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Washington County Board Says no to Measure 97 in Split Decision

Washington County commissioners, by a 3-2 vote, will formally oppose Measure 97.

The Nov. 8 ballot initiative would raise a projected $3 billion annually by raising the corporate minimum tax by 2.5 percent on a business’s Oregon sales of more than $25 million.

Oregon Health Forum hosts a debate on this controversial ballot measure on Oct. 5 at the Multnomah Athletic Club. For details, click here.

Is corporate tax measure a 'blank check'? Campaigns slug it out on how revenue could be used

Two sides of a proposed corporate sales tax on the November ballot are clashing over a fundamental tenet of the measure — how the revenue can be spent.

Initiative Petition 28 — which is on track to be called Measure 97 on the ballot — would levy a 2.5 percent tax on certain corporations’ Oregon sales exceeding $25 million.

Our Oregon, the nonprofit group backing the proposal, wrote in Section 3 of the initiative that revenue from the tax “shall be used to provide additional funding for public early childhood and kindergarten through 12th grade education, health care and services for senior citizens.”

Opponents of the measure argue that passing the tax is akin to writing a “blank check” to the Legislature, because the ballot measure is not constitutionally binding. That means that lawmakers may spend the estimated $3 billion in annual state revenue from the tax for any purpose they see fit.

An opinion released Monday by the nonpartisan Office of the Legislative Counsel supports the opponents’ claim.

“Section 3 would not bind a future legislature in its spending decisions,” wrote Chief Legislative Counsel Dexter Johnson in the opinion issued to Rep. John Davis, R-Wilsonville. “If Measure 97 becomes law, the Legislative Assembly may appropriate revenues generated by the measure in any way it chooses.”

Only a constitutional amendment could restrict how the Legislature spends the money, legislative counsel concluded.

Katherine Driessen, a spokeswoman for Our Oregon, said the ballot measure “spells out very clearly where the revenue must go.”

“As with any law, the Legislature would have to change the law in order to spend the money on anything else,” Driessen said. “We believe that with the billions needed to boost our schools and critical services, any Legislature would be hard-pressed to spend the money on anything other than those areas.”

Sen. Richard Devlin, D-Tualatin, co-chairman of the Joint Legislative Committee on Ways and Means, said going against voters' wishes would stir up political backlash. “They could use it (IP 28 revenue) for anything they want at their own peril,” Devlin said. “If it passes, the voters would have spoken very clearly that they want these things improved.”

Everything you want?

The Legislature has modified ballot measures in the past to fix sections that didn’t work or to add clarity, but generally has adhered to the intent of such laws, Devlin said.

For example, lawmakers have made several tweaks to Measure 91 legalizing recreational marijuana since voters approved the law in 2014.

“Obviously you’ll run into some marijuana advocates who’ll say we didn’t follow what they’d hoped for, and you’ll probably run into some people who weren’t advocates who said we went too far, but I think the Legislature actually tried” to follow the spirit of the law, Devlin said.

Proponents of the measure and lawmakers already disagree on interpretations of the intent of Measure 97.

Lawmakers on the ways and means committee have said some of the revenue from Measure 97 could be used to help offset some $885 million in projected cost increases to the state’s public pension program, known as the Public Employees Retirement System.

“It could be used for reserves or PERS, if it’s needed to,” said Rep. Peter Buckley, D-Ashland, who co-chairs the committee with Devlin.

Driessen of Our Oregon, said using Measure 97 revenue for PERS would conflict with the intent of the initiative. But lawmakers say that view denies the reality that PERS is part of the budgets for K-12, health care and senior services.

“I could put a certain amount into K-12 and say I’m not covering the PERS funds; then the school districts don’t have that much in additional resources because they do have cover the PERS costs, so it isn’t like there is a barrier between these two,” Devlin said.

Lawmakers also want to have the flexibility to repurpose revenue in the event of an economic downturn or other financial crisis, in order to avert layoffs or cuts in basic services, Buckley said.

“You’re going to get this from both sides,” Devlin said of the battle over IP 28. “One side is going to say the Legislature can do whatever they want with this so then you shouldn’t approve the measure. The other side is going to say: 'Voter, you’re going to get everything you ever wanted if you vote for the measure.' ”

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Washington County board says no to Measure 97 in split decision

Washington County commissioners, by a 3-2 vote, will formally oppose Measure 97.

The Nov. 8 ballot initiative would raise a projected $3 billion annually by raising the corporate minimum tax by 2.5 percent on a business’s Oregon sales of more than $25 million.

