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MAY 5, 2017
THE REAL POLITICAL GAMES BEGIN
A couple of
weeks ago a new committee was formed, it is a joint committee to deal with
taxes. The membership of the committee is the members of both the House
and Senate revenue committees. In theory, their job is tax reform, but it
became very clear yesterday their goal is tax increases based on the
presentation made by the Speaker of the House and her leadership team.
What is even more interesting is we are already receiving emails in support of
the proposal as the “only way to save our schools.” In reality the
Speaker’s plan is designed to allow the continued expansion of government.
Maybe it is time for a reality check.
Oregon ranks
6th in the nation for total state expenditures per capita at
$9,245. California ranks 21st at $6,420 and Washington ranks
33rd at $5,598 per capita. We spend almost twice as much as
our surrounding states and in 2016 state employees received raises and perks
costing more than $300 million. An interesting subset of these numbers is
health insurance, which is paid by the state. The average premium for
state workers is $16,992, which is nearly double the national average.
The cost of state government has grown by nearly 40% since 2011 and it is
projected to grow by another 8 to 10 per cent in this budget. I think it
is safe to say that, while the majority party continues to talk about
education, their real focus is the continued expansion of government in
general. We just can’t afford this rate of expansion.
For those
who say business needs to pay its “fair share,” it is time for some
reality. It has been said our corporate taxes are low, but you are never
given the full picture. Taxes can take many forms. It is logical to
assume any time government takes money from a business or a person it is a tax,
even if it in theory is called something else. Oregon has over 4,100
different licenses or fees and most them are paid by business. When we
add these to the direct taxes paid by business we rank around 24th
when compared to other states. But what frustrates me on this subject is
what seems to be a lack of understanding of basic economics. The bottom
line is a business must be able to sell their product for more than it costs to
produce it. All taxes and fees are nothing more than a cost of
production, the same as labor or any other factor. When the cost of
production goes up the cost of what is produced goes up as well. So, in the
end it is the consumer who pays for the increase. By the way, businesses
don’t have a magic pot of money to pay taxes with the way some would have you
believe.
There are,
however, two taxes I will be able to support if they are structured in the
right way. The first will be the hospital tax. Which is a plan that is
still being worked on. This plan is somewhat complicated as it also deals
with federal Medicaid funding, but will allow us to match federal funds without
real cost increases to Oregonians. At this point it would be best to
ignore all the political pontification relative to potential action at the
federal level. The bottom line is we should be able to fund the Medicaid
program without a general tax increase.
The second
tax I could support would be a gas tax increase for our transportation
system. My one condition is the money needs to go to roads and bridges,
which are the only uses for this money by law. This is also a package in
which a great deal of work still needs to be done, but it is important to
finish this work before the end of the Session.
As for the
other things, we can do to balance the budget, it is time for government to get
its house in order. If we just cut back on the projected expansion in the
current proposal, we would be most of the way to solving the problem.
There are several good options we can consider, but until the majority party
becomes willing to not look at tax increases as the first option it will be
hard to come up with real solutions. We have about two months until the
end of the Session, and my hope is we will at some point start putting the
people, not the government first.
Sincerely,
Senator Jeff
Kruse
email: Sen.JeffKruse@oregonlegislature.gov I phone: 503-986-1701
address: 900 Court St NE, S-205, Salem, OR, 97301
website: http://www.oregonlegislature.gov/kruse
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