More than 70 pieces of legislation are to be proposed at the state legislature this year in an attempt to address shortfalls in various state coffers, State Rep. David Brock Smith, R-Port Orford, told Curry County commissioners late last month.
The state needs billions of dollars of taxes to increase spending for schools and cover public employee retirement benefits, known as PERS.
PERS officials say it’s unclear if any reform will be taken up in the new year.
“The Oregon Business Council has a list of money-saving pension changes it will preview for lawmakers and other participants at Monday’s Oregon Leadership Summit. But conventional wisdom is that Democrats’ blue wave election results on Nov. 6, heavily supported by public employee unions, drowned any chance of pension reform in 2019. Power shifted, and most pre-session talk seems to be about a $2 billion tax increase, without any accompanying pension cost containment,” they told the Oregonian shortly after the mid-term elections.
They also admitted the math is getting worse.
PERS investment returns are about 1.5 percent — compared to the system’s “assumed” return of 7.2 percent. That will make the unfunded liability grow by another $3.5 billion, to $26 billion, officials said.
Statewide public employee pension costs are expected to increase by $1.1 billion in the next two years and another $700 million for schools and state agencies in the next biennium.
Aflutter in bills
The House Revenue committee introduced more than 50 proposals, and the Senate Finance and Revenue committee introduced more than 30 tax bills earlier this month, none of which have price tags on them yet.
A new business tax still being worked on would likely be a tax on gross receipts of a business. Others are pushing for changes to the way commercial and industrial properties are taxed, with adding more minimum-tax brackets to corporate income taxes or changing the top taxing tier from an established rate to a percentage of the company’s sales.
The Senate Finance and Revenue committee was also considering asking voters to end Oregon’s personal income tax rebate — the “kicker” — in the state constitution and divert that money to a fund to pay for education during economic downturns.
The rebate occurs when tax revenues in a two-year budget cycle are more than 2 percent higher than initial forecasts.
And lawmakers will try again to repeal a tax break that affects internet providers. It was initially approved in 2015 when state officials were trying to lure Google Fiber here, but when that company bailed, Comcast moved in to claim the savings for itself, officials said.
A repeal died in the last moments of the short session this fall amid lobbying by the media giant, which in an unrelated matter, agreed not to try to claim the tax savings. Without the lobbying, the chances of repeal are greater, lawmakers said.
Another change to be proposed would be to tax business property at its real market value, rather than allow the tax relief voters put in place with Measure 50 in 1997 — a measure that has virtually crippled state budgets, leaders say.
Measure 50 reduced taxable property values and limited increases to 3 percent each year, essentially separating a property’s value from the tax placed on it. However, Measure 5 would still be in place, limiting property taxes to $15 per $1,000 real market value.
Another measure would ask voters to change the lower limit established by Measure 50 and set a base assessed valuation at 75 percent of a property’s real market value. Simultaneously, the first $25,000 or 25 percent of the real market value, whichever is lower, would be exempt from taxation.
Some elected officials have said they want any such changes to be revenue-neutral, meaning that some property owners taxes could increase, while others go down — so long as the net revenue is the same — another question that would likely have to go to the vote.
Curry County has the lowest tax rate in the state, at just less than 60 cents per $1,000 assessed valuation. It doesn’t bring enough money into county coffers to sustain services, many of which have been spun off into nonprofits or outsourced to other counties and companies.
Another tax that might not affect many people here is one that would tax million-dollar homes at their real value, as well. The tax wouldn’t come into play until the home was eventually sold for that price, beginning Jan. 1, 2021.
One Senate proposal, however, would benefit citizens, by increasing the earned income tax credit for low-income employees and double the standard deduction on tax forms.