Our Opinion: If COVID-19 slows state economy, reconsider tax proposals
Local jurisdictions are lining up to ask taxpayers for more money in the May and November elections. The proponents of these historically large tax proposals thought the stars would align for them this year with a robust economy and high voter turnout, particularly among Democrats, raising the odds that people would say yes to new taxes.
But one of those stars is abruptly falling, as economic growth is threatened by the fast spread of the novel cornonavirus in Oregon. This should prompt all local jurisdictions to reconsider whether this is the ideal time to ask voters for additional money.
If the worst happens — and the state temporarily slips into recession — this would be the most inopportune moment to raise people's taxes. There's a reason governments usually reduce taxes during economic downturns. They are trying to stimulate spending among consumers and businesses. Increasing taxes would worsen short-term economic pain, even if the projects — such as school construction — would bring jobs and growth in the longer term.
Measures appearing on the May ballot include a $250 million income and business tax from Metro for homeless services and a renewal of the city of Portland's gas tax. Then in November, voters will be — or likely will be — asked to approve a $1.4 billion school construction bond measure from Portland Public Schools; a $405 million bond measure from Multnomah County libraries; and a $4.3 billion transportation measure from Metro.
We recognize the eventual need for some of these investments, but timing is everything. In the long recovery from the Great Recession, local jurisdictions were selective in their tax proposals. Data from the League of Oregon Cities that was shared with us by DHM Research shows a sharp decline in the number of local funding measures proposed following the 2008-09 crash. Since 2016, the money requests have picked up dramatically and the rate of approval has been high as well.
This makes sense, as local leaders need to be sensitive to people's ability to pay. That sensitivity must come into play now. Even if the economy merely slows — but doesn't dip into recession — voters understandably will be more cautious than they might have been just three weeks ago.
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