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Entries in K-12 school funding (3)


Sausage-Making in Full View

Watching a special legislative session is unavoidably like watching sausage being made, with all the ingredients spilled on the political table in full view.As the saying goes, it may be best not to see either laws or sausages being made. But that is hard to avoid when contemplating a legislative special session.

Governor Kitzhaber has hosted Oregon legislative leaders at Mahonia Hall this week to barter a deal to make deeper cuts in public employee retirement spending and raise taxes on large corporations and wealthier Oregonians to pump more money into K-12 education, higher education and mental health care. 

The so-called grand bargain Kitzhaber seeks isn't new. It was debated in the regular legislative session but never quite got enough political traction. 

Gaining political traction often requires introducing new components into the policy machinery. Senate Republicans, for example, want to include a tax cut for businesses that file as S corporations. The idea goes in the opposite direction of raising money, but at least it involves taxation.

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Budget Battle Nears Final Showdown

Oregon lawmakers won't make their June 28 adjournment date as they continue to spar over a plan to balance the budget. But last week the sparring match took clearer shape when two rival revenue packages were unveiled by Democrats and Republicans.

The Democratic plan would raise $256 million more in revenue during the 2013-15 biennium, while the Republican plan would raise $352 million over the next two years, but also includes a $150 million tax cut for small businesses in the current biennium, which ends June 30.

A revenue-raising package is a precondition for majority Democrats to consider deeper cuts in public employee retirement benefits. However, some Democrats appear content to balance the budget with existing revenues and already approved PERS cuts and go home.

That's what might have happened except for Senator Chris Edwards, D-Eugene, who joined 14 Senate Republicans in voting down a $6.5 billion K-12 school budget. Edwards and Republicans may not have agreed on the reason for their vote, but the effect was the same — it forced leaders in both the House and Senate to consider alternatives to a balanced budget and more K-12 school funding.

Add to this political brew the support of business groups for tax hikes that affect their members. A willingness to go along with some relatively mild tax increases may result from looming ballot measures next year pushed by organized labor to impose even higher tax rates on corporations and high-wealth individuals. Legislatively approved tax increases now may take the wind out of the ballot measure sails next year.

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Tax Measures and Tax Reform

When Oregon voters receive their ballots this weekend, they will confront three very different tax measures, which could have an impact on the prospects of comprehensive tax reform in the state.

The ballot measures deal with prohibiting more real estate transfer fees, phasing out the estate tax and modifying the corporate income tax kicker. Proponents of comprehensive tax reform in Oregon worry the measures could remove issues from discussion that could sweeten a broader tax measure.

So far, none of the tax ballot measures has stirred much public debate, overshadowed by the higher profile and more costly fight over two measures to allow privately owned casinos in Oregon.

The three tax measures have received spotty editorial support. Measure 79, which would place a ban on future real estate transfer fees in the Oregon Constitution, has been called overkill since there already is a statutory ban in effect. Measure 84, which phases out the estate tax, has been questioned because there already is a $1 million estate exemption. Measure 85, which redirects corporate income tax kicker rebates to K-12 schools, has been criticized because it won't automatically mean more money for education.

Local government officials seem resigned that the constitutional ban on real estate transfer fees will pass, with financial backing by the National Association of Realtors. Washington County is the only Oregon municipality with a real estate transfer fee in place. While there weren't any nascent plans to challenge the statutory ban on such fees, some local officials have suggested the tool would be appropriate for capital projects such as restoring and modernizing county courthouses.

Backers of the estate tax repeal have branded their effort as ridding the state of a "death tax" that cripples family-owned small businesses. However, the Legislative Revenue Office estimates the repeal, when fully phased in, would result in an annual tax savings of $120 million, suggesting it would have a fairly limited impact.

Opponents of Measure 84 also have identified a potential flaw, which they say could create an unintended capital gains loophole.

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