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Senator Atkinson: Sine Die 2009

Dear Friends,

At 9:45 pm on Monday June 29th, the Regular Session of the 75th Oregon Legislative Assembly adjourned sine die. This sine die newsletter will look at the major issues of the 2009 session, and the winners and losers as a result of the policies enacted.

It’s the Economy, Stupid

To borrow from President Clinton, this session was all about the economy: job creation, unemployment, and taxes. However, unlike the Clinton years when the economy improved, the majority party pursued policies which will only hurt the economy, and budgeted for misplaced priorities with a budget that is out of touch with Oregon ’s economy and needs. When the session began the seasonally adjusted national unemployment rate was at 7.6%, Oregon ’s was 9.9%. When the session ended, the national rate had climbed to 9.4%, Oregon ’s had jumped to 12.4%. Out of Oregon ’s 33 counties, only three have unemployment rates below 10%; conversely, eleven – or almost a third – of Oregon ’s counties had unemployment rates higher than 15%.

During the last six months, and in many cases the last year, Oregonians have budgeted to reflect the tough economic times. Many of you have postponed vacations or expensive purchases in favor of the basics: paying the bills, putting your sons and daughters through school, and putting food on the table. The majority party, however, believes the Oregon budget is somehow immune to the economic times. In the ’07-’09 biennium Oregon ’s total budget was 48 billion dollars. The Governor proposed a budget for the 2009-2011 biennium of 54 billion dollars (see graph). The Ways and Means Committee decided Oregon did not have that level of funds to spend, so they “cut” the budget down to 50 billion dollars, and then claimed there is a 4 billion dollar budget “shortfall”. However, the reality of the situation is that the majority party increased spending by 2 billion dollars.

If you go to a 1st grade math class and ask them how much bigger 50 is than 48, they will tell you 2. However, if you go to Salem and ask the majority party how much bigger 50 billion is than 48 billion, they will tell you it’s a 4 billion dollar budget shortfall. Instead of doing what the rest of Oregon is now doing – that is, budgeting for the priorities and then cutting department budgets – they raised taxes and fees to the tune of approximately 1.4 billion dollars.

Here are some of the items with increased fees: recording property documents in the counties, sheriff fees, judicial system filing fees, hunting/fishing licenses, boating, death certificates (yes, it is now more expensive to die in Oregon), and vehicle registration, title, and licensing fees (taken with the increase in the gas tax, the average Oregon household can expect to pay about $114 dollars more per year in vehicle related expenses). Along with those increases in fees, here is what taxes have been raised on: gas, “forest products” (further burdening an already hurting industry), and healthcare insurance policies.

Those tax and fee increases, taken by alone, would serve to further burden Oregonians but they would not cause businesses to go under or more Oregonians to be laid off. But the majority party actually passed tax increases that will shut down businesses and put more Oregonians out of work. House Bills 2649 and 3405 will, respectively, raise personal income taxes on those making $125,000 and above in various brackets (e.g., individuals and married people have a different threshold for an income tax increase), and increase the corporate minimum tax in Oregon to a sliding rate based on the sales/income of the business.

On the surface, that policy does not seem to be entirely unreasonable: those who have more can afford to help more in the tough economic times. However, public policies do not exist in a vacuum; they are judged based on how they affect the public. In Oregon , 80% of small businesses are owned by individuals or families making over $125,000. By increasing taxes on those individuals in this economic climate when sales and demand for services are down, it will force those businesses to cut costs in some way to pay for those increases. A business has only three options: either lay off workers, cut back on the benefits they provide to their employees, or close their business down altogether (either via retirement or moving to a different state).

Increasing the minimum corporate tax only further hurts small businesses. One part of the corporate tax increase increased the minimum tax on S-Corporations. S-Corporations are businesses with no taxable income. The business owners pay the income taxes for the business on their personal income tax, which is at a higher rate than the minimum tax. So now small business owners, on top of paying higher personal income taxes which include their business’ income, have to pay a higher tax on the privilege of doing business in Oregon . This will only further harm small business owners’ bottom lines, which will prevent them from growing their businesses and force them to lay off even more employees.

On top of all of this, the majority party instituted a gross receipts tax this session on businesses. The gross receipts tax is, to use Senator Atkinson’s word, “nutty”. The gross receipts tax is similar to a sales tax, except it taxes the seller instead of the buyer. It ensures that the state can tax all businesses, whether or not the business makes a profit that year. So now, Oregon is going to tax businesses’ total revenue even if the business lost money that year. Democrats feel that it is appropriate to then punish those businesses that make a profit by taxing their capital gains. All of these new taxes on business will only serve to drive Oregon ’s economy deeper into this recession.