Voting for an opposition resolution Tuesday (Aug. 23) were Chairman Andy Duyck and Commissioners Bob Terry and Roy Rogers. Voting against the resolution were Commissioners Dick Schouten and Greg Malinowski.

Elected officials can take stands on ballot measures. But under state law, neither they nor government staffs can use public resources to promote or oppose them.

The measure has sharply divided business groups, which have amassed millions in their campaign to defeat it, from the public employee unions sponsoring it.

Terry, who has been in the nursery business, proposed the resolution in opposition to Measure 97.

He said the tax would compound the cost to a farmer buying fertilizer, chemicals, seed and feed from businesses subject to the tax.

“It’s very regressive on the small businessman,” Terry said. “If he buys three or four items within the county, he is going to have to pass that (cost) off, so it is not really 2.5 percent. It compounds beyond that.”

The measure does exempt from the definition of “Oregon sales” purchases made within agricultural cooperatives.

But Schouten said state lawmakers can make adjustments to the measure, which raises money for education, health care and senior services through the state general fund.

“All of them are woefully underfunded, almost everyone agrees,” Schouten said.

“This is at least a good start to raise some of the money. We’ve got a tremendous shortfall at the state level.”

“I think the consequences of not finding additional funding for the considerable shortfalls, particularly on the education side, are far worse than the measure would do.”

Malinowski acknowledged that businesses will pass through any higher costs to consumers, but he is skeptical about the job losses estimated by Measure 97 opponents.

“I do not think we will have grass growing in the streets on this one,” he said.

“I do not think I have gotten enough information yet to feel comfortable with what the issues are.”

Duyck, who employs 20 people in a business that manufactures plastic and metal components, said the measure would increase the cost of power and supplies. He said half his output goes to exports in competition with businesses that do not face shipping costs.

“There are companies like mine that will be directly affected,” he said. “Make no mistake about it: It’s not even a question mark as to whether or not they will. They simply will.”

Rogers referred to voter rejection of a retail sales tax nine times between 1933 and 1993 — Oregon is one of five states without one — and said “this is definitely a hidden sales tax.”

“Our largest employers will simply shift activities out of Oregon, which is not good for our economy – and everybody is a loser,” he said.

Rogers also said the county and Clean Water Services – the latter a separate agency governed by the commissioners – also make purchases of materials from businesses subject to the higher tax.

“If we have to absorb those cost increases, property taxes and (utility) rates go up,” he said.

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Beaverton wants to tax marijuana

If voters approve in November, a 3% city tax would apply to recreational pot sales

Beaverton’s marijuana smokers may soon have to pony up a little more green for their green.

The City of Beaverton is preparing to put a 3 percent tax on recreational pot before voters this fall. The tax would not apply to medical marijuana.

If approved, the tax could generate $86,000 per year, a loose estimate based on Oregon Liquor Control Commission financial data applied to the five stores currently licensed to sell marijuana in the city, according to Finance Director Patrick O’Claire.

The tax income would go into the city’s general fund, where it would be available for general operations rather than earmarked for specific purposes, O’Claire said.

However, the new revenue would help offset additional city costs related to marijuana enforcement, such as additional training for the city’s police officers in recognizing signs of drug-impaired drivers.

During a presentation on the proposal Tuesday, Beaverton City Council members all echoed support for the tax, which they equated to taxes on alcohol and tobacco sales.

“I think we need to get this on the ballot,” Council member Mark Fagin said.

The proposed ballot language will come back to the Council for formal approval to get it on the November ballot.

Like many cities around Oregon, Beaverton’s Council passed a 10 percent tax on recreational marijuana before voters approved its legalization last year.

Subsequent efforts by the state to set rules call into question the city’s ability to impose the larger tax.

At the same time, the state allowed local governments to seek voter approval for a 3 percent tax on top of collecting a share of state taxes built into the measure voters passed, said Maja Haium, an assistant city attorney who brought a draft of the ballot title and summary to the Council.

The vote must occur at a general election.

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As spending on lobbying increases, transparency remains murky


SALEM — Businesses, special interest groups and governments have increasingly invested in lobbying Oregon lawmakers and other state officials over the last nine years. And based on spending data from the state, those groups appear to have concluded lobbying is a good investment: reported annual spending on lobbying increased 15 percent from 2007 to 2015, when adjusted for inflation.

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EO MEDIA GROUP" width="116" />Yet despite the millions of dollars involved, it’s nearly impossible for Oregonians to get details on how lobbyists spend that money to achieve payoffs for their clients, because Oregon law allows lobbyists and their clients to disclose little information about how they influence state laws and spending.

