Call it what you will, Oregon House Bill 3427 is a sales tax. It passed the House May 1 and awaits action by the Senate.
The measure’s complicated, to say the least. It runs to 45 pages, most of which are devoted to laying out chapter and verse on how schools around the state may spend the $1 billion in annual new revenue the tax will bring in. Just thinking about the additional paperwork the proposed law would generate is enough to give one a major headache.
That’s the least of HB 3427’s problems, however.
More important is this: The measure is a not-so-cleverly disguised sales tax that will be paid by nearly every Oregonian one way or another. True, groceries and gasoline are exempt. But at least some health care could be taxed, as could, apparently, prescription drugs. So, too, could some clothing, books, movie tickets and movie popcorn.
There is, to be sure, a reduction in the state’s personal income tax on the first $125,000 of taxable income. The cut is small, however, a quarter of 1%. Thus, if your taxable income is $6,000, you’ll get a tax cut of about $15. Try not to spend it all in one place.
Nor will the sales tax address the state’s most pressing financial problem — its $26 billion-plus unfunded liability in its Public Employee Retirement System pension obligations. Assuming nothing changes next year, school districts will have to pay about 4 percentage points more into PERS than before, not because they’ve hired new employees but because that’s their share of the $26 billion hole in PERS funding. For Bend-La Pine Schools that means 22.76%of payroll for Tier 1 and Tier 2 employees and 17.31% for newer, Oregon Public Service Retirement Plan, employees.
Most Oregonians believe that schools in this state need more money. Most might be willing to shell out more of their own money to help.
But a cobbled-together sales tax measure that disingenuous about what it is combined with an underfinanceded pension fund that lawmakers are all too willing to ignore is not the way to go, and Oregonians know that.