A D V E R T I S E M E N T
A D V E R T I S E M E N T
L.E. BASKOW / Pamplin Media Group
Gas stations, such as the Chevron on Southeast Powell Boulevard in Portland, are among many businesses working to defeat Measures 66 and 67. Voters this month are being asked to ratify or reject the measures, a referenda on the 2009 Legislature’s income and business tax increases.
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East County’s school districts, as well as Mt. Hood Community College, may have to cut millions of dollars from their budgets should measures 66 and 67 fail to pass muster with voters.
The $733 million in tax increases addressed by 66 and 67 are included in the state budget for the 2009-11 biennium. If the measures pass and the tax increases remain intact, districts will receive funding as promised if the tax revenues come in as the state projected when the budget was established.
But what if the measures fail? Predictions range widely, given that no one knows what the state government will do should that happen.
Nothing is set in stone, but here’s how education officials in East County are speculating about the impact of no votes on 66 and 67.
If the Legislature makes budget reductions to all state services based on losing the projected $733 million, Gresham-Barlow may lose as much as $6 million over the biennium, said Athena Vadnais, district spokeswoman.
Vadnais noted that would be akin to losing the funding needed for slightly more than 17 school days over the biennium or slightly more than 73 full-time teaching positions.
If 66 and 67 go down, the district plans to monitor legislative budget discussions, she said, noting Gresham-Barlow officials will “begin to look at this year’s budget to see where the funding shortfall can be addressed as well as look at the 2010-11 budget.”
Kris Howatt, chairwoman of the district’s school board, said the board — with one dissenting vote — has taken a stand in favor of the tax increases.
“In the last 10 years of reductions in education funding, I have seen a continual erosion of educational opportunities we can provide to our students (including) higher student-to-teacher ratios and fewer hands-on experiences,” Howatt said. “There are also fewer elective offerings … decreased opportunities in fine arts education, as well as other co-curricular opportunities. All together, this adds up to a reduced educational experience for our students.
“A student is a fifth-grader only one time; we don’t have the luxury of telling them to come back another year,” she added. “In the same way, there is never a good time to wait for tax reform, it has to start somewhere.”
Board member Dan Chriestenson, however, opposed the board’s resolution, telling his fellow board members the tax increases don’t specifically fund education and will cost jobs in the middle of a recession. The state bucked its constitutional duty to fund education while increasing outlays to other services, he said.
“Our school funding challenges are rooted in legislative malfeasance, not in under-taxation of the so-called ‘rich’ or Oregon employers,” he said, noting 66 and 67 supporters “have already lined 73 of our teachers against the wall, loaded the rifles and are telling the voters in our district, ‘Give us the money, or the teachers get it …’ This type of thuggery is reprehensible, and I will fight vigorously to not only prevent the threatened cuts, but to restore adequate funding as required by our (state) constitution.”
Reynolds
If the measures fail, the district estimates it will lose roughly $7.8 million over the biennium, according to Andrea Watson, district spokeswoman.
The district has built a 3 percent contingency fund balance into its supplemental 2009-10 budget, she said, noting that amounts to almost $5.149 million.
The district has not looked at specific areas it might cut, she added. “The board would likely decide how much of the contingency to spend to fill any revenue gaps,” she said. “The remainder would be the amount of expenses needed to be trimmed.”
Centennial estimates it would lose about $3.5 million, or 6 percent of the district’s 2010-11 budget, if both measures fail, according to Wendy Reif, spokeswoman. That’s equal to:
• 19 days of school
• 43 teachers
• or increasing average class size by five from the current average of 28 students to 33.
Another way of looking at the cuts: imagine the district eliminating all high school extra-curricular activities, the district’s entire technology department, all heat, water, lights, phones, sewer and garbage pickup.
Measures 66 and 67 are not the only factors affecting next year's budget, Reif added. Salary and benefit increases in current contracts will cost $2.5 million in 2010-11.
Meanwhile, another $900,000 in state money for Centennial is at risk because it is contingent on the state having a certain balance of reserves in June.
Reif adds that federal stimulus money will expire next year, which means funding for a significant number of positions will be in jeopardy in 2011-12 as well.
“Even if measures 66 and 67 pass, Centennial will be cutting about 6 percent next year,” Reif said “Cuts would reach about 12 percent, if both measures fail.”
Shar Giard, chairwoman of the district’s school board, noted the board unanimously voted in December to support 66 and 67.
“It’s just going to be devastating if they lose, and we just don’t want that to happen,” she said.
As did Centennial, the Corbett School District noted that challenges loom even if measures 66 and 67 pass.
Superintendent Bob Dunton said the district is set to begin negotiating a new teachers’ contract later this year, and estimates the medical insurance costs and Public Employees Retirement System increases could cost the district as much as $400,000.
Should 66 and 67 go down, Corbett stands to lose $500,000 in 2010-11, the equivalent of 16 percent of the district’s teaching staff.
“We haven’t made concrete plans, as the budget process is still to come,” Dunton said. “We will be looking at reserves and cost-saving measures before we look at program reduction, but those are decisions that are going to require some processing.”
When asked where he stood on the Oregon tax increases, Dunton replied simply: “The public has the right to determine what value they want from their public schools.”
If the state cuts education funding by 5 percent, Mt. Hood Community College stands to lose about $2.185 million over the biennium. If the state cuts funding by 10 percent, that figure could rise to around $4.7 million over the biennium.
Bradley Best, student body president at Mt. Hood, noted his group “is nonpartisan, and we cannot tell students which way to vote within this special election.”
However, speaking for himself, he added he supports the tax increases.
