PORTLAND — With the largest corporate tax hike in Oregon history likely headed to voters in November, lawmakers have two different scenarios to consider for the next two-year budget cycle: one with an extra $6 billion in tax revenue, and one without.
That reality prompted Gov. Kate Brown on Thursday to release her own vision for some of that revenue if Initiative Petition 28 passes this fall.
It involves creating an endowment fund for high school vocational programs in hopes of boosting graduation rates; expanding earned income tax credits for low-income households; and establishing tax credits for corporations that dedicate a portion of their tax bill to the Oregon Growth Fund for small and minority-owned businesses.
Cost estimates weren’t immediately available as discussions with lawmakers, who will ultimately decide the plan’s fate, were just beginning. But officials in Brown’s office say it’s a framework to start with, an effort to lock away at least some of what would otherwise be discretionary money for the Legislature.
“The time to build the boat is before the tide rises,” Brown, who remains neutral on IP 28, said in a statement. “As I consider the development of budgets and policies for 2017-19, my Corporate Tax Implementation Plan provides a framework for planning that advances my priorities: improve our high school graduation rate, continue economic growth statewide and protect Oregon jobs.”
The measure — a gross receipts tax hike proposal that would apply to businesses with $25 million-plus in annual sales and is awaiting final approval for the November ballot — specifies that all revenue it generates would fund education, health care and senior services.
But there aren’t any guarantees. Lawmakers can spend the revenue however they want because IP 28 would change state law, not the Oregon Constitution — a structure that its public union-backers say they chose to avoid pigeonholing future budget decisions.
Questions remain
Education, health and senior services would almost certainly benefit from IP 28. It sends proceeds to the general fund, the bulk of which already funds those areas, especially education. But what portion of the proceeds — especially with other funding challenges facing the state, such as pensions and transportation — and how it’d be spent beyond that is unclear.
Katherine Driessen, spokeswoman for Our Oregon, the union-backed nonprofit behind IP 28, said Brown’s proposal is a good first step that “addresses education, and we look forward to working with the governor on an implementation plan that addresses health care and senior services as well.”
Rebecca Tweed, campaign coordinator for the business-backed opposition campaign, said Brown’s proposal doesn’t address the broader issues with IP 28 and instead, “demonstrates that IP 28 includes no strategy and no accountability for how the state would spend the $6 billion it would generate.”
Brown also needs the support of the Legislature, where feelings on IP 28 are mixed, even among Democrats.