Senator Atkinson believes Oregon ’s budget needs to be more in tune with Oregon and its needs, “Oregonians need to know their government is on their side. We can’t say with a straight face we represent them when Oregon ’s budget is not in line with Oregonian’s priorities.” Senator Atkinson believes the Back to Basics budget plan, which is more in line with Oregon ’s needs and priorities, is how Oregon should plan its budget. Senator Atkinson would budget according ot Oregon ’s priorities to ensure schools, public safety, and human services would be fully funded, and would have cut the various state agency budgets instead of spreading the cuts across the entire budget. Oregon has enough money to fully fund the top three priorities, but based on the budget of the majority party, they seem to not think education, public safety, and human services are more important than funding state bureaucracies.

Among the various budgets Oregon has to plan for, the education budget is the most politicized of all the budgets. Senator Atkinson believes this is wrong, as “Politics have no place in Oregon classrooms. It is time to make education the priority we all say that it is. We say education is our first concern, but it is one of the last things we fund. States like Florida , Washington and Nevada can pass entire state budgets and adjourn in 60 days, we should be able to budget for schools in 81 days. There is no reason why we should take more than 150 days to pass an education budget for Oregon .” Senator Atkinson has for three straight legislative sessions tried to pass a law that would constitutionally require the Oregon legislature to fund education by the 81st day of session or the legislators would forfeit their salary.

Winners and Losers

The results of this legislative session created clear-cut winners and losers amongst Oregonians. The winners are state agencies, elitist environmentalists, state employees, and anyone who likes paying more taxes. The losers, very clearly, are small business owners, unemployed Oregonians, local governments and decision makers, Oregon ’s public safety and education systems, and anyone who owns or is trying to start a new business in Oregon .

There were several bills this session that made the winners the winners. First, the majority party passed several bills that gave state agencies more authority than they previously had. For instance, House Bill 2227 took local county land-use planning authority away form the counties and gave it to the Land Conservation and Development Commission in the area of citing for destination resorts. This bill also doubled as a victory for the elitist, urban environmentalists as they told rural counties that they do not know what is best for their counties and should not be able to cite for destination resorts in the name of “preserving” land. The Oregon Education Association union scored a victory with the passage of SB 767 which shut down virtual charter schools for a year so the issue could be “studied”. Many students don’t perform or learn as well in traditional “brick-and-mortar” schools, and have chosen to learn online with various state-approved programs. The biggest proponent of SB 767 was the OEA, which opposes charter schools, as it does not like the competition to improve education standards in Oregon . Any other group of winners was anyone who is looking to become a state employee. The only sector of the economy that is growing and creating jobs is state government, which cannot create actual jobs. The salaries for those new jobs simply come from higher taxes non-state employees have to pay.

The list of losers, in terms of population in Oregon , is unfortunately longer than the list of winners. The most obvious losers are all Oregonians. The sheer number of tax and fee increases will be noticeable to any of the affected groups. But more significantly, anyone who owns a small business, anyone employed by a small business, or anyone who is currently unemployed are the biggest losers of this session. Many small and even medium sized businesses will be forced to close or lay off some of their employees, and those that aren’t forced to lay anyone off will not be able to grow their business. Subsequently, anyone who is currently looking for a job will have to continue looking, as companies will not be able to grow and create jobs. Another, “hidden”, group of losers from this session are future Oregon taxpayers. Senate Bill 338 borrowed $176 million dollars to create 3,000 jobs. That seems nice, until you consider the terms of the loan and the jobs created. First, Oregonians will be paying off that loan for the next 20 years. So, say, if your child was a 5-year-old in kindergarten last year, Oregon will have just paid off the loan by the time your son or daughter turns 25. Second, those jobs were only temporary jobs. Every single one of those 3,000 jobs is now gone. They were all maintenance jobs, repair jobs that should have been done by the state. Some of those jobs lasted for one day. Is the next 20 years really worth one day’s worth of work? Third, 3,000 may seem like a good amount of jobs, except that in February when the bill was passed there were 236,286 Oregonians unemployed. So for the next 20 years all of Oregon is going to be paying off a loan that created jobs for barely 1% of the unemployed population in Oregon . A third group of losers are locally elected officials. As mentioned in the “winners” section above, a number of bills this session were designed to take away local control and give it to state agencies. Further hurting local officials’ control is that when that authority was taken away from local officials the state Legislature gave away its power to check the actions of those agencies. So now if the legislature wants any kind of oversight power a completely new law has to be passed so they can do so.

