The Recession Session

Well the Oregon Legislature just finished its biennial session, now dubbed the “recession session” as the Democrat majority struggled to deal with Oregon’s declining economy, personified by our state having the second highest unemployment rate in the nation at 12.4%.

Predictably, their fix to our ailing economy was to raise taxes on “the rich” and to force corporations to pay taxes even when they are losing money. They apparently believe that they can tax their way out of the recession, with no ill effects on the economy. Now this has clearly been repudiated by many studies as cited by two recent OregonCatalyst articles by respected Oregon economists, Bill Conerly and Randy Pozdena, who predict that just the two income tax increases alone will cost at least 80,000 Oregonians their jobs over 10 years. You can read both articles at http://www.oregoncatalyst.com/index.php/archives/2454-Raising-Oregons-Corporate-Income-Tax-Rate-Will-Cost-43,000-Oregon-Jobs.html  and http://www.oregoncatalyst.com/index.php/archives/2406-Taxing-the-Wealthy-More-Will-Cost-36,000-Oregon-Jobs.html

Just about every day someone asks me on my radio show or in my work as a community organizer (please don’t laugh, but it is true) for limited government principles at Americans for Prosperity, why are the ruling Democrats doing this? Don’t they know that this will only hurt the economy and not help it? Why are governments in Oregon continuing to hire more people (6,000 last year alone) when the private sector has laid off over 100,000 Oregonians during the same period?

There are two answers why:

Larry Huss writes a great article in OregonCatalyst http://www.oregoncatalyst.com/index.php/archives/2480-The-Fight-for-Control-of-Oregon.html#extended that explains the first reason, which I will not recite for you as he does a masterful job in relating that it is all a payoff to the unions that support the Democrats.

The second reason is that the ruling Democrats simply do not believe that raising taxes on the rich or corporations will hurt the economy. They continually cite rankings that show Oregon as a low tax state http://www.taxfoundation.org/taxdata/show/476.html and they argue that we can be like other states, raise taxes and not feel ill effects. This is why they just grew Oregon’s budget by 5.4 billion dollars more than the last 2 year budget, during a recession.

The problem is that they use statistics that only tell a partial story to provide intellectual cover for liberal legislators raising of taxes and fees. The use reports such as the Tax Foundation’s report http://www.taxfoundation.org/files/bp58.pdf that Oregon is the 9^th best business climate state (only because we don’t have a sales tax) as justification for raising taxes. They also do not include data from local revenue like property taxes and fees, which if they did, would destroy their argument.

For instance, the big government liberals totally ignore data that indicates clearly that Oregon is actually one of the most taxed states in the nation if you add in fees and figure it on a per person basis. The US Census Bureau data from 2004 (the latest rankings I can find) http://www.census.gov/govs/state/04rank.html show that if you included state and local government total revenue, Oregon ranked 7^th highest in the nation per person. The National Conference of State Legislatures even ranks Oregon higher when figuring in state and local income taxes only, with Oregon ranking 5^th highest in America per person and second highest in the nation if you figure these same taxes as per $100 of personal income http://www.ncsl.org/Default.aspx?TabId=12627

The tax and spend crowd is purposefully engaging in bait and switch here by focusing on statistics that do not accurately represent the total tax and fee burden borne by Oregonians. If you look at the real data of how much total government revenue is collected from Oregonians, you quickly figure out that there is no justification for raising taxes and fees on the argument that Oregon is a low tax state.

This is especially true when one reads page 12 of the Secretary of State’s CAFR 2008 report http://www.sos.state.or.us/audits/reports/full/2009/2009-01.pdf which indicates that one year ago, the state of Oregon had 4.9 billion in cash sitting in state agency bank accounts, of which roughly 3.5 billion would have been available for state spending instead of raising taxes.

“On June 30, 2008, the State’s governmental funds reported combined ending fund balances of $4.9 billion. Of this amount, 71.5 percent is available for spending at the State’s discretion (unreserved, undesignated fund balance).”

You should note that this money was not reserved or allocated for spending, but just money sitting there in reserve. The figures do not also include the two rainy day funds, which total nearly 800 million. For this money to have been spent, there would have had to have been Emergency Board approval after June 30, 2008, which did not happen. This money is still available.

Clearly, the truth is that Oregon has plenty of money in reserve and doesn’t need to raise taxes to deal with the State of Oregon’s needs during the 09-11 budget.

And I haven’t even gotten started on how to actually make Oregon state government more efficient and smaller.

The Recession Session will be known as the one in which the ruling Democrats reached too far too fast, ignored the real financial facts, put Oregon deeper in debt, rewarded the unions while punishing the private sector and passed nearly 2 billion in new taxes, only to have most of them repealed by the voters.

Will they ever learn?