Jeff Kruse

MAY 5, 2017




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.




Senator Jeff Kruse

email: I phone: 503-986-1701
address: 900 Court St NE, S-205, Salem, OR, 97301