Gov. Kate Brown conceded Thursday that Oregon consumers would have to bear some of the costs of the proposed $3 billion corporate tax increase on the November ballot.
In her first extensive interview on Measure 97 since endorsing it early this month, Brown defended the measure as the only “viable option” for sustaining needed investments in schools, health care and other services.
The governor told OPB that the initiative would force large corporations to pay a “more fair share” of the tax burden in Oregon.
But she also disagreed with sponsors of the measure, who have contended that the major corporations subject to the tax would not be able to pass it on to consumers.
“Oregonians are smart enough to realize there will be, um, they will bear some of these increased costs,” Brown said. She did not say what share she thought would be passed on to consumers, noting that economists have differed on that.
The Legislative Revenue Office has estimated that the measure would eventually cost Oregon households between $372 and $1,282 a year, depending on their income level. Most of that would be in higher prices, although some would represent lost wages.
Paul Warner, the chief revenue officer, said he estimates that about half the tax hike would be passed on to consumers.
Sponsors argue that major out-of-state corporations would find it difficult to pass on price increases to Oregon consumers, both because of national pricing policies and competition from firms that aren’t subject to the tax. Katherine Driessen, a spokeswoman for the pro-97 campaign, said she is “glad the governor is working with us and looking for the interests of all Oregonians.” But she added, “We certainly don’t think these costs are going to be borne by consumers.”
Pat McCormick, a spokesman for opponents, said Brown’s comments further support their contention that much of the costs will find their way to consumers. Backers, he said, are resorting to “sham economics” to argue otherwise.
Brown had earlier proposed expanding the Earned Income Tax Credit for low-income Oregonians in the event the measure passed. She said Thursday that she wanted to ease the impact of Measure 97 on low-income Oregonians, particularly when it comes to energy costs. Generally speaking, utilities are allowed to pass taxes on to consumers when their rates are set by the Public Utility Commission.
In any case, Brown said the positive impacts of the tax far outweigh the negatives.
“It definitely puts a more fair share on out-of-state corporations,” she said, adding, “The question is, if it wouldn’t be doing that, why are corporations — businesses — spending so much money to defeat the measure.”
Brown said the state’s budget would become “untenable” without a major infusion of revenue. She said the state is projected to face a $1.35 billion shortfall in its next budget cycle.
“I don’t see how you make those levels of cuts without significantly reducing our school year, without increasing class sizes and without gutting our early childhood education programs,” Brown added, “and without putting up more barriers in this state to attend community college and our universities.”
Brown’s Republican critics have repeatedly charged that she is supporting Measure 97 because the initiative is being financed by the state’s public employee unions, which are among her key political allies.
Brown said that’s not the case. She said she tried to build consensus among labor and business interests for an alternative approach but came up empty.
“Do I think that (this) ballot measure is the best way to make public policy? Absolutely not,” Brown said. “But I think there is a level of frustration that both the legislature and governors haven’t able to tackle the issue of tax reform. This a viable option. It restores balance; it provides resources on the table for key programs; and I think it makes sense for Oregon right now.”