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State at fiscal crossroads

Oregon is at a crossroads. As the state slowly climbs out of the economic downturn, it must not go back to business as usual.

The state has recently sent more money to K-12 education, it is eliminating furlough days for state workers, and it is giving raises to employees and officials. That may be appropriate, given the cutbacks of the last few years.

But this is not “happy days are here again.”

The state’s financial house is not in order. Now is the time to address the boom-and-bust approach of recent decades, in which state spending has climbed during the good times and then couldn’t be maintained when the economy slowed.

Efforts to curtail government spending through the initiative process have created a mind-numbingly complex tax structure. The lack of a sales tax and limitations on property taxes leave the state far too dependent on the volatile income tax. Ballooning commitments to the Public Employees Retirement System, to criminal justice and to health care threaten needed spending for schools and other public services.

Gov. John Kitzhaber has been traveling the state in pursuit of the so-called “grand bargain” that the 2013 Legislature failed to achieve. He’s seeking agreement on new taxes paired with cutbacks to PERS, and the GOP has said tax cuts for small businesses need to be part of the package.

The governor’s efforts are well-placed; a grand bargain would help.

But it’s not nearly enough to correct decades of decisions by voters and legislators that leave us unable to pay for the structure we’ve created.

We need a tax system that makes sense and is less volatile. And we need a thriving economy that reverses the slide in taxpayer income.

Oregonians’ median incomes in 2010 were 4 percent less, inflation adjusted, than in 1980. Fix that and a lot of good things follow. In the meantime, avoid new spending.

— Wescom News Service (Bend Bulletin)

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