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Proposed Tax For Oregon Schools Dodges Business Opposition, Heads To House Floor

April 30, 2019 | OPB News | by Rob Manning

A proposed billion-dollar business tax for Oregon schools took a big step forward Monday, as it passed out of a special legislative committee created more than 15 months ago, with this single piece of legislation in mind.

The Joint Committee on Student Success has been working for months on a commercial activities tax to fund early learning through high school. The spending side has been relatively clear for weeks, with a goal of investing at least $2 billion per biennium into three main categories: early learning, statewide initiatives (ranging from career-technical education to summer programs), and a grant program intended to allow school districts flexibility to make targeted investments aligned to specific needs they’ve identified, such as improving graduation rates or boosting attendance.

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Oregon House to vote on $2 billion education revenue, reform bill

April 30, 2019 | Statesman Journal | by Natalie Pate

After nearly a year and a half of work, the Legislature’s Joint Committee on Student Success passed its new education package out of committee Monday evening, just a day before the end-of-April goal.

House Bill 3427, formerly HB 2019, now heads to the House floor with a do-pass recommendation. It was approved by the joint committee in a 10-6 vote, split on party lines.

Sen. Tim Knopp, R-Bend; Rep. Greg Smith, R-Heppner; Sen. Kim Thatcher, R-Keizer; Sen. Chuck Thomsen, R-Hood River; Rep. Cheri Helt, R-Bend; and Rep. Sherrie Sprenger, R-Scio, voted against it.

The committee — 16 legislators from both sides of the aisle — has met with educators, families and business leaders across the state since January 2018 to figure out what’s going well in schools, and what isn’t.

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Our Opinion: Big move on PERS encouraging

April 30, 2019 | Portland Tribune | by Editorial Board

Consider this: The PERS unfunded liability has continued to grow despite a 10-year bull market on Wall Street, where much of the retirement money is invested. If Oregon couldn’t pay down the liability during robust economic times, what will happen when the economy and market go south?

Oregonians may be left scratching their heads when they see thousands of teachers protesting at the Oregon state capital in Salem or in their home towns on Wednesday, May 8.

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Editorial: Oregon must rethink gross receipts tax plan

April 25, 2019 | Capital Press | by Editorial Board

Oregon lawmakers want to raise an additional $1 billion a year in taxes to pay for new initiatives to improve K-12 education.

The Legislature wants to raise a lot more money this session, despite already being on track to see revenues increase by 5%.

Its decision a few years ago to expand Medicaid has led to a $254 million shortfall, despite a raft of taxes voters approved last year to help fund the program. A $300 million tobacco tax hike is on tap to fill the gap.

It has voted to hold back $108 million owed to Oregonians under the “kicker” program, which rebates money to taxpayers when receipts exceed projections by 2%. And it is proposing a carbon cap scheme that could raise as much as $700 million while increasing the cost of fuel and everything transported by truck or train.

But one tax at a time.

Under the first proposal, businesses would pay a half a percent of their gross receipts over $1 million. Businesses would be able to deduct 25% of either labor or capital costs, which could push some businesses below the gross receipts threshold. Sales of groceries, gasoline and diesel would not be taxed under the proposal.

Supporters say about 40,000 of the state’s 460,000 businesses would be subjected to the tax. And to further help sell the plan, the proposed legislation would cut personal income tax rates for all but those in the top bracket by a quarter of a percent.

This plan is similar to the ill-fated Measure 97, an initiative petition voted down in 2016.

That measure proposed Oregon’s largest tax hike ever. It would have imposed on “C” corporations an additional 2.5% tax on gross sales in Oregon exceeding $25 million. It would have raised $3 billion per year.

Democrats sponsoring the current proposal have obviously scaled back their ambitions. But even in its pared-down form, the proposal has the same shortcomings as Measure 97.

Advocates like the gross receipts tax because they claim businesses use recognized deductions to avoid corporate income taxes. The biggest problem with a gross receipts tax is that it must be paid regardless of whether the business in question makes a profit. High-volume, low-margin businesses such as farming can get caught in the net without making a dime.

