Capital Bureau

SALEM — The Oregon Education Association, a union representing 44,000 public school employees, plans to go to voters in 2018 in an effort to shore up more state funding for schools through a tax on businesses.

State legislators Thursday moved forward on a $8.2 billion proposal to fund public K-12 education through the State School Fund for the next two years. That’s about $827 million more than the amount approved in the current two-year budget period.

Charging that state funding is insufficient in light of the state’s relatively large classroom sizes and low graduation rates, the OEA has proposed two ballot measures, both of which are planned for the ballot in November 2018.

They aim to leverage changes to the state’s business tax structure to increase school funding.

One measure would change the legislative votes required to pass corporate tax increases. According to OEA, if passed, it would allow the Legislature to raise corporate taxes to fund education by a simple majority vote, rather than the three-fifths majority required under current law. That change would be triggered if the Legislature “puts forth” a budget that does not meet the level of the Quality Education Model, a statewide benchmark for public school funding developed in the late 1990s.

The second measure — a proposal the groups are calling Invest in Oregon’s Future — would lower individual income taxes while increasing “taxes for large corporations” by way of a gross receipts tax. The tax would be .95 percent for corporations with annual sales of more than $5 million.

Last November, Oregon voters rejected Ballot Measure 97, which would have raised $6 billion per two-year budget cycle, a sum supporters said lawmakers would used for schools and social services.

The money would have been raised by a tax on gross annual sales similar to the one that OEA is now proposing, but Measure 97 would have imposed a higher rate that would have applied to fewer businesses. OEA was one of its supporters, along with other union groups.

A bitter battle unfolded last fall over Measure 97, and appears to have cast a pallor over business tax discussions in the ongoing legislative session, which is due to end in early July. Other proposals to change the state’s business tax structure are still alive, but lawmakers have not made a decision yet.

Advocates for changing the tax structure, such as State Sen. Mark Hass, D-Beaverton, argue that switching from a state corporate income tax to a tax on “business activities” through gross sales receipts could introduce more stability to Oregon’s volatile revenue system.

The effort to increase education funding also arises in the context of a $1.4 billion gap between what the state expects to realize in revenue and the amount of money it would take to maintain all state services at current levels.

And some Democratic legislators argue that without raising new revenue, the legislature will have to make drastic cuts to fill the $1.4 billion gap, such as narrowing the pool of people in Oregon who are eligible for Medicaid, the government’s healthcare coverage for the poor. However, lawmakers are still discussing a healthcare provider tax that could cover a substantial amount of the state’s Medicaid costs in the coming two-year budget.

Patrick Criteser, president and CEO of the Tillamook County Creamery Association and chair of the Oregon Business Plan, a group of businesses that have coalesced around state policy issues, told lawmakers Thursday that the group would be willing to support modifications to current taxes, rather than changing the overall business tax structure to one based on business sales in the current legislative session.

Meanwhile, two other local unions, SEIU 503 and Oregon’s chapter of the Association of Federal, State, County and Municipal Employees, announced plans this week to file a ballot measure to require publicly traded corporations to report Oregon taxes to the Oregon Secretary of State.

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