Atkinson Accomplishments 2009

Being in the minority makes getting anything passed hard. However, Senator Atkinson did have a very productive session. Here is a list of the bills the Senator got passed:

  • SB 975: Ends the Oregon practice of taking first $2,400 of unemployment benefits. In the interest of full disclosure, this bill went through the common practice of “gut-and-stuff”, which means the contents were taken out of Senator Atkinson’s bill and placed in the personal income tax increase bill. So the Democrats took Senator Atkinson’s idea and put it in a bill that the Republicans voted against, then took the credit for the accomplishment.
  • SB 740: Normally a dead bill is not considered an accomplishment, but in this can an exception needs to be made. Governor Kulongoski and the Democrats in the legislature thought it would be a good idea to tax water. Senate Bill 740 would have levied a $100 per year tax on all water rights in Oregon . At the end of the session Senator Atkinson said “I said this bill would pass over my dead body, and there is a reason I’m still standing.” Senator Atkinson fought to protect what he sees as a fundamental right for Oregonians.
  • SB 449: Honors WWII veterans by naming US HWY 97 the World War II Veterans Historic Highway.
  • SB 469: Otherwise known as the “Lemonade Stand Bill”, this bill allows minors who have “businesses” such as lawn mowing operations, lemonade stands, dog walking services, car washes, etc. to be free from city hassle.
  • SB 472: Directs the state Department of Fish and Wildlife (ODFW) to start a pilot hatchbox program on the Rogue River and its tributaries. Hatchboxes increase the survival rate of salmon and steelhead eggs from 5 to 20% naturally to 65 to 95%. With Oregon ’s depleting salmon and steelhead populations, this is a great program for Oregonians to take ownership of the fish in our streams and rivers and help restore the famous Oregon salmon and steelhead runs.
  • SB 545: Directs ODFW to study fish hatcheries and determine how best to raise fish in hatcheries to further help restore diminishing fish populations in Oregon .
  • SB 660: Allows for a state employee to voluntarily request a deduction from their payroll to make a donation to the Oregon State Capitol Foundation.
  • SB 839: Allows a victim of human trafficking to be eligible for the Address Confidentiality Program.
  • SCR 5: Honored the life of Gene Landsmann, a pillar of the Mt. Ashland community for many years.

The “Final Deal”

After the Governor vetoed the education budget, House and Senate Democrats needed Republican help to override the veto. To get the votes they needed, they cut a deal with Republicans. On the Senate side, of the five bills the Democrats agreed to pass three were Senator Atkinson’s: Senate Bills 472 and 545, and the bill that funded the Avel Gordly Mental Health Center .

Senator Atkinson’s Continuing Initiatives

While it was a productive session for Senator Atkinson, there were several bills the majority party let die in committee. While the majority party may have killed these bills, the issues are not dead for Senator Atkinson, and he will continue to work for these issues:

  • HB 3493: This bill would have created a $3,000 dollar tax credit for a business that hired an employee for at least a year. President Courtney had a similar bill, SB 4, but the difference was Senator Atkinson’s version stipulated that to qualify for a tax credit the employee had to have been unemployed for at least 4 weeks. This would have encouraged businesses to hire unemployed Oregonians and stimulate the economy.
  • SB 474: Would eliminate taxes on capital gains, thus ending the Oregon practice of punishing businesses for growing and allowing them to grow more and create more jobs.
  • SJR 19: Proposes amendment to the Oregon Constitution to mandate passage of the K12 education budget by the 81st day of the legislative session and to prohibit compensation of legislators if not passed by then. Would be referred to the voters for approval if passed.
  • SB 499: Would give a business energy tax credit to businesses that build an alternative vehicle manufacturing facility in Oregon .
  • SB 465/635: One of Senator Atkinson’s personal passions is making our state capitol look beautiful and worthy of representing the people of Oregon . These bills would have mandated the polishing of all of the brass in the capitol, and would have restored the skylights in the stairwells of the original building, and would have turned Court Street in front of the Capitol into a true Capitol mall, and could divert traffic either under the mall or to a different street.
  • SB 466: Would give the Oregon State Police jurisdiction over rest areas along Oregon ’s freeways.
  • SB’s 467 & 471: Would prohibit local governments from preventing families from renting our rooms.
  • SB 473: Would gradually raise the threshold for filing an inheritance tax to $3.5 million by Jan. 1, 2010.
  • SB 633: Would direct the Oregon Investment Council and State Treasurer to ensure that investment funds are not invested in companies doing business in Iran .
  • SB 909: Would expand the $50 political income tax credit to include nonpolitical charitable organizations, such as food banks. Due to the economy, many non-profit organizations are hurting financially and this would allow people to continue to donate to those organizations that provide help to the most vulnerable Oregonians.

All Best,

Kyle Vinyard

Senator Atkinson’s Staff

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