Our Oregon

2018 Oregon General Election Could Be Dark and Spicy

Oregon has prided itself on polite politics and transparent campaign finance. But that reputation could be tested in this election cycle with bruising political battles and a rise of dark money financing for ballot measures.

Oregon has prided itself on polite politics and transparent campaign finance. But that reputation could be tested in this election cycle with bruising political battles and a rise of dark money financing for ballot measures.

Oregon has a reputation for polite, transparent politics. That reputation may change in this election cycle because of “hardball tactics” by Priority Oregon, a pro-business organization committed to challenging the hegemony of Democrats in the state.

Formed a year ago, Priority Oregon entered the political field by opposing efforts by legislators in 2017 to craft a gross receipts tax that would have assessed businesses on sales versus profits. Now it is spearheading four initiatives that take aim at unions, state spending and legislative approval of tax increases.

OPB’s Jeff Mapes has reported business lobbyists describing Priority Oregon as “designed to take a more hard-nosed approach to politics, unencumbered by the mainstream business community’s need to maintain ties to the Democrats who largely run state government.” Priority Oregon’s task is apparently not to make nice with Democrats.

So far, Priority Oregon also isn’t making it clear who is funding its political activities. In his story, Mapes said, “While sharpening its rhetoric, the group seems to be protecting its backers from any blowback.”

So-called dark money is no stranger to politics, but isn’t common in Oregon, where public disclosure is the rule and the routine practice. Erica Hetfeld, who is heading Priority Oregon, has promised the group will be more visible this election cycle, but not necessarily more transparent. Priority Oregon was established as a nonprofit 501(c)(4) entity that is allowed to engage in public activities without the same disclosure requirements as a political action committee.

Financial disclosure forms filed with the Elections Division indicate the Oregon Farm Bureau, Associated Oregon Loggers and Automobile Dealers Association of Portland have contributed to political action committees aligned with Priority Oregon-backed ballot measures, which are collecting signatures. Initiative backers must turn in the required number of signatures by July 6 to qualify for the November Oregon general election ballot.

Political Action Committees supporting Initiative Petition 31, which would require legislative supermajorities for any state tax revenue increases, and several other petitions (IP 34, 36 and 33), have collectively spent $146,000 during this election cycle with Ballot Access, LLC to collect signatures, according to state records.

Initiative Petition 34, which would make Oregon a right-to-work state, seems relatively quiet awaiting a ruling by the US Supreme Court in the matter of Janus v. AFSCME. The court heard arguments February 26 on the potentially precedent-splintering case. If that decision results in a victory for Union supporters, you can expect fundraising and advocacy to increase.

Initiative Petition 36 would create a state government spending limit and require excess revenue to reduce the Public Employees Retirement System unfunded liability. 

Another major effort expected on the ballot in November, Initiative Petition 37 would ban a tax on groceries.  IP 37, as you might imagine, has attracted substantial financial support from major grocers like Costco and Albertsons-Safeway. In addition, it's spent over $300,000 for petition signature gatherers and management support from conservative firm Morning in America since December of 2017.

More rough-and-tumble politics also is expected in the gubernatorial race. Democratic Governor Kate Brown is running for a full 4-year term and may face Republican Knute Buehler who has positioned himself as a politically moderate alternative. Like a running back on a bad football team, Buehler’s biggest challenge may be getting past the line of scrimmage in the GOP primary that often is dominated by more conservative voters. While Buehler has raised more campaign funds than his conservative fellow candidates, their views may be more in line with current thinking within the Republican Party.

There is an interesting twist to Buehler’s campaign. Rebecca Tweed, his campaign manager, also runs Grow Oregon, which major business leaders created in 2012 to counter the success of Our Oregon, a union-backed political group that advocates for tax hikes in the name of economic and social fairness. Grow Oregon and Our Oregon are both nonprofits, not PACs. Before leaving for Priority Oregon, Hetfeld was director of Grow Oregon.

