R evenue is piling up at such a steady clip, Oregon’s Office of Economic Analysis reported Tuesday, that the state General Fund is a whopping $370 million fatter than it was expected to be only two months ago. Democratic and Republican legislative leaders responded to this good news instantaneously — and very differently.
Think chocolate and ketchup.
House Speaker Tina Kotek, D-Portland, warned in a press release about the “long-term, structural budget imbalance” responsible for an expected $1.4 billion shortfall in the 2017-19 biennium. Kotek proposed “a different path forward” that would involve “reducing the cost of delivering services and reforming business taxes.”
Kotek’s Republican counterpart, Mike McLane, responded to Tuesday’s forecast by noting that tax revenues next biennium are likely to hit a “record high.” He also took a poke at “Democratic leaders, who continue to push a narrative that suggests current revenue levels are inadequate.” Rather than pushing for higher taxes, he wrote, the state needs to “get serious about slowing the unsustainable rate of spending in Salem.”
At the middle of the squabbling, meanwhile, was the personal income tax “kicker,” which is more likely to occur than not. Legislators could keep the money, which may top $400 million, with a two-thirds vote in each chamber. McLane, in anticipation of a Democratic push in that direction, said forget about it. The Oregon Center for Public Policy, a left-wing think tank, urged lawmakers to keep it.
There’s nothing new about the basic disagreements. Lawmakers and interest groups have bickered about Oregon’s tax structure, its spending habits and the kicker for years. This year’s ritual griping is particularly disheartening, though. It highlights the void at the center of Oregon politics that used to be occupied by a governor committed to solving big problems through the search for an “operational center.”
John Kitzhaber overstayed his welcome in Salem and fell prey to the arrogance and blindness that can accumulate over three-plus terms in Oregon’s top office. Still, he was right about some important things, including the need to address the state’s most pressing problems through bipartisan compromise. He did this in 2013 with public pension reform, though the state Supreme Court scaled back the Legislature’s work. Kitzhaber had shifted his focus to tax reform before his career went off the rails.
Seeking what he called an operational center was messy, contentious and not always successful. It involved irritating components of his base. But fixing big problems is never easy.
During her relatively short tenure, by contrast, Kate Brown has presided over a game of systematic small ball. Core Democratic constituencies have racked up wins on contentious issues: renewable energy mandates, a huge minimum-wage hike, mandatory inclusionary zoning, and so on. But neither she nor legislative leaders have done anything of note to control Oregon’s spending problem or improve its unbalanced tax structure. As a result, the state’s well-known cost drivers, including unsustainable public pensions, public employee health benefits and Medicaid expansion, continued to push the state inevitably to the brink of a huge budget hole everyone knew was on the horizon.
A big push was made on the tax-and-revenue front last year, but the massive business tax that became Measure 97 was the creation of public employee unions. Brown and other key legislators endorsed the measure, effectively outsourcing their leadership on one of the state’s most bedeviling challenges to the very groups who’ve consistently resisted efforts to reduce the cost of public-sector benefits. Voters clobbered it.
And so here we are, staring down a $1.4 billion shortfall. The state is weighed down on the one hand by a volatile and unbalanced tax structure (Democrats are right about this) and on the other by such a chronic inability to exercise fiscal discipline (Republicans are right about this) that spending the kicker would be as foolish as giving the crazy cat lady a key to the animal shelter.
Meanwhile, convincing voters to go along with tax reform is likely to be more difficult now than only a year or two ago thanks to the Measure 97 fiasco. On this issue, it’s hard to say whether the credibility or cooperative spirit of Oregon’s elected leaders is in shorter supply.
In the short term, anyway, don’t expect to see any answers to the fundamental tax and spending problems about which Republicans and Democrats regularly squabble. Here’s hoping, however, that candidates for governor next year are willing to address at least two basic questions:
How would you propose to address Oregon’s money problem?
How would you seek an operational center?
— Erik Lukens is editor of The Bulletin.