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Tax revenue forecast falls

SALEM — While not surprised, Jackson County legislators were dismayed over a new revenue forecast that shows tax collections down by some $183 million over the previous forecast in December.

The new numbers on personal and corporate business tax collections, plus a $17.5 million drop in lottery receipts, were unveiled Friday in front of a Joint House and Senate Revenue Committee hearing.

Sen. Alan Bates, D-Ashland, the only delegation member serving on the budget-writing Ways and Means Committee, said the panel faces some tough decisions during the one-month supplemental session.

"There are no sacred cows," Bates said of programs approved in 2007 when the state's economy was humming.

"I hope these later numbers mean a very mild recession here," said Bates. "But I can't guarantee that."

New and enhanced spending will come under the closest scrutiny, and 24/7 state highway patrol coverage recommended by the Ways and Means co-chairmen earlier this week will be on the chopping block. The chairmen included $1.3 million in their budget to hire another 39 troopers on top of the 100 new hires approved by the 2007 Legislature.

"I'm afraid this may be the beginning of a serious reversal," said Rep. George Gilman, R-Medford, adding that cuts should be made now. "Raising taxes is not the way to get out of a recession," he said.

Gilman said he hoped money for 24/7 police coverage would be spared, but added that now appears unlikely.

"I hope I'm wrong," he said.

Rep. Peter Buckley, D-Ashland, the House majority whip, predicted lawmakers meeting this month will not approve any new spending and cuts will come in those new or enhanced programs approved during the regular session.

"I don't see any help for the counties," he said, referring to the fiscal crisis that will hit timber-dependent local governments should Congress fail to renew the Secure Rural Schools and Self Determination Act.

The Ashland lawmaker said he doesn't see a prolonged downturn, agreeing with state economists that revenues will continue to decline the first six months of 2008, then stabilize.

"I believe it will be a shallow downturn. I think we can weather it," he said.

That would be a welcome change from the precipitous drop in revenues after the 2001 forecast. The result was eight consecutive downturns that triggered five special sessions in 2002 and one in 2003 before Oregon bottomed out.

"This puts us on notice that the happy days aren't here again," said Rep. Dennis Richardson, R-Central Point. A fiscal conservative, Richardson criticized the free-spending 2007 Legislature controlled by Democrats.

"This forecast will jeopardize any bills that would add programs," he said.

Sen. Jason Atkinson, R-Central Point, said the leadership should have recognized that a downturn was inevitable.

The good news, he said, is that with the Legislature in session, lawmakers now have the opportunity to make the necessary budget adjustments.

But partisan politics could still get in the way in this election year. He cited the 2007 meeting when lawmakers "opted to fund a parking structure in Hillsboro above 24/7 highway patrols."

"I don't know if this Legislature is above partisan politics," he said.

Medford Republican Rep. Sal Esquivel said the yo-yo revenue picture — rosy last year, slumping early this year — illustrates the need for a more stable tax structure, one that promotes jobs.

That means reductions in personal and corporate taxes, lower property taxes and a 5 percent sales tax locked into the constitution for replacement revenue.

"We need to talk seriously about tax reform," he said.

Bates has served 10 years in the Legislature and in each session, he was forced to vote for painful spending cuts.

"Last session we finally had adequate resources; now the economists are taking that away from me," Bates observed.

He said the subprime mortgage crisis was the main culprit in revenue declining. "We are not losing jobs," he added.

Don Jepsen is a freelance writer living in Salem. Reach him at djepsen34@yahoo.com.