Iowa could learn something from Oregon voters about taking a balanced approach to budget challenges.
In a victory for fiscal prudence, Oregon voters recently passed two initiatives — Measures 66 and 67 — that upheld their legislature’s decision to use a balanced approach to their budget shortfall.
In Oregon’s case, lawmakers last session made cuts to the budget and raised income tax for the top 3 percent of filers. They also raised the corporate minimum tax from $10 and increased the corporate income tax rate for businesses netting over $10 million a year, and temporarily for most other businesses. As the Legislature already voted last session to use a balanced approach that included trimming the budget and raising revenue, this vote saves Oregonians from further cuts in important services. This is notable for two reasons:
■ Oregon is known for its opposition to raising taxes, having last voted to raise taxes about 80 years ago when it added a state income tax.
• It is one of five states that does not have a state sales tax.*
• It also has a statewide cap on property tax.
• It has a “kicker” law that automatically sends money back to residents when revenues exceed forecasts. Oregon has no rainy day fund.
■ Given the opportunity for a direct vote, Oregon voters chose to retain a balanced approach and raise taxes on themselves rather than make additional cuts that would decrease funding for education, health care and other essential services.
Oregon’s voters truly understand the importance of a balance during difficult economic times.
So, what does this mean for Iowa? For one, the Oregon vote remarkably reflects the results of a survey of Iowa voters last fall.
That survey for the Iowa Fiscal Partnership found that Iowa voters favor a balanced approach to addressing further budget problems:
■ Six in 10 favor some increase in taxes and fees rather than making cuts alone.
■ By the same ratio, Iowa voters believe the wealthiest Iowans — those earning over $250,000 per year — and big corporations pay less than they should in taxes.
The situation is complicated, and Iowa voters recognize that using budget cuts or tax increases alone will not solve our balance problem.
Oregon’s unemployment rate is 11 percent, compared to Iowa’s 6.6 percent. Oregonians understand that a budget has two sides, and a balanced approach to spending and revenue assures a responsible way to protect critical services in difficult economic times.
Posted by Christine Ralston, Research Associate
* Federation of Tax Administrators website, http://www.taxadmin.org/fta/rate/sales.html (accessed on January 29, 2010). The other states are Alaska, Delaware, Montana and New Hampshire.