Taxing Issues in Oregon

LEE HOCHBERG:

Log trucks rumble through the small town of Rainier, Oregon, all afternoon. Though there aren't as many as there used to be, the wood products industry is still the historical heart of the town, which makes it especially galling to local school administrators that the high school's wood shop may soon be eliminated for budget reasons. Superintendent Michael Carter:

MICHAEL CARTER:

In this community, this is vital. This project has been here since the school's inception. Woodworking, the entire community was built around woods, the wood industry. This is one of the few areas some kids actually really shine in, and they can make a career out of, and we're going to cut that.

LEE HOCHBERG:

The district may lay off the wood shop teacher to save money for English, math and science programs. It faces a $600,000 budget shortfall mainly because the state government has lopped $285 million from statewide school funding. Oregon schools get some money from local property taxes, but 71 percent of it comes from the state.

SINGING:

Tomorrow, tomorrow — I love ya tomorrow…

SPOKESPERSON:

Good.

LEE HOCHBERG:

Also on the block at Rainier High is the drama program; and ironic for this town that sits aside the Columbia River, the swimming program. 90 districts statewide have sliced as many as 17 days off the school calendar to save money.

SPOKESMAN:

I understand when you say "no new taxes," but you've got to understand that we're to a point you can't run schools at the funding levels that we're expected to do it. It's impossible.

LEE HOCHBERG:

And it's not just schools under Oregon's budget ax. The state is also slashing $200 million from its health care program for the low-income and $60 million from public safety.

SPOKESPERSON:

If you are waiting for a ballot, if you'll move on down to the end of the counter, we'd appreciate it.

LEE HOCHBERG:

The cuts were needed because Oregon voters have rejected two statewide ballot measures to boost the state income tax in just over a year– the most recent, measure 30, this past February. Oregon faces an $800 million deficit. It has one of the highest unemployment rates in the country, and with people not working and not paying as much income tax, state revenues have plummeted. But voters have rejected tax increases to plug the deficit.

Oregonians haven't voted to raise the state income tax in 75 years, so the rejection of the proposed tax increase in February really wasn't a surprise. But many observers say the tax hike would have gone through had it not been for the efforts of national anti-tax activists. The state legislature had already passed the tax increase with bipartisan support. It would have raised the average Oregonian's tax $81 per year.

SPOKESMAN:

And it is not about the money. It's about the character of the nation. We believe in individual liberty and personal responsibility. (Applause)

LEE HOCHBERG:

But former U.S. House Republican Leader Dick Armey and his Washington, D.C.- based anti-tax group came to Oregon to overturn the legislature's measure. The group, known as Citizens for a Sound Economy, had already helped defeat a tax increase in Alabama.

SPOKESMAN:

Excuse me, ma'am…

LEE HOCHBERG:

In Oregon, it spent $100,000 on signature gatherers, who got enough petitions signed to send the issue to a voter referendum. Political analysts like Oregon State University's Bill Lunch say it's highly unlikely the tax would have been put up for a vote and rejected without Armey's efforts.

BILL LUNCH:

The money to finance the referendum signatures clearly mainly came from outside, so that's the critical component here. And the thrust to get this going was probably external; the money for it was probably external.

LEE HOCHBERG:

And Peter Courtney, the president of the state senate, accuses outsiders of misusing Oregon's referendum process. He says they're taking major decisions like budget making away from legislatures.

PETER COURTNEY:

If we are going to move away from a representative democracy and simply have a direct democracy, that is a major change and the greatest change this country will experience in its 200-plus years of existence. It was never intended to be that way.

LEE HOCHBERG:

The director of Armey's group in Oregon, Russ Walker, answers that while his organization did organize the petition, it was Oregonians who signed them.

RUSS WALKER:

175,000 real people signed that petition and said, "you guys made the wrong decision." And then come election day, almost 60 percent of Oregonians said, "you made the wrong decision."

LEE HOCHBERG:

He says the tax increase failed because Oregon voters are struggling through hard economic times and they believe the state government is wasting their money.

SPOKESMAN:

We have had unemployment between 7 percent and 8.5 percent for the last three years in the state of Oregon. We have the highest unemployment in the nation. We were dead last in jobs creation, and they're being told, "we want more of your money." Wrong message. Wrong message.

LEE HOCHBERG:

Indeed, the tax hike was trounced in towns like Rainier, where the county unemployment rate is over 11 percent.

TOM RAMEY:

I know the kids, they got to have a… a good education, but at the same time I see that they got to open up the country and get jobs going, and I don't know. And I haven't seen that too much, and it's scary. Yeah.

WOMAN:

We can only give so much. We can only give so much, and I know the schools are in jeopardy. We're all in jeopardy.

MAN:

Hello? They want to talk to you.

LEE HOCHBERG:

As Oregon schools struggle, so are thousands of low-income Oregonians, who rely on the state for health coverage. Phillip Bounds returned from military service in Iraq in October and has been unable to find work. His wife, Jennifer, a diabetic, has been getting her health coverage through the state health plan. With the failure of Measure 30, her benefits, as well as those of 50,000 other low-income Oregonians who don't qualify for Medicaid, will end August 1.

PHILLIP BOUNDS:

This is the rose petal off of the rose bush in front of Saddam's presidential palace.

LEE HOCHBERG:

With Phillip Bounds still recovering from mortar and missile attacks in Iraq, the family sees an irony.

JENNIFER BOUNDS:

It's quite frustrating that we can help everyone else out, but in the end, there isn't anything to help us out.

PHILLIP BOUNDS:

For Afghanistan, Iraq, Bosnia. Yeah, we'll go anywhere and everywhere, but we've got a lot at home we still need to take care of.

LEE HOCHBERG:

And the state cut off prescription drug coverage for 7,000 other Oregonians. Channah Pastorius needs $2,100 a month for medications to treat her multiple sclerosis. She now depends on drug companies to send her free medicine, but she fears that charity will end.

CHANNAH PASTORIUS:

They're not in the business to give out medications. It's nice they do that and I'm so grateful, but I'm so afraid they're going to say, "we don't have to do this."

LEE HOCHBERG:

The governor's health advisory panel reports, of those the state has cut off, 92 percent now have no prescription drug coverage; 45 percent rely on drug companies for charity care, and most of those only get some of the medications they need. A 37-year-old epileptic suffered a massive seizure two weeks after the state cut off his anti-seizure medications. His death received widespread attention and became a rallying cry for those opposed to the cutbacks. The Citizens for a Sound Economy's Russ Walker says nobody's medicine would need to be cut off if the state spent the money it does have more wisely.

RUSS WALKER:

The solution ultimately to Oregon's economic woes and fiscal crisis is not more taxes. That will actually create more difficulty for business in the state of Oregon. It will make it more difficult for businesses to locate here. What we need to do is find a way to track businesses. You can do that by reducing regulations, by removing the barriers that make it difficult for businesses to come to Oregon.

LEE HOCHBERG:

State leaders are accessing emergency funds, but so far have found only $15 million to try to soften the blows to schools and the uninsured. Armey's group, meanwhile, is currently working against proposed tax increases in Washington State, Nevada, New Hampshire, and Michigan.