May 20, 2004 11:00 pm
Ted Kramer ().
Ted Kramer ().

One thing is certain about Oregon's tax system. It's a mess and it's not likely to get any better without some form of restructuring.

State Treasurer Randall Edwards and state Rep. Greg Smith presented an overview of Oregon's budget and tax structure during a Union County Chamber of Commerce forum Tuesday night.

Although Edwards, a Democrat, and Smith, a Republican, are at different ends of the political spectrum on a lot of issues, they found common ground in explaining the tax structure, its challenges and what the future might hold.

We're a one-horse state when it comes to funding the state's general fund services — education, public safety and human services. The state relies on the income tax, which rises and falls with the economy. And we're a state without a savings account for rainy days. Oregon's kicker law, the only one of its kind in the nation, guarantees that when tax revenue exceeds budget projections the money is returned to taxpayers.

Voters like it, and so do elected officials come election years — no matter how much of a difference kicker revenue could make in helping pay for services in ensuing years.

Wall Street, though, hasn't looked fondly on the realities of Oregon's tax structure, Edwards said. Oregon's system — reliance on the income tax, a kicker law that doesn't allow for savings, and the instability caused by initiatives like Measures 5 and 11 — has resulted in the state's bond rating being lowered.

Oregon's got a problem, one that Edwards said probably won't correct itself completely even if the economy gets hot again. The borrowing that has occurred the past few years will have an impact on future years.

"We got ourselves in a box,'' the treasurer said.

Smith agreed. He said he applauded former Rep. Max Williams' efforts to look at a tax restructuring system. But that effort, like most, went nowhere.

"What is so Republican about the income tax, and so Democrat about a sales tax?'' Smith asked. ‘We ought to be able to figure out a tax system that works.''

Oregon voters don't take kindly to change, especially since 1990's Measure 5 limited property taxes and took taxpayers out of the equation of deciding what they want to fund with their taxes.

Measure 5 removed all semblance of local control over taxes, forcing K-12 funding on the state and a significant shift in how income taxes were dispersed. Measure 5 undermined Oregon's tax structure and Oregonians' willingness to help fund necessary government services, as evidenced by the votes on Measures 28 and 30.

The Measure 5 property tax cap doesn't allow us as voters to help our local schools and services get out of the jam. And as a state we've undermined our higher education system to the extent that major industries are frowning on what our state has done to itself.

Edwards and Smith didn't venture into partisan or controversial topics during their session Tuesday. But their message was clear. We've created a mess and the prospects for the future aren't bright without some form of restructuring.

The system we've got is broke. But until Oregonians grow tired of decreasing educational opportunities, larger class sizes and businesses looking elsewhere because Oregon doesn't adequately support all levels of education, the reality is that the problem won't get fixed.

The burden is on us.

Ted Kramer is editor of The Observer. Reach him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it