With a vicious recession already underway in Oregon, this is the most inopportune time for local governments to propose new ways to spend tax dollars.
Every taxpayer-supplied penny available — and likely more — will be needed over the next two years just to retain existing, critical state and local services such as education and health care. For this reason, we cannot support Metro's Measure 26-210, which would raise money for wrap-around services for people who are homeless. This measure was hurriedly devised early this year and pushed forward to the May 19 ballot before the magnitude of the COVID-19 crisis was fully understood.
In those days of a seemingly strong economy, Metro councilors figured they could get voters to approve a homeless-services tax in May and come back in November with a transportation package for voters to consider. But the virus has changed everything. We were skeptical of the measure before, but now, just the timing by itself is reason for voters to reject it.
A look back at the last two recessions provides needed perspective. In 2003, in the midst of a less-severe economic downturn, the Legislature had to make substantial cuts in state spending. It tried to raise taxes through Ballot Measure 28, but voters lacked the stomach for it. As a result, Oregon ended up on the comic pages of the nation's newspapers — literally — for the shortness of its school year.
Seven years later, after the Great Recession had devastated the state budget, the Legislature again made severe reductions and asked voters to backfill spending through two ballot measures. This time, voters obliged and supported raising taxes on businesses and higher-income individuals.
There's no doubt Oregon's government is headed into another fiscal crisis, and the debate will resume again over what to cut and how to raise money to soften those reductions. As outlined in a story by our Capital Bureau reporter Peter Wong, Oregon is likely to lose billions in tax dollars due to the virus.
Oregon collects 90% of its general fund revenue from individual and corporate income taxes. These revenues are about to be crushed. Nearly 300,000 people in Oregon have filed for unemployment in the past few weeks. Vast numbers of businesses are closed and bringing in no revenue to be taxed. Dollars from the new corporate activities tax will be far, far below projections.
Metro's homeless-services measure would tax high-income individuals and families, as well as business profits. The money would be used to pay for services that help move people out of homeless camps and into more stable situations. The purpose is beyond reproach, but businesses that are closed will have no profits to tax and people out of work will no longer be making salaries, high or otherwise.
Metro's revenue projections for this measure are seriously out of date, but the point isn't how much money might be raised. Rather, it comes down to brutal assessments of priorities. Without unprecedented federal support, which seems doubtful in the amount needed, Oregon is about to enter a time of government scarcity. State and local jurisdictions will have to decide whether to cut school funding, whether to limit access to health and human services, and whether to reduce availability of many other critical programs that support the most vulnerable of Oregon residents.
Until the severity and length of this financial crisis is fully understood, new funding initiatives should be delayed. The robust economy that was encouraging a number of jurisdictions to head to the ballot this year has dissipated.
Both public officials and voters will need to adjust to this new, unfortunate reality.
You count on us to stay informed and we depend on you to fund our efforts. Quality local journalism takes time and money. Please support us to protect the future of community journalism.