“I don’t understand why our teachers and instructors should take a pay cut when they are the individuals that help improve our communities,” he said. “It is more cost efficient to train people to be a contributing member of society than to not train them and be a burden or liability on taxpayers.”
Pam Shield, Mt. Hood’s Faculty Association president, said instructors have seen positions eliminated and pay cut since 2003, adding the faculty has taken four furlough, or unpaid days, in 2009-10.
“The state has already had to cut education, health care and public safety services to the bone when it made $2 billion in cuts during the last session,” she said. “Our state's community colleges provide educational and vocational training opportunities for anyone who may need retraining after losing a job. Now is not the time to take an ax to the community college system.
She also criticized the idea that the tax measures would hurt businesses.
“A good education is the key to our state’s future success,” she said. “By voting to pass the tax measures, business leaders will put their role as an Oregonian first and will put needed dollars into the community to create a strong work force.”
The Faculty Association Senate is sponsoring informational sessions on 66 and 67 for Mt. Hood faculty and staff at 5 p.m. Tuesday, Jan. 19.
— Rob Cullivan
PAMPLIN MEDIA GROUP: JAIME VALDEZ
Dan Bozich of Tigard asks motorists along Southwest Lower Boones Ferry Road to vote Yes on Measures 66 and 67. Two My View writers weigh in on their sides of the issues. Critics of the 2009 Legislature’s income and business tax increases gathered signatures to force a public vote on the plans.
As a member of the audit committee at Mt. Hood Community College, Travis Stovall knows firsthand how shrinking budget pools are eroding Oregon’s educational foundation.
He further realizes that if voters fail to approve measures 66 and 67, the situation will — in the short run, at least — likely worsen.
“I know very well the shortfalls we face,” he said. “We’re behind in education in this state. We need to get caught up there.”
However, as an active member of East County’s business community, Stovall said he’s firmly convinced that the tax measures, which are on the ballot Jan. 26, will cause more harm than good.
“At this point in time, tax increases will hurt our ability to increase employment,” he said of the measures. “The Legislature is playing the hand they were dealt, but I think they went too far with this tax measure.”
The East Metro Economic Alliance, for which Stovall serves as executive director, has not endorsed a position on the measures. The majority of business owners large and small he’s discussed the issue with, he noted, agree the new tax assessments could hit them where it hurts.
Of particular concern is Measure 67’s provision that would tax gross, rather than net, income of businesses with in-state sales of more than $500,000. That, noted Stovall, leaves high-revenue, low net profit businesses — grocery stores, car dealerships and construction — in an unfortunate position.
“It’s their overall gross receipts, top-line revenue, that gets affected,” he said. “If a business has $150,000 in (gross) profit, but is not taking it out” for personal income, “they’ll go into the 7.9 percent tax rate. They may not even bring that amount home” as salary “but they’ll have to pay taxes on it.”
Casey Ryan, vice president of Riverview Community Bank, agreed, noting that the measures would be the proverbial case of robbing Peter to pay Paul.
“If you take $700 million out of the economy to give to the government, that’s $700 million out of the public sector,” he said, referring to projected revenue. “We need to reform the tax system in Oregon. This isn’t the way to do it.”
Those backing the tax measures, he said, don’t seem to consider that some employers, including smaller businesspeople, would be left with less money to pay existing, as well as prospective, employees.
“Corporations and businesses pay employees’ taxes too,” he noted. “If a guy doesn’t have a job, he wouldn’t be paying (income) taxes.”
With two children attending schools in the Reynolds School District, Ryan acknowledges his stance on 66 and 67 will have a direct effect on their schools’ budgets.
“Me voting ‘no’ could affect me in the short term,” he admitted. “It could hurt a little bit, but I’m thinking in the long term.”
David Eatwell said he is too. The economic development director of the West Columbia Gorge Chamber of Commerce said while the chamber is not taking a public stance on the measures, he personally supports them as a flawed, but necessary approach to help a state in crisis.
His logic is relatively simple. A well-funded, thus stronger, educational system would attract more residents and encourage more businesses to invest in Oregon.
“The state’s tax structure needs to be reworked,” Eatwell said. “These measures are a step in that direction.”
Eatwell said he’s uncomfortable with how Measure 67 would tax corporations on gross profits. However, that downside is outweighed, he said, by a strong educational system and infrastructure that lures investors to the state.
“If our educational system continues to deteriorate, and we continue to have pictures of a science teacher in front of 42 students on the front page of the paper,” he said, “that is going to be more detrimental to our efforts to bring jobs to the area than the burden of tax increases on our residents.”
— Shannon Wells
It’s impossible to know how Gresham City Hall will be affected if voters shoot down measures 66 and 67, said Ron Papsdorf, Gresham’s government relations manager.
That’s because legislators meeting in February for the next session will ultimately decide how to fill the $727 million budget hole that killing the measures will create, he said.
But it stands to reason that those cuts could affect how much state-shared revenue Gresham receives. Such funds make up 5.5 percent of the city’s general fund budget for 2009-10.
In light of the possible cuts, the Oregon Legislative Fiscal Office has requested proposed budget reductions from state agencies to the tune of 5 to 10 percent.
Most notable of the proposed cuts that could affect Gresham is a possible reduction in funding for the East Metro Gang Enforcement Team.
Cuts to statewide agencies could affect all cities. For example, the Public Safety Standards & Training Division could reduce training for new police recruits.
Fewer dollars for the local government grant program would mean less funding for projects such as Gresham’s new skate park, which was made possible with funding from such a grant.
And neighbors challenging proposed developments could experience delays if hours are reduced to those who staff the State Land Use Board of Appeals.
— Mara Stine
Tax fight battles myths, data
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