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September 14, 2021 - Week 25

REVENUE Josie Koehne

The June 2021 Revenue Forecast was exceptionally good this year, especially given COVID 19’s serious economic impact which badly hit those in the two lowest income quintiles. The highest income earners did exceptionally well from enormous stock market gains and from businesses that were largely unaffected by Covid, where employees could work from home.

Since the 2019 close of session (Sine Die), the 2020-2021 biennium, General Fund gross revenue is up $2 billion (9.9%) from the 2019 close of session estimate, with personal income tax revenue up $1.2 billion (6.6%) and corporate tax revenue up $664.2 million (55.8%) with the help of the new Corporate Activity Tax (CAT)! Net General Fund and Lottery resources are up $2.3 billion or 9.4%!

So both the corporate kicker, that goes into Fund for Student Success for K-12 schools and early education programs, and the personal kicker, which will return a record $1.9 billion to taxpayers (posted on August 25) will take effect for 2021-2023 biennium.

According to a March 22 KATU article, Oregon is estimated to get more than $4 billion from the most recent federal stimulus bill, the American Rescue Plan Act (ARPA), with funds split between the state, counties, and cities, of which the State is to receive $2.6 billion. The CARES Act and a December stimulus bill were a great help with providing direct funding to taxpayers. Oregon failed to pass a bill this session to provide direct payments to those Oregon taxpayers without a social security number but who were paying their taxes using a TIN ID. Lawmakers passed a record state budget, marshalling these shockingly strong revenue projections and billions in federal aid to create a $29.4 billion spending plan that sent money to every corner of the state, increased school spending and made historic investments in housing and mental health.

Those working in the service and small manufacturing sectors, many of whom are people of color, were most impacted by COVID 19 restrictions. A state moratorium is in place, recently extