Oregon Public Broadcasting

Governor Ted Kulongoski wants Democrats in the Oregon Legislature to balance the next budget with new tax hikes.

The Democratic Governor has proposed four revenue increases as part of his two-year spending plan.  

Democrats in the Legislature now have the power to do that without Republican support.  But it’s not likely to be smooth sailing for the proposals.  Salem correspondent Chris Lehman reports.

On paper, it looks like a case of what Democrats want, Democrats get.  

They have a large enough majority in both the House and the Senate to pass tax increases without any Republican support.  So when the Governor says things like this, it’s a good bet lawmakers will give it a look.

Ted Kulongoski:  “Every pack of cigarettes sold costs Oregonians $11.16 in increased health care costs.  My budget aims to recoup some of those costs by increasing the cigarette tax by 60 cents a pack.”

It’s not the first time the Governor has proposed a tobacco tax hike.  In the 2007 session he tried for an 84-cent a pack increase.

Remember how that turned out?  The proposal failed both in the Legislature and at the ballot the following fall. Senate President Peter Courtney remembers it well.

Peter Courtney:  “We got clobbered last time with 84 cents, just got annihilated.”

Courtney says he’s not sure if the new tobacco tax proposal will do any better.  It faces stiff opposition, and not just from tobacco companies.  

Paul Romain is a lobbyist for Oregon gas station owners, who make a lot of money selling cigarettes.  Romain says a smaller increase is still unacceptable.

Paul Romain:  “It’s still 60 cents a pack.  It’s six dollars a case.  So it’s a lot of money, so if you’re in the business of selling cigarettes you don’t like it.”

Gas station owners aren’t the only interest group opposed to the Governor’s tax proposals. Hospitals object to a plan to fund children’s health care by raising a tax on health care providers.  

Andy Davidson is President of the Oregon Association of Hospitals and Health Systems.  He says he supports the goal of the new tax.  But he says it puts an unfair burden on the state’s hospitals.

Andy Davidson:  “I don’t think the general concept of a hospital tax and the way that they envision it is really the direction that we ought to be heading.”

As interest groups line up against the tax proposals, Republican lawmakers are issuing  press releases against the Governor’s plan too.  But one tax that might face smoother sailing is a proposed increase in the state’s corporate minimum tax.

It’s been ten dollars since the 1930’s and even some businesses support raising it.  But even if lawmakers pass every proposed tax hike, the state of Oregon still won’t have enough money to continue to fund services at their current levels.  

Governor Kulongoski is proposing cuts to some social assistance programs.  The Governor and lawmakers are also looking to Washington D.C. to help pick up the slack.

Senate President Peter Courtney says it’s time to find out how effective Oregon’s Congressional delegation can be.

Peter Courtney:  “If we don’t get some help out of them, we are gonna be in deep trouble. Some people are really gonna get whacked and hurt badly.  I’ll just say that to you.  So guess what federal delegation, I hope you’re out there listening.  You say you’re good, you say you have access.  You better produce.”

Courtney knows at least two members of the Congressional delegation quite well.  Incoming Democratic Senator Jeff Merkley was Speaker of the Oregon House during the last legislative session.  And incoming Congressman Kurt Schrader was co-chair of the Senate’s budget writing committee.