The Pamplin Media Group/EO Media Group Capital Bureau categorized lobbying spending in Oregon by industry and sector using data from the Center for Responsive Politics, which tracks spending on lobbying by industry at the federal level. In total, groups spent more than $251 million on lobbying during the past nine years, according to state data.

The health care sector — whose ranks include nurses, pharmaceutical companies, hospitals and doctors — reported spending the most on lobbying from 2007 through 2015, a total of $36.5 million. Next was the business sector, which spent $30.8 million, followed by finance, insurance and real estate interests that reported spending a total of $27.3 million on lobbying during the same period.

Restrictions on lobbying

Unlike several other states including Idaho, Oregon does not require lobbyists to disclose the specific bills or executive branch actions they seek to influence. Oregon lobbyists are only required to disclose food, drinks and entertainment purchased for a specific lawmaker or other state official if the cost exceeds $50 on a single occasion, and lobbyists do not have to report individual expenses reimbursed by their clients.

Until this year, the only way to know how much lobbyists and their clients were spending to entertain Oregon state officials was to request a copy of the paper reports filed with the Oregon Government Ethics Commission.

The agency launched a new electronic filing system for lobbyists late last year, but that system is not displaying certain spending details due to technical glitches. Even if the system were working correctly, however, it would likely provide only a small sample of lobbyists’ activities. Of the $35.9 million in reported spending last year, only $93,189 was explained in detailed reports.

These minimal reporting requirements contributed to Oregon receiving one of the lowest rankings in the nation for transparency in lobbying activity.

Last summer, the Sunlight Foundation evaluated how all 50 states track spending on lobbying and created a scorecard ranking the states. The foundation awarded Oregon an F grade, meaning lobbyists and their clients face fewer disclosure requirements than in most other states.

Most of Oregon’s neighbors received higher grades, from an A in California to a C in Idaho.

Emily Shaw, a senior analyst at the Sunlight Foundation who was involved in the project, said the goal was to evaluate how much information states collected about lobbyists’ specific activities and the costs of those actions.

“People should be able to find out who has come to influence their laws,” Shaw said. “That’s not to say there needs to be any particular restriction on lobbying in a particular situation. But for good public awareness of what’s happening in these processes, we need good information about what lobbyists are doing, and when.”

Pete Quist, research director at the National Institute on Money in State Politics in Montana, agreed that it is important for states to require lobbyists to disclose more about how they influence lawmaking. The institute is collecting information about state-level spending on lobbying across the nation. “The lobbying piece isn’t analyzed as much in the media as it should be,” Quist said. “What we see a lot of public discussion about is the campaign contributions.”

'So easily evaded'

Oregon lobbyists have resisted efforts to require them to disclose more details of their work, most recently in 2015 when they won passage of a bill that allows them to avoid reporting spending to lobby other lobbyists, for example to build a coalition for or against an issue. The 2015 bill — which easily passed both chambers of the Legislature and was signed into law by Gov. Kate Brown — extended the disclosure exemption through mid-2017.

Dan Meek, a public interest attorney and co-chair of the Independent Party of Oregon, said this exemption is a major reason the public cannot find out how lobbyists use much of the money their clients report spending. Still, Meek said he remains more concerned that Oregon has no campaign contribution limits because political donations do not have to be reported as gifts, even if they are connected to lobbying efforts.

“Lobbying regulation in Oregon is really of secondary importance because it can be so easily evaded,” Meek said.

The extension of the lobbying reporting exemption last year provided another example of how lobbyists avoid revealing their impact on Oregon’s laws.

Lobbyist Marla Rae, who served on the Oregon Fish and Wildlife Commission and worked for the Oregon Department of Justice and former Gov. Ted Kulongoski, advocated for the bill during legislative hearings on behalf of the Capitol Club of Oregon, a professional organizations for lobbyists. However, the Capitol Club did not report spending any money on lobbying last year and Rae does not appear to have registered to lobby on behalf of the group.

In an email, Rae explained that the Capitol Club did not have to report spending any money on lobbying because she volunteered her time to advocate for the bill. Rae wrote that she did not spend enough time working on the issue — the threshold is 24 hours in a quarter — to trigger the state’s requirement to register as a lobbyist for the group.

Bill Cross, the Legislative Committee chair for the Capitol Club, said the group still wants a permanent reporting exemption for lobbying other lobbyists, partly because it is burdensome for lobbyists to track the information.

