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CLEAR Temp: 70 °F Wind: NW at 3 mph Monday, June 10, 2002 SECTIONS Home Page Local News Sports Business Obituaries Life Opinion - Politics AP News Weather Classified Archives Site Map EXTRA Cyberchef E The People Golf Job Network Headbone Zone Wellness Connection Movie Times Newspaper in Education Oregon CarZone Outdoor Journal Personals Prime Times Real Estate Tempo A & E TV Times W3 Magazine CLASSIFIEDS Find a Car Find a Home Find a Job Find Everything E SOUTHERN OREGON Destinations Automotive Communities Employment Entertainment Publications Real Estate Recreation Shopping Calendar ABOUT US FAQ What's New Advertise Home Delivery Classified Ad Contact Us Media Kit Jobs @ Mail Tribune Email Story to a Friend May 29, 2002 Gov. John Kitzhaber Kitzhaber wants a temporary tax boost A one-time income tax hike could help to eliminate the state’s growing budget deficit by the next biennium By DANI DODGE Mail Tribune Gov. John Kitzhaber on Tuesday proposed a temporary income tax increase to deal with the gaping budget deficit. "You’ve got a $876 million problem, and the scary thing is the projection for 2003-2005 is $1.3 billion." Kitzhaber said in a meeting at the Mail Tribune. "We ought to refer to the September special election a temporary income tax bracket increase ... it will be a referendum on education." Earlier in the day, Kitzhaber gave a budget address at the Eugene Rotary Club and also met with private groups, the media and legislators to build support for his plan. The state’s budget deficit has been slowly getting more and more grim since the Legislature passed the state’s budget last year. Two special legislative sessions have been held this year, but there was no agreement between Republicans and Democrats on how to deal with the widening budget gap. At the last special session, though, legislators referred Measure 13 to voters. The measure would have taken $220 million from the state Education Endowment Fund to rescue schools from revenue shortfalls. It failed at the polls. Kitzhaber, a Democrat, said he will call another special session in mid-June. At that session, he will propose a new budget plan. It calls for no further cuts, but several new tax increases. He said that while there has been disagreement at the special sessions on many things, there is general agreement on services that are vital to the state. "We have cut the budget about as deeply as we can," he said in his speech in Eugene. "What we have been debating is not the budget cuts but rather how to pay for that portion of the budget we want to sustain." Kitzhaber’s proposal would: Put the remaining $80 million of unallocated national tobacco settlement money into the current budget; Disconnect from the federal economic stimulus package — that includes tax provisions that reduce state revenue — or delay its $124 million fiscal impact; Raise the cigarette tax by 50 cents per pack; Refer to voters a temporary adjustment of the personal and corporate income tax rates with a provision that they must be re-enacted in December 2004 or they revert to current rates; Kitzhaber said the income tax increase could be implemented by marginal increases in the tax brackets, which currently are set at 5 percent, 7 percent and 9 percent. He suggested the simplest way to increase the tax rates would be to increase them to 5.1 percent for lower incomes, 7.2 percent for middle incomes and 9.3 percent for upper incomes, but the amount of increase would depend on the amount of money the state needs to raise. If, for example, the Legislature wanted to raise $600 million, the income tax increase would have to be set to 5.2 percent, 7.4 percent and 9.7 percent. That would mean a family making $20,000 or less would have an income tax increase of $32, and a family making $200,000 a year or more would have an increase of $3,200. "But the people at the upper end of the bracket are the ones who got most of the benefit from the Bush tax cut and most of the benefits of Measure 88," Kitzhaber said. Measure 88, passed in 2000, increased the amount of federal taxes that can be deducted on Oregon tax returns. Other options could be an income tax surcharge, or putting smaller increases on lower incomes and larger increases on wealthier taxpayers. Kitzhaber also suggested referring a second measure to the voters in November that would create an Education Stabilization Fund — similar to that proposed by Measure 13 — but without putting the money into the current budget. Instead, it would create a cushion of nearly $300 million to help maintain school funding, if necessary, for the 2003-2005 biennium. Kitzhaber said combined with the $450 million in cuts already made, the tax increases would generate enough revenue to essentially eliminate the budget deficit in the coming biennium. And he said, he thinks he has the votes in the Legislature to pass it. Kitzhaber noted that nearly 60 cents of every state dollar goes to education. If his plan or some other revenue-enhancing plan isn’t implemented, school funding will be drastically cut. Already, the Portland school district has the shortest school year in the nation, and another Oregon school district has gone to a four-day week. Public safety also could face cuts. The most likely cuts would be in transition programs for criminals, but that would increase the recidivism rate or mean the Oregon Youth Authority might have to release offenders. Further cuts in social services would mean the state loses federal matching funds. Tuition at state colleges would "go through the roof," Kitzhaber said. "A good education is not only the key to a skilled work force, but increasingly, the key to social and civic success as well," Kitzhaber said. "But if at the end of the day, if people don’t want to pay for schools, we don’t pay for them." Reach reporter Dani Dodge at 776-4471, or e-mail [email protected] Printer Friendly Version Email Story to a Friend Subscribe Archive: Click to Search Mail Tribune Home Local News | Sports | Business | Obituaries | Life Opinion - Politics | AP News | Archives | Site Map E Southern Oregon | Classified Copyright 1997-2002 Mail Tribune. All rights reserved. Privacy Policy web master feedback A D V E R T I S E R S