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New Report On Oregon's Tax and Spending Levels Shows "Things Don't Look Different Here"

News Release
January 30, 2002

A new report released today by the Oregon Center for Public Policy finds that Oregon's level of government spending per person is close to the national average and has remained constant, relative to income, for the last 20 years. Only five other states have tax burdens lower than Oregon. The report analyzes recent U.S. Census Department data that rank tax and expenditure levels of state and local governments.

Related materials:

Full report (PDF)

This report addresses the claims of others that created confusion by ranking Oregon as relatively high for total state and local government spending and relatively low for taxes. The OCPP analysis explains that this is because Oregon spends money that it receives from the federal government, and collects revenues other than taxes.

"Contrary to claims of anti-government activists, tax levels in Oregon are not high and have not been rising. Total state and local tax collections have kept pace with economic growth in Oregon for some time now," said Jeff Thompson, economist and policy analyst with the Oregon Center for Public Policy.

Among its findings, this OCPP analysis of Oregon taxes and spending shows that, after accounting for federal aid received, general expenditures by state and local governments in Oregon are close to the national average. Oregon's state government ranks 24th for general expenditures not counting federal aid.

Recent reports in the press and by some anti-government groups have claimed that Oregon ranks 9th in spending. According to the OCPP analysis this ranking is misleading because it includes federal tax dollars the state spends. The ranking is also irrelevant to the debate over closing the state's General Fund revenue shortage, because it includes the spending of local governments and non-general expenditures, such as the expenses to stock and operate state-run liquor stores. Unlike most other states, Oregon operates state-owned liquor stores, resulting in state spending that ultimately produces a profit.

"Furthermore," Thompson said, "Oregon has some unique characteristics that drive spending. We spend on ports while landlocked states don't, and voters passed the tough-on-crime Measure 11 that substantially boosted required spending on corrections."

"Federal dollars spent, local government spending, and non-general expenditures like liquor sales and worker's compensation have nothing to do with Oregon's current revenue shortfall," said Thompson. "Including them only serves to distort the picture and confuse lawmakers trying to address a serious state General Fund revenue shortfall."

"The reality facing the Governor and the Legislature is that Oregon ranks 24th in spending," said Thompson. "When it comes to state government spending, the anti-government crowd is wrong. Compared to other states, things don't look different here."

"The Census data show that only five other states dedicated a smaller share of their income to state and local taxes than Oregon," said Thompson. "What we've done is shift the funding of state and local government from taxes to fees and other charges. When you add in those fees, we're not really different than other states."

The report also puts rankings into perspective for decisions faced by the Legislature and Oregonians on how to balance Oregon's budget. "How Oregon ranks against other states is irrelevant to Oregon's ability to afford the public goods and services that our state and local governments provide," said Thompson.

"Just because your neighbor lets his or her lawn grow wild has no bearing on whether you can afford a lawnmower. The same goes for the state. Just because another state may not provide a service has no bearing on whether Oregon can afford to provide the service," Thompson said.

The study, "Things Don't Look Different Here: Making Sense of Taxes and Spending in Oregon," is available on the OCPP web site, www.ocpp.org/2002/es020130.htm. The Oregon Center for Public Policy is a non-profit research organization that analyzes budget, tax, and program issues important to low- and moderate-income Oregonians, the majority of Oregonians.

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