“I’m sure we’ll be pursuing some sort of way to adjust that because the value of that information just doesn’t seem apparent to us,” Cross said.

Cross said it would also create a lot of work for lobbyists — with minimal benefit to the public — if lobbyists were required to report all the bills or executive actions they work to influence, because he sometimes tracks hundreds of bills during a legislative session. At the moment, no one is advocating for expanded lobbying disclosures in Oregon, Cross said. “I’m not aware of any issues, I guess, that have evolved in the last four or five years where other organizations have said, ‘Wait a minute, we really need to reform our lobbying disclosure laws because of problems with corruption or something,” Cross said.

The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group. Hillary Borrud can be reached at 503-364-4431 or [email protected].

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Our Oregon exceeds signature milestone to put corporate sales tax on ballot

Union-backed group passes 88,184 needed to qualify for vote

SALEM-The union-backed Our Oregon has surpassed the threshold for signatures required to place a corporate sales tax measure on November’s ballot.

The campaign has collected 130,000 signatures and plans to submit the last batch to the Oregon secretary of state’s office Friday, May 20, for verification, said Our Oregon spokeswoman Katherine Driessen.

Only 88,184 signatures are required to place the measure on the ballot.

“Everyone is pretty thrilled, and it is a real showing of support for our campaign,” Driessen said. “Our volunteers are fanning out around the state and really talking to voters everywhere and feeling the goal of the campaign resonates with Oregon citizens.”

The next step for the campaign is to build support for the measure, she said. Supporters hope to see the $5.2 billion in biennial revenue from the tax will help offset a projected $1.3 billion shortfall in the next biennium and augment spending on education, health care and senior services.

“It's way past time that our schools, our health care, and our senior services get the funding they need. While volunteering and talking with Oregonians, it became clear that decades of underfunding had taken a toll on residents young and old,” Khalil Edwards, a volunteer signature gatherer, said in a statement released Friday afternoon. “Parents are frustrated by overcrowded classrooms, and seniors are wary of what their retirement might look like. That's what fueled me as I was collecting signatures — a better Oregon that values kids, seniors and every Oregonian.”

A business coalition with more than 500 members is strongly opposing the measure, saying the tax will drive up prices for consumers and small and medium-sized businesses.

"Our group will campaign vigorously against this ill-advised proposal," said Rebecca Tweed, campaign coordinator for Defeat The Tax On Oregon Sales. "We are confident that when voters become aware of its damaging consequences they will strongly reject it in the fall."

The Legislative Revenue Office is scheduled to report on the projected impacts of the corporate tax during legislative hearings Monday, May 23.

The report will examine the effects on state revenue, wages, private and public sector employment, prices and other economic indicators.

Often referred to as a gross receipts tax, the 2.5 percent levy would apply to certain corporations with annual sales exceeding $25 million. The tax would affect about 1,000 of Oregon’s 30,000 corporations, said Legislative Revenue Officer Paul Warner.

"We expect that the report is going to confirm what we've been saying for awhile now: that large and out of state corporation will pay this tax," Driessen said. She said the campaign, however, is open to new information and to striking a compromise with business leaders provided that the proposal raised enough revenue "to fund our badly underfunded services and focused on making corporations do their part."

But business leaders said the trickle-down effect of the tax - in the form of higher prices - will hurt consumers, employees and businesses of every size.

"Everywhere you have a gross receipts tax of this nature the consensus among economists is who pays it is you and me and small business and families, and we think that picture will be painted very vividly on Monday - that Oregon families are going to be paying this $5.2 billion tax increase," said Ryan Deckert, president of the Oregon Business Association.

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EO MEDIA GROUP" width="116" />Gov. Kate Brown and Speaker of the House Tina Kotek, D-Portland, earlier this year declined to hold a special session to negotiate a more moderate alternative to the steep tax increase.

Sen. Mark Hass, D-Beaverton, who proposed a smaller tax on corporations during the February legislative session, said Monday's report could spur lawmakers to take another look at offering an alternative.

"I think after Monday it will start to get real," Hass said. "I think there is a chance for a compromise, and I think there is an opportunity for sensible people to get together to look at coming up with an alternative to what is going to be a very contentious, divisive campaign."

Sen. Richard Devlin, D-Tualatin, said in April that he is working on alternative to the tax measure but did not return repeated calls for details from the Pamplin Media Group/EO Media Group Capital Bureau.

By Paris Achen
Portland Tribune Capital Bureau Reporter
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