The impact of the tax is cumulative, with each vendor in a supply chain adding to its price to help cover the cost. The end user of a product — a farmer with a piece of farm machinery — pays the full load without necessarily being able to pass that along.

Oregon faces a lot of tough problems. The unfunded liability of the Public Employee Retirement System is a daunting burden that costs local school districts an ever-increasing share of their revenues. At the same time, test scores and graduation rates are abysmal.

Lawmakers see the gross receipts tax as an easy source of big money. They need to look elsewhere.

Editorial: Kotek should not be a can kicker

April 23, 2019 | Bend Bulletin | by Editorial Board

Of all the things parents want to pass on to their children, debt is probably not one. House Speaker Tina Kotek has suggested doing it anyway.

One of the ideas she has been thinking about as a partial solution to the state pension program’s $27 billion unfunded liability is kicking the can down the road. Delaying payments. Stretching out the liability farther into the future.

The idea in pensionspeak is to lengthen the amortization period for the Public Employees Retirement System. In plainer language, that means stretching out the number of years used to calculate the time to raise the money to pay PERS pension benefits.

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Editorial: Taxes, schools grab spotlight in Capitol

April 22, 2019 | ALbany Democrat-Herald | by Mike McInally

With about two months remaining in the legislative session, we’ve reached the point at which the focus is narrowing onto the biggest and most contentious issues in the Capitol — and at least some Democrats are starting to sense that, despite their super-majorities in both chambers, they may not be able to win approval for all the items on their agenda.

In that light, it was interesting to note this comment from Speaker of the House Tina Kotek in a recent story in The Oregonian: “We only have so many super-majority votes in our pocket.”

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Editorial: Legislature shouldn’t pass unfair tax

April 18, 2019 | Bend Bulletin | by Editorial Board

Employees of businesses with thin profit margins should start worrying about what the Oregon Legislature is scheming to do to their jobs. House Bill 3427 creates a tax that will make it even harder for those businesses to prosper.

The Legislature is not going to be able to come up with a tax everyone likes. But it should try to come up with one that is fair. HB 3427 fails.

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Gov. Brown’s plan to protect schools from pension costs likely falls short

April 9, 2019 | The Oregonian | by Ted Sickinger

Much of the intrigue in this year’s legislative session centers around lawmakers’ push to raise corporate taxes by $2 billion to better fund Oregon’s struggling K-12 schools.

Meanwhile, behind the scenes, Gov. Kate Brown is aggressively shaking the sofa cushions of state government in a companion effort to protect that investment from being spent on school districts’ increasing pension costs.

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Former Oregon Gov. Ted Kulongoski Files Two 2020 Ballot Initiatives to Tackle Public Pension Costs

April 5, 2019 | Willamette Week | by Nigel Jaquiss

The former governor, a Democrat who oversaw PERS cuts in 2003, is joined by former state Sen. Chris Telfer, a Republican.

Former Gov. Ted Kulongoski today filed two 2020 ballot initiatives aimed at addressing the unfunded liabilities of the Public Employment Retirement System, which exceed $25 billion and will require increasingly large payments from state and local government employers over the next decade.

Kulongoski, a Democrat who served as governor from 2003 through 2011, previously oversaw significant PERS cuts during the 2003 legislative session.

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Bipartisan group files two initiatives to protect PERS pensions and public services

April 4, 2019 | The Oregonian | by Ted Sickinger

Members of the business community filed two prospective ballot measures Thursday that would aim to rein in the Oregon’s public pension system’s growing deficit and runaway costs.

The first potential ballot measure would give new hires the option of a 401(k)-style retirement plan financed by matching contributions of 6% of salary by employers and employees. New hires could choose that new plan or the pension system — but not both, as employees get today. And moving forward, all employees participating in the pension plan would contribute 6% of their salary toward the cost of future benefits, starting July 1, 2021.

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