Hood River County’s bi-partisan team has agreed on many issues during this legislative session — but not about the largest tax hike in Oregon history.
Rep. Patti Smith, R-Corbett, refused to endorse House Bill 2152 last week because it would impose a temporary income tax on citizens. She said that increase is similar to the Measure 28 proposal that was rejected by voters in January — and will be retroactive to the beginning of the year. In addition, Smith objected to the $800 million tax package because it cuts in half the current three percent discount for prompt payment of property taxes, and hikes some small business taxes.
“This is going to be very harmful to businesses and families — raising taxes to this level is one of the last things we should be doing in a recession,” Smith said. “This bill was just ’business as usual’ in Salem, it didn’t address the underlying concerns with the economy, it just delayed making the tough decisions that would require us to live within our means.”
Sen. Rick Metsger, D-Mt. Hood, voted in favor of the three-year surcharge because it would be offset by new federal tax cuts instituted by President George W. Bush. For example, he said the household income of a married couple in Hood River County averages $30,000 and, by filing jointly, they will now pay $13 more in state taxes for 2003, but will receive a $38 break at the federal level.
“You can’t look at tax increases or decreases without looking at the services you are providing. During the past eight months it became clear that the legislature wasn’t willing to gut or decimate our schools and services to seniors and people with disabilities,” Metsger said.
Under the new state plan, taxpayers will calculate their income tax liability and then multiply that tax by a percentage that rises with income. According to the state formula, single filers with a federal adjusted gross income of less than $10,000 and joint filers with less than $20,000 will pay no surcharge. At the top range of taxation, single filers with more than $120,000 in adjusted gross income and joint filers topping $240,000 will multiply their tax by nine percent to determine their surcharge. State officials have calculated that joint filers with an average Oregon income of $59,335 will pay $98 more in state taxes next year. Joint filers with an annual income of $70,000-$100,000 per year would pay $214 with that amount increasing by another $100 for single filers.
Smith said there will now be “double taxation” for Multnomah County residents, who voted in a three-year temporary tax of three percent after the failure of Measure 28. In addition, she said the legislature has also raised or established more than 20 new taxes or fees, including those for overnight lodging, vehicle titles and both hunting and fishing licenses. In addition, she said no consideration was given to the steep spike in gas prices already being borne by motorists, or the continual climb of electricity and other utility bills.
“The argument that this is only going to mean a few extra dollars from each taxpayer doesn’t hold up when you look at the total picture,” said Smith, who received more than 200 emails and telephone calls from constituents asking her not to support the surcharge.
Smith is joined in her opposition by the Oregon Republican Party and several grassroots organizations, including Citizens for a Sound Economy and the Taxpayers Association of Oregon. These groups claim the legislature has “violated the will of the people by instituting the “massive” tax increase. If Gov. Ted Kulongoski signs off on the bill, they plan to begin gathering the 50,420 valid signatures needed to bring the issue before voters in a special Feb. 3, 2004 general election.
Metsger said the $200 million increase from added corporate tax revenue was largely support by big companies. But Smith said it will place an additional burden on many “mom and pop” operations which make up more than 94 percent of Oregon’s business base.
Both Metsger and Smith strongly support making educational dollars a top priority, but they differ on their views about how the temporary surcharge accomplishes that goal, even if it raises $5.2 million for schools during the current biennium.
Metsger said Hood River County schools will now be spared the time and expense of asking voters to approve a $1.3 million local option levy, which would have cost homeowners of a $200,000 house about $30 per year. Smith said there is still no stability for schools even with the raise in income taxes because of the pending referral and the fact that the expected revenue from the tax increases is only a forecast.
“The only way we can really show support for our schools is to focus on the economy and putting people back to work,” she said.
“We preserved the basic services for our county and taxpayers will still pay less income tax than in previous years and I think that’s the win-win solution we were looking for,” Metsger said, reiterating that 900 jobs have also been cut from the government payroll in a move to streamline operations.
Although Smith believes the people sent a clear message that they didn’t want new taxes through the Measure 28 vote, Metsger disagrees. He said the mid-January were votes cast before the citizens knew that the ailing state budget forecast was down an additional $1 billion. He said taxpayers have also made it clear that they did not want human service and educational programs cut.
“When people see that their taxes go down while their services go up, I think they are going to see this issue differently,” he said.
Both Metsger and Smith are in total agreement that quality schools will help attract corporations into Oregon. But Smith contends that the state’s ongoing financial woes and increased burden of regulation only serves to keep private businesses away — which lowers tax dollars for public services.
“We’ve ended this session the same way that we started — with nothing certain and we owe our constituents more than that,” Smith said.
Metsger said one thing is certain, that Hood River County residents were well served during this session by the “best team in Salem.”
“We pretty well represented our respective districts because they were pretty torn on this issue and the voters on both sides got to be heard,” he said.