It is a recipe for a ripe family feud with plenty of money spread around to make a lot of noise. Toss in a few additional spicy ballot measures that are circulating for signatures and you could have one of the hottest elections in some time. Some of the measures in circulation include restoring legislative term limits, requiring publicly traded corporations to disclose their state taxes, requiring proof of citizenship to vote and repeal of Oregon’s sanctuary state law.

 

Oregon’s Pending Political Divorce

Measure 97, which would raise taxes on corporations with more than $25 million in annual sales in Oregon, faces an uncertain future in the general election. However, it does seem certain that it's causing a political divorce in Oregon that will fuel polarization and make compromise harder to find.

Measure 97, which would raise taxes on corporations with more than $25 million in annual sales in Oregon, faces an uncertain future in the general election. However, it does seem certain that it's causing a political divorce in Oregon that will fuel polarization and make compromise harder to find.

Oregon voters can expect political rhetoric to escalate over Measure 97, the initiative to impose a gross receipts tax on corporations with large sales in the state, as the November 8 general election approaches.

However, the more intriguing question may be what will or should happen after the election, regardless of whether Measure 97 passes or fails? Chances are whatever happens will feel like a divorce. Andrew Bulkily, writing for Oregon Business, summed up the situation as going from “gridlock to civil war."

No one disputes that the stakes are huge. Oregon officials estimate Measure 97 will generate $3 billion per year in new state tax revenue. Proponents say most of that tax will be shouldered by large out-of-state corporations that currently don’t pay their fair share of the tax burden in Oregon. Opponents insist that the tax measure will result in higher consumer prices.

Emily Powell, the third generation owner of Powell’s Books, says higher taxes resulting from the passage of Measure 97 could drive the iconic Portland-based independent bookstore out of business. Powell says profit margins in the book business are too small and competition is too stiff to allow the store to raise its prices.

Measure 97 revenues have been touted by supporters, including Governor Kate Brown, as a badly needed and long overdue revenue make-up for K-12 school funding, health care and senior services. Opponents argue that the initiative can’t guarantee how legislators will spend the added tax money and that a big chunk of it will go to cover huge Public Employees Retirement System shortfalls.

There are people on both sides of the initiative who wish a compromise could have been reached to avoid a ballot measure mash-up that could be the most expensive political campaign in state history. Proponents and opponents have each raised double-digit millions of dollars to trade televised jabs this fall. Measure 97 backers weren’t in the mood to compromise, feeling that 2016 could be a moment to push through a major tax change on the ballot.

Which brings us to what happens after the election. If Measure 97 passes, the state’s available discretionary revenue will sharply expand. That would probably erase the projected $1.3 billion state biennial budget hole, but it wouldn’t necessarily determine how the balance of money would be spent. You could expect fierce arguments among interest groups over how much should go to K-12 schools versus investments in health care and senior services – and in higher education. You also could expect some high-profile business response, such as a business like Powell’s Books shuttering.

If Measure 97 fails, the state budget hole will loom even larger, potentially threatening cuts to K-12 and higher education funding and threatening Medicaid expansion. Perhaps worse, many in the business community may refuse to enter into discussions about how to meet that budget shortfall, PERS underfunding or tax reform because of the fractious fight they had to wage to defeat Measure 97. Oregon lawmakers may see hearing rooms full of angry faces unwilling to sit together in work groups to explore solutions.

It’s likely that the political zombie of a state sales tax would re-emerge. The sales tax has been the default idea for how to reduce the volatility of Oregon’s existing income-tax-heavy revenue system. However, sales taxes face their own haunting challenges, such as Internet sales. In Oregon, the appetite for a sales tax by voters has the same taste notes as brussels sprout ice cream.

If Measure 97 passes and Brown wins election, it will give her an effective mandate to guide how the new tax revenue should be allocated. However, it could dampen enthusiasm for climbing the steep hill to craft, pass and avoid a referral on a major transportation funding measure.

If Brown wins, but Measure 97 fails, Brown will have the challenge of trying to patch together a balanced budget, with limited credibility to court business support for alternative tax-generating options.

Brown’s position also would be weakened because she must run for election again in 2018 for a full four-year term. As secretary of state, Brown succeeded John Kitzhaber as governor after he resigned in 2015 and is running this year to fill out the final two years of the former governor’s four-year term.

