News Release

An end-of-session maneuver, called a “gut-and-stuff,” replaced one tax cut bill, Senate Bill 535, with the contents of another, Senate Bill 537-A. The revised bill, Senate Bill 535-B, is on its way to a vote in the State House of Representatives. SB 535-B would increase the amount of federal income taxes subtracted from state taxable income from $3,000 to $5,000. It would take effect in 2001 if voters approve the measure in a referral to the November 2000 ballot. The measure’s primary promoter is Associated Oregon Industries (AOI), a business lobby group.

“This is a tax cut for the wealthy,” said Charles Sheketoff, executive director of the Silverton-based Oregon Center for Public Policy. “On average the poorest 40 percent of Oregonians will receive no tax relief.”

According to a study by the Oregon Center for Public Policy and the Washington, D.C.-based Institute on Taxation and Economic Policy:

• The 60 percent of Oregon households in the lowest income groups will receive an average tax break of $8 a year.
• The poorest 40 percent of Oregon households receive, on average, no tax relief.
• Sixty percent of households will receive just 8 percent of the tax break offered by SB 535-B.
• The wealthiest 20 percent of Oregon households, with an average income of about $132,000 a year, will reap 57 percent of the tax break and have their tax bills reduced by $166 on average.

“The impact to the state would be phenomenal,” said Sheketoff. He referred to a projection by the Legislative Revenue Office showing that such a tax cut would cost the state $43 million in the last six months of the 1999-01 biennium and as much as $223 million in the 2001-03 biennium, when fully implemented.

Sheketoff notes that the $223 million price tag exceeds the Governor’s Recommended 1999-01 general fund spending for all of the following agencies combined:

• Oregon Health Sciences University ($107.9 million);
• the District Attorneys ($9.5 million);
• the Economic Development Department ($3.4 million);
• the Employment Department ($4.6 million);
• the Oregon State Fair ($0.7 million);
• the Housing and Community Services Department ($19 million);
• the Department of Veterans’ Affairs ($2.5 million);
• the entire consumer and business services program area ($12.8 million);
• the legislative branch of state government ($51 million); and
• the Commission for the Blind ($1.3 million).

“It is also more than Oregon spends on juvenile justice, welfare, or the state police,” said Sheketoff. “At a time when legislators are negotiating, bitterly, over how to distribute an already limited budget, they are asking voters to limit future budget options in order to benefit Oregon’s most fortunate.”