07-09 Budget Balance
Earlier news indicated that the budget hole for the current biennium was $855 million. Now, with the use of stimulus funds, various account raids, and budget cuts, the legislature has rebalanced the state's budget.
Of the $2.2 billion in direct payments expected to come to Oregon from the federal American Recovery and Reinvestment Act, $401 million was immediately available and allocated for the current budget cycle.
While cuts to schools via the State School Fund were not as bad as originally foretold and most districts will be able to use their own reserves to backfill, other education program accounts did go under the knife. The Community Colleges and Workforce Development Account, interest earned in the School Improvement Fund, and the Special Education Account were all diverted to the General Fund.
Reserve accounts raided for $150 million include Tobacco Settlement Funds, Insurance Fund, Educators Benefit Account, Credit Enhancement Fund, Trust for Cultural Development Account, Connecting Oregon Communities Fund, Community Development Fund, Employment Departments Special Administrative Fund, JOBS Plus Unemployment Wage Fund, Problem Gambling Treatment Fund, Community Mental Health Housing Fund, natural resources' Orphan Site Account, a low emission vehicles program account, Waste Tire Recycling Account, Underground Storage Tank Insurance Fund, Water Development and Bond Sinking Fund, Tumalo Project Fund, Fish and Wildlife Deferred Maintenance Subaccount, Child Abuse Multidisciplinary Intervention Accounts, Police Standards and Training Account, and the State Fire Marshall Fund.
State agency program cuts total $311 million and include state troopers (39 of them), courts (over $5 million and probably closed on Fridays), 911 emergency communication funds (almost $6 million), and county economic development funding ($2 million). Shared revenue owed to local governments was slashed more than $2.2 million.
But this just clears the immediate hurdle and the high-jump remains to be contended with. The 2009-2011 budget is already predicted to fall more than $3 billion short of needed revenue. The legislature intends to apply the rest of the stimulus fund, consider using $750 million in state rainy day funds, and make some additional budget cuts in order to pass a Constitutionally mandated balanced budget by the end of June.
Oregon Business Second to One
According to Chuck Sheketoff, executive director of the Oregon Center for Public Policy, a new study done by the accounting firm Ernst & Young found that Oregon has the second lowest state and local business taxes among all states and that businesses get a better deal for the taxes they pay in Oregon than just about anywhere else in the country. Only North Carolina has lower business taxes than Oregon, according to the study.
The study's data suggest that Oregon's state and local business taxes are so low that the state could raise business taxes by $1.6 billion annually and still be in line with state and local business taxes nationwide.
The Oregon State Legislature has often been reminded that Oregon's business tax structure, most specifically its corporate minimum, is amiss. Legislation introduced so far this session to address this include HB 2070, HB 2119, HB 2773, HB 2913 and HB 2935 all raising the corporate minimum for tax due by Oregon businesses.
Tax Credit for Political Race or for Human Race
For quite some time, Oregonians have been able to receive a full tax credit up to $100 for political contributions. But donations mad to non-profits have garnered only a partial tax deduction. Why this discrepancy? Why is more value placed on campaigns than on compassion? SB 909 seeks to bring parity to these two choices allowing both types of contributions to be met with a dollar-for-dollar tax credit for Oregonians who give.
An Economic Stimulus Idea - this one is closer to home
House Republicans just introduced HB 3095 which they are calling the "Main Street Incentive Plan." Their plan encourages businesses and homeowners to immediately invest in improvements to their property through a tax credit. Those credits would cost the state about $45 million a year over the next five years, but the return would be $400 million in new investments in Oregon and 6,000 jobs.
With enactment of HB 3095, 50% of the cost of capital construction could be claimed by the property owners at tax time and those pursuing "green" projects would qualify for a 100% tax credit over five years.
Secondary effects adding to the bottom line of the proposal are the resulting property tax increases.
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