Area opponents of Ballot Measures 8 and 91 warn that the measures could threaten the financial stability of Eugene schools and city programs, but supporters say the measures would constitute a minimal reduction of funding and boost the economy by cutting taxes.
Measure 91 would make federal income taxes fully deductible on both personal and corporate income tax returns in Oregon. If the measure goes into effect during the 2000 tax year, state revenues would be reduced by approximately $870 million during the current fiscal year. After 2001, state revenues would be reduced by about $1 billion a year, depending upon growth in personal income and tax liability.
Lane County Commissioner Peter Sorenson said the measure is regressive, and would actually raise combined federal and state income taxes for most Lane County residents because the decrease would eliminate the state surplus, called a “kicker,” which would likely be returned to taxpayers.
Only those who make more than $81,000 a year, and write off federal taxes on state returns, would gain a deduction sufficient to offset the lost kicker refund, according to the Oregon Legislative Revenue Office.
Furthermore, Sorenson said the measure would cause a “drastic reduction” in public school funding.
Kelly McIver, a spokesman for the 4J School District, said that the measure could reduce funding for the district, which encompasses all of Eugene, by about $4.3 million during the 2000-2001 year, or about four percent of their annual budget. In future years, that amount would jump to a $13 million cut, or about 11 percent of the district’s budget.
Like Measure 91, Measure 8 hinders the capabilities of Oregon schools, McIver said.
The measure, which limits state spending to no more than 15 percent of state personal income, could reduce 4J funding by about $11.5 million per year, or almost 10 percent of their annual budget. The cuts would especially affect programs such as special education, McIver said.
“Any time you’re talking of budget reductions greater than one or two percent, that’s serious,” McIver said. “When you get up to 10 percent, it’s drastic.”
Supporters of Measures 8 and 91, however, counter that passage of the measures would greatly reduce the amount of taxes paid by Oregon residents at minimal cost to state programs.
Becky Hanson, executive assistant for Oregon Taxpayers United, said that schools are making claims based on the false belief that the measure is retroactive, meaning it would apply to the current year.
“The deductions are for the first year for which the taxes are paid, so the deduction will be taken on the 2001 tax returns,” Hanson said. “The first year you won’t see any change.”
Furthermore, Hanson said, the measure would curtail future spending and not constitute a cut in current spending.
Sorenson argued that under the measures, both local and state programs would be affected.
“Local programs such as drug prevention and public health will be reduced,” Sorenson said. “There’s no doubt about that. The legislature will be forced to make these cuts.”
Though the emphasis has been on education, Terry Connolly, the Eugene City of Commerce’s director of government affairs, said that businesses also need to be aware of the effects that the measure could have.
If Measure 91 passes and the state loses part of its general fund, the legislature will look for places to make up the difference, and might target businesses for replacement revenue, he said.
“On one hand, a business could say [Measure 91] makes sense,” Connolly said. “On the other, business must ask themselves what services will be cut that they need.”
City senior financial analyst Larry Hill said the Eugene City Council is considering taking positions on several of the measures, but they haven’t done so yet.
Even if the measures pass, the state legislature can take action to soften the blow for government-funded programs by safeguarding revenue sharing — where the state government shares tax revenues with city governments. Eugene receives $8 to $9 million in state-shared revenue a year, Hill said, which can be reduced by an underdetermined amount with the passage of measure 91 and 8.
“The legislature could protect its revenue sharing [by cutting] from state programs,” Hill said. “We expect to see a reduction in state shared revenue if they pass, but we don’t know for sure.”