Oregon Raises Taxes, But Budget Situation Worsens

by Kristina Rasmussen “Oregon Raises Taxes, But Budget Situation Worsens.” There’s a lesson here for tax hikers in Illinois. Amber Gunn has the story in the August edition of Budget & Tax News: Oregon voters in January approved significant personal and corporate income tax hikes. The predicted increases in revenue have failed to materialize, however, and now the state...

by Kristina Rasmussen

“Oregon Raises Taxes, But Budget Situation Worsens.”

There’s a lesson here for tax hikers in Illinois.

Amber Gunn has the story in the August edition of Budget & Tax News:

Oregon voters in January approved significant personal and corporate income tax hikes. The predicted increases in revenue have failed to materialize, however, and now the state is bracing for extensive budget cuts.

Oregon’s June revenue forecast predicted tax collections through July 2011 will come in $577 million shy of the budgeted amount. Nearly all of the decrease is due to lower-than-expected personal income tax collections.

In response, Gov. Ted Kulongoski (D) has ordered 9 percent across-the-board cuts for state agencies. Oregon law does not give the governor the authority to cut funding selectively.

Kulongoski is considering whether to phase in the proposed cuts or implement them all at once. Either way, Oregon’s budget must be balanced by June 30, 2011.

The tax hikes were widely touted by proponents as the end of Oregon’s deficit problems and a preferable alternative to program cuts.

Spending reform, as always, is key:

Bob Williams, director of StateBudgetSolutions.org, says most tax hike advocates care less about revenue stability and more about who pays.

“They are far more interested in redistributing wealth than in maintaining the conditions for its creation. If wealth creation were a priority, we would see tax cuts, not tax hikes,” he said.

Williams says his research shows most state budget problems are attributable to excessive spending. “Until states decide to address the spending side of the equation, we won’t see a solution. Everybody’s out of money,” he said.