Want Oregon's children to be healthy? Governor Kulongoski proposed the Healthy Kids Initiative (HB 2201 A) to provide access to health insurance for Oregon children.  The administration estimates that there are 117,000 uninsured children.  About half qualify for health programs but are not enrolled.  The other half are not covered by parents' insurance, or the family is uninsured due to the high cost of premiums.  The Initiative would provide coverage to children in families earning up to 200% of the poverty level and provide a subsidy on a sliding fee scale to families up to 300% of the poverty level.  

The program is designed to provide comprehensive care including dental, vision, mental health services and physical health care to children up to age 19.  It would be supported by an 84-cent tax on a pack of cigarettes and a federal match for state dollars.  The increase in cigarette tax would put Oregon in line with Washington State.  However, since Oregon does not have a sales tax, cigarettes would still cost less here.

The House Revenue Committee passed an amended bill on February 14 and sent it to the Joint Ways and Means Committee. The amended bill will not cover all uninsured children because of income limits.  SB 31, a similar bill, has been heard in the Senate Health and Public Affairs Committee, but has not yet been voted upon.

If you want to take action on this, see the "5 Minute Activist" section of this report.  To learn more about the coalition and the campaign to pass Healthy Kids, click here.

Karen Nibler, Social Policy Coordinator

Paula Krane, Citizen Access Coordinator

The Senate Finance and Revenue Committee has passed out legislation to change the corporate "kicker" law. Currently, if revenue from corporate income taxes exceeds the 2% projection for the biennium, it must be returned to corporate taxpayers at the end of the biennium. The proposed change requires a constitutional amendment which would be voted on May 15 at a special election IF the bill gets out of Ways and Means and then passes both the House and Senate by simple majorities. The Governor supports a suspension of the kicker, but not the total change until later. Going the suspension route would require a 3/5 vote in each house under the kicker law, and it can only be suspended once.  During the discussion in the Senate committee, support for changing the law and putting the revenue into a reserve account came from both small and large corporations as well as advocate groups including human services, education and public safety.

Saving for a Rainy Day

The Senate Finance and Revenue Committee's proposal would put the projected revenue from the corporate kicker ($275 million or more) into a rainy day fund at the end of the 2005-07 biennium (around September when the final calculation is made).  Four Senate bills are involved: SJR 3, which redirects the kicker revenue return; SJR 8, which establishes the reserve fund, SB 48, which directs the future funding of the fund after changing the kicker, and SB 549, which provides for the Special Election, the ballot title, summary, and fiscal impact.  Ballot Measure 49 would amend the Constitution to place certain future corporate income/excise tax revenues in a dedicated Rainy Day Savings Account. 

The measure also provides for how the Rainy Day Savings Account can be used: "funds may be used during periods of economic recession in order to prevent cuts to essential services such as education, health care, senior services and public safety." "...can only be accessed when revenues fall below projections, when there is a sustained rise in unemployment, or when the Governor declares an emergency and three-fifths of the Legislature authorizes use of the account." These are the same triggers for use that are in place for access to the Education Stability Fund.  The support from corporations came from the assurance that the kicker revenue would go into some type of reserve fund.

Corporations have received $527 million in tax credits since the kicker law went into effect in 1979.  Based on the history of corporate tax revenue compared to projections, the rainy day fund is expected to receive about $50 million per year on average, but the deposits will be uneven. Some years will see larger amounts, and others will have none depending on how the revenue either exceeds or does not rise to projections. The fund is capped at 10% of the General Fund and will not reach that level for several biennia. The Fund can be used before it reaches the cap under the prescribed conditions, but not more than two-thirds can be used.

The vote in the Senate Committee was 3 to 1, with one of the two Republican members voting with the two Democrats.  It must pass out of Ways and Means to the Senate floor soon since the deadline for getting Measure 49 on the ballot is March 15.

Suspend or Change? 

The issue of what to do with the kicker now is clouded because the Governor's suspension bill, HB 2707, with dash 3 amendments, will probably be voted out of House Revenue soon.  Since it calls for suspension rather than redirection of the corporate kicker for 2005-07 (suspension is allowed only once), the kicker would remain in the Constitution.  The primary argument against putting the matter on the May ballot is being brought forth by large advocate organizations such as the Oregon Education Association and labor because they are concerned about educating the public in time for the May vote and the possible high cost of the special election.  The problem with suspension is two-fold: it requires a three/fifths vote (20 in the Senate and 40 in the House) to pass, and the corporate kicker would remain a problem in the Constitution.  The amendments to HB 2707 have revised it to create an Oregon Rainy Day Fund account in the General Fund into which would go an increased amount from corporate income/excise tax revenues of $975 million for 2005-07. After this biennium, an amount equal to one percent of the General Fund appropriations for future biennia would be transferred to the Oregon Rainy Day Fund. If the ending balance does not equal or exceed one percent of the General Fund appropriations, the entire balance of the ending balance would go into the Rainy Day account. If the moneys in that account equal 10 percent of the General Fund revenues collected during the biennium, the excess goes to the Education Capital Construction account which is also created by the bill.

The work for advocates begins now with members of the Legislature and will continue with voters through the election (if one occurs) in order to ensure that Oregon will finally have a reserve fund, which is so badly needed.

Tax expenditures (or credits) account for more than $27 billion in possible revenues that the state does not collect.  This is the third session the League has been working with the Oregon Revenue Coalition to call attention to tax breaks and to advocate for reductions and repeals of some of them.  HB 2388 is now on the table in House Revenue, and it offers some hope for the future.  The measure calls for a legislative review of all 355 tax expenditures at least once every six years.  An interim committee of House and Senate members who have been involved with revenue and taxation would examine the expenditures for their purpose, effectiveness and efficiency in achieving their purpose, and revenue impact (on the General Fund), and then provide a written report with recommendations before September of each even-numbered year.  HB 2388 sets forth the program for how the review would occur for the next three biennia.  We will be working hard to move this bill forward.  It marks the first time progress can be made in this critical area.

Kappy Eaton, Governance Coordinator