly included agencies that were publicly funded.

A number of representatives from Hood River's public agencies also spoke out at Smith's townhall, protesting any cuts in education and human services. The majority of these individuals favored a "choice" tax on beer, wine and cigarettes to help make up the state's $830 million budget deficit.

Maija Yasui, county drug and alcohol prevention coordinator, said it had been 29 years since there had been a raise in the beer excise tax. She said Kitzhaber's "nickel-a-drink" proposal would not hurt small breweries since it exempted companies who produced less than 200,000 barrels per year.

Both she and Sharon Guidera, director of the Mid-Columbia Center for Living, said that increasing cigarette and/or beer taxes would be "fair" since taxpayers incurred the cost of treatment for the problems caused by these products.

"We're not talking about taxing people on things that are necessary items," said Judie Holt-Mohar, a Mid-Valley Elementary School teacher.

Smith said the Oregon legislature was standing strong on its commitment not to reduce K-12 school budgets any more than absolutely necessary. She said educational institutions across the state had actually received an increase in the current budget, from 4.7 billion in the last biennium to 5.2 billion in 2001-2003, and even with a proposed $107 million reduction these institutions had lost less than two percent. However, Holt-Mohar said enrollment increases and operations hikes had already swallowed up that additional funding. She said that educational funding had been jeopardized in 1992 when passage of Measure 5 gave shifted school funding authority to the legislature.

"You are the people who are in the driver's seat and we can't depend on you," she said. "Everytime you gut it (budget) it will take us 10 years to make up that loss."

But Smith said without finding long-term solutions, the state was going to be unable to maintain many essential services. She said the debate over what to cut during the town hall was the same tough choices faced by the legislature. In spite of the pressure for taxation during the Feb. 21 meeting, Smith stood firm in her resolution that increasing taxes during a time of "deep recession" would further harm Oregon struggling businesses and taxpayers. She said 160,000 people were currently unemployed, the nation's highest percentage, and officials had to seek out solutions to diversify the state's economic base and attract more industry and business -- which would bring more money for programs.

"The problem is that I don't know any business that is growing at the rate of government right now," said Smith. "We can't be taxing to grow government, we've go to downsize and stop living way beyond our means."

Craig Sabina, board member for The Next Door, Inc. and owner/CEO of Summit Projects, told Smith that she needed to consider at least some tax increases to give agencies time to adjust to any downsizing.

"You've got to look at the whole picture, otherwise you'll shock the system so dramatically I think the consequences will be dire," said Sabina. "You've got to try to find a compromise, you hold your nose and then you do some very courageous things like reduce some taxes and add a sales tax."

Camille Hukari and several other local orchard owners suggested that instead of raising taxes the state government should streamline its own operations. They said by lessening the regulatory burden placed on food producers and other small businesses, the state could greatly reduce its own overhead and needed personnel.

"Some of these regulatory jobs do more harm to the economy than anything else," said Hukari. "As a business owner I would love to see an eight percent annual increase -- I'd even settle for a three percent increase."

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