OPB partnered with The Oregonian/OregonLive for a series of stories looking at the potential impact of Measure 97. That’s the ballot measure to increase taxes on companies with more than $25 million in annual sales in the state.
Voters will decide the fate of the initiative next month. But what if Measure 97 doesn’t pass?
Here’s a quick Q&A at how passage or failure of the measure would affect public services, particularly for schools.
Let’s start with a reminder: What problem is Measure 97 supposed to solve?
Most supporters of Measure 97 have focused on schools. Oregon is at the bottom in graduation rates. Class sizes are relatively high and the school year is short. In part, the problem comes back to money. Schools have been on a rough roller coaster ride in Oregon since voters approved big property tax cuts starting in 1990.
The first of two big tax cuts, Measure 5, shifted most school funding to the state, putting schools in competition with other state programs funded primarily by the income tax. It’s a volatile source of money that rises and falls even more steeply than the economy.
In 1991, as Measure 5 was just starting to phase in, Oregon was 16th in the country in per student spending, according to Census figures. Now the latest Census data puts Oregon at 38th. The state has gone from above average in spending to below average.
(Note: There are other measures of school finance. Opponents point to newer data from the National Education Association that says Oregon — thanks to relatively strong economic growth — has improved its ranking to 23rd. The Yes on 97 campaign disagrees and points to another study it says takes regional cost differences and student need into account. It places Oregon 35th, but the data is not as new as that from the NEA.)
Economists say this new tax will generate $3 billion a year in revenue. That’s a huge amount of money. What would it be used for?
Measure 97 says the money is to be directed to schools, health care and senior services.
In reality, the legislature has broad flexibility to decide how to spend the money. Expect a big scramble for the cash — and not necessarily all for those services.
For example, legislators will be under heavy pressure to provide some tax relief to homegrown corporations that say they will be particularly hurt by the measure.
Gov. Kate Brown has also proposed some additional aid to low-income consumers to pay for energy costs. Regulated utilities appear to have the clearest path to passing on additional taxes from Measure 97.
That said, there appears to be little doubt that much of the additional money would go to schools.
The state is currently spending about $7.4 billion in the 2015-17 budget on schools. Chuck Bennett of the Confederation of Oregon School Administrators says he thinks K-12 education could receive $9.5 billion to $10 billion in the next budget if Measure 97 passes.
And what happens if it fails?
The governor would release a budget showing how the state would live within current spending. Brown says there would be a $1.35 billion shortfall, requiring tough choices.
Bennett said in this situation, school lobbyists would have to battle to get to the level it would take to accommodate increased costs without forcing new cuts. He said schools would need to get about $8.4 billion to $8.5 billion from the state for a “no-cuts budget.”
Bud Pierce, the Republican candidate for governor, this week released a budget promising to give schools $8.6 billion. He says a tax increase isn’t necessary. The Brown campaign fired back that his budget was unrealistic.
Do state leaders have a Plan B?
There’s a lot of talk in Salem. Some business leaders opposing Measure 97 have said they’re willing to consider a more modest tax for schools. Several legislators have informally discussed coming up with a proposal in the next legislative session.
But that’s far from saying that there’s agreement on a plan. There have been efforts to provide “replacement revenue” for a quarter-century now without lawmakers — or voters — agreeing on a solution.