Thousands of Oregonians could see more money taken out of their paychecks and companies would be writing bigger checks to fund Gov. Kate Brown’s proposed budget and revamp the state’s education system.
Brown needs to find $2.6 billion more than is already being paid in state taxes to cover her proposals for the state’s next two-year budget. It’s likely much of that sum would come from corporate or personal income tax increases.
Currently, individual taxpayers are projected to pay $19 billion in state income taxes the next two years. And corporations are projected to pay another $1.1 billion.
The governor for the most part has been quiet about where she’s going to get the new money. She has proposed increasing a variety of taxes other than income taxes, but that gives her about one-third of what she needs to cover her proposed spending.
The details on who would pay are yet to come.
“The governor will be engaged in working with those who will be proposing ideas, which includes the business community, Legislature and other stakeholders across the state,” said Chris Pair, Brown’s communications director.
“It’s going to be a challenge,” the governor said last week when she announced her budget plan. “I don’t think it’s going to be easy, but I do think it’s work worth doing and attempting to do.”
House Speaker Tina Kotek, D-Portland, said she wants to raise “sustainable” revenue for the education plan through corporate or personal income taxes.
“If we’re going to have the resources we need, you have to look at the big things,” Kotek said.
Pushing tax increases through the Legislature could technically be easier for Democrats, who now have a supermajority of votes in the House and Senate.
Kotek said that’s no guarantee that tax changes would pass easily.
Critics already are pushing back on the idea that Oregonians need to be taxed more.
House Republican Leader Carl Wilson of Grants Pass, called the governor’s budget a “call to drastically increase taxes on everyday Oregonians.”
He noted the state already is forecast to take in an extra $1 billion in the next biennium without changing tax rates. The governor’s move to take another $2 billion is a challenge, he said.
“It is a challenge to the wallets and pocketbooks of hardworking Oregonians,” Wilson said.
Jason Williams, the executive director of the Taxpayer Association of Oregon, also was critical.
“No amount of tax revenues” could fix what he called a “leaky” budget.
While he said that the governor’s plan to hire more internal auditors could help identify government waste, that would only be effective if the state cut wasteful programs.
The state has made minor changes to income taxes in recent years.
In 2017, these included a new payroll tax to help pay for transportation projects, and changes to how certain corporations apportion income — simply put, how they figure out what they owe to Oregon when they pay their taxes.
Brown’s budget already includes $769 million in increased taxes, largely the result of a work group figuring out how to cover the state’s $623 million bill the next biennium to cover Medicaid, the government health care program for the poor and other qualifying groups.
Health care is costing the state more money — not because the care itself is getting more expensive, but because the federal government is covering less of the bill than it used to.
A mix of tobacco and business taxes would cover the Medicaid cost, state officials said.
“The governor has balanced the budget by, in essence, getting the health care community together to find an alternative way to pay for health care costs, instead of that cost shifting to the general fund,” said George Naughton, the state’s chief financial officer.
Other minor tax increases included in the budget including a higher tax on hard liquor and higher tax rates for small business owners,