This is a fairly grim picture. Sort of like a family portrait after a divorce.

Over time, views will soften, the more contentious personalities will be pushed aside and a dialogue can resume. But as the 2016 presidential election has revealed, strong political undercurrents can be unleashed, deepening polarization and crippling efforts to find common ground – or even a table where everyone can sit around to talk.

A Ballot Brimming with Measures

The 2016 election could be bulging with ballot measures from a higher minimum wage to making English the official language of Oregon.

The 2016 election could be bulging with ballot measures from a higher minimum wage to making English the official language of Oregon.

Oregon's 2016 primary and general election ballots could be brimming with measures such as a gas tax in Portland, a gross receipts tax on businesses and a higher statewide minimum wage.

There also may be ballot measures touching on raw nerves related to immigration, universal background checks on gun sales, immigration and stricter penalties for lethal force to pets.

Combined with a wide open presidential race, the advent of Super PACs and a high-profile challenge to the re-election of Portland Mayor Charlie Hales, the 2016 election shapes up as a bonanza year for advertising venues. It's possible there could be more money to spend than there is advertising space to buy on television and radio.

As AP's Jonathan Cooper reported over the weekend, the only for-sure Oregon ballot measure at this moment is a legislative referral to make judicial retirement mandatory at age 75. But this is just the lull before the expected storm.

Our Oregon is shopping seven possible ballot measures to raise taxes on corporations and wealthier Oregonians. Two groups are vying to place a higher minimum wage on the ballot, one at $13.50 per hour and the other at $15 per hour.

There are at least two measures kicking around dealing with energy. Backed by oil companies, one would repeal the low-carbon fuel standard approved by the 2015 Oregon legislature. The other, put forward by environmental activists, would ban the expansion of any infrastructure in Oregon to extract, produce, process, ship or distribute fossil fuels.

In the absence of legislative action, Portland Commissioner Steve Novick has proposed a local gas tax to help pay for street repairs. His earlier idea of a street utility bill was shouted down, but Novick said Portland can't wait until the 2017 legislative session when Senate President Peter Courtney says he will take up a statewide funding proposal. There is a slim chance a transportation measure could be hammered out for consideration during the short 2016 legislative session.

Consumer activists have submitted a potential initiative to amend the Oregon Bottle Bill to make all consumer packaging, except what is compostable or refundable, subject to a 10-cent redemption fee. Grocers may elect to push an initiative to privatize liquor distribution and sales in Oregon.

Health care advocates are looking at measures to create a constitutional right to health care and require the Oregon legislature to adopt a system of universal health care. There also is a potential measure that would define maximum allowable charges for health care services.

Immigration foes, fresh from their success in 2014 blocking a driver's license bill, are toying with new measures to require employers to use the E-Verify system and designate English as the official language of Oregon.

Several measures could affect local governments. One prospective measure would hand over 50 percent of lottery proceeds to Oregon counties. Another would strip away Metro's ability to manage its regional urban growth boundary.

A second measure affecting the Oregon Lottery would carve off 5 percent to pay for veterans' services.

Other issues bouncing around, such as rules governing legalization of recreational marijuana, could result in even more ballot measures. 

Finding Budget Happiness

When Governor Kitzhaber returns from his Bhutan sojourn to find the secrets to happiness, he will discover unhappiness engulfs his homeland.

A Democratic plan to raise taxes on wealthy Oregonians and corporations evaporated on the House floor for that pesky constitutional problem of too few votes. Two days later, labor-backed Our Oregon responded by filing six proposed ballot measures to hike corporate taxes from as little as $185 million to as much as $1 billion per year. All that has business groups howling about a reprise of the divisive Measure 66 and 67 tax battles.

The purpose behind raising revenue is to prevent more K-12 school cuts. Nervous about the legislature's ability to boost spending on schools, droves of parents in the beleaguered Beaverton School District took to knocking on doors to drum up votes for a special levy.

The governor stepped back to let rookie House Speaker Tina Kotek, D-Portland, have a go at the $275 million bill, which never even came to a vote. Now it may be time for Kitzhaber to invite legislative leaders to Mahonia Hall to find common ground.

Senate Republican Leader Ted Ferrioli, R-John Day, told reporters the failed House tax vote last week created an opportunity to find solutions in the political center. In his first two years of this term, Kitzhaber was adept at finding bipartisan support for major initiatives, in part because he spent time meeting with both Democrats and Republicans. That same skill set will be called on this session.

In reality, the 2013 Oregon legislative session has not been overly partisan. Going into the session, observers said it would be necessary for Democrats to recruit Republicans to support budget and revenue packages — as well as wise to sustain the bipartisan esprit that developed as a result of the unique power-sharing agreement in the 2011 and 2012 sessions.

Time Short to Launch Tax Reform Debate

Governor Kitzhaber is talking privately about tax reform, but the time has come when conversations about what reform looks like must go public.Democratic Senator Ginny Burdick surprised many political observers when she came out against Our Oregon's proposed 2012 ballot measure directing all corporate kicker refunds to K-12 education. Our Oregon, the political arm of Oregon public employee unions, proceeded and successfully placed its initiative on the November ballot.

What was surprising is that Burdick had supported past Our Oregon proposals, such as Ballot Measures 66 and 67 in 2009 that raised income taxes on corporations and wealthy individuals. Burdick didn't criticize the substance of what Our Oregon was doing. She was unhappy because it wasn't a more comprehensive tax reform proposal. Burdick told Willamette Week, “All I can hope is, it doesn’t make the ballot. It will throw a monkey wrench into real financial reform.”

Burdick and other leaders believe only dealing with the corporate kicker will take the wind of out the sails of a larger discussion on restructuring Oregon's tax system, which relies heavily on income taxes that can sag when the economy tanks.

Oregonians to Decide Nine Measures

Oregon voters will decide in November on three tax measures, two measures to allow privately owned casinos, legalization of marijuana and a ban on commercial gillnet fishing.  They also will get a chance to give the governor additional powers in the event of a catastrophic disaster.

None of the measures, at least so far, has touched a public nerve. But that could change after Labor Day and voters begin to pay attention to who and what is on the ballot.

A tight, well-funded presidential race should ensure good voter turnout, even though Oregon is usually lumped in with fairly certain blue states voting for President Obama. Some of the ballot measures that qualified for the Oregon ballot also could stir the political pot.

Legalizing personal cultivation and use of marijuana and hemp (Measure 80) will draw attention from the expected quarters. Oregonians have voted on marijuana and medical marijuana measures before, but this measure has a new twist — a government role in regulating commercial marijuana cultivation and sale. Think of the commission that would be created as a mini-Oregon Liquor Control Commission.

The pair of measures to legalize privately owned casinos and a casino in a former greyhound racetrack in Wood Village will get plenty of airplay. The Lake Oswego-based casino advocates have invested a lot of money to get Measures 82 and 83 on the ballot and can be expected to fund a robust campaign in their support. Indian casino operators, who worry that a Portland-area casino will siphon off their clientele, will mount strong opposition. The Oregon Lottery and its retailers have a similar fear. Also expect voices of concern from those who worry about making casino gambling even more accessible in the metropolitan area. Oregon voters rejected a similar measure in 2010.

By comparison, the proposed ban on commercial gillnet fishing (Measure 81) seems like inside baseball. If passed, it would disallow use of gillnets to catch salmon by non-tribal persons on the Columbia River, with exceptions in the Lower Columbia River. Commercial fishing interests aren't well-heeled and may be unable to tell its story to voters. Then again, the same may be true for the sponsors of the measure.

Tax measures can be headliners on any ballot, but maybe not so much this time. Measure 79, pushed by Oregon's real estate sector, would ban any new real estate transfer taxes or fees. Measure 84 would phase out the state's inheritance tax on large estates and all taxes imposed on intra-family property transfers. Measure 85, sponsored by Our Oregon, would redirect corporate income tax kicker refunds to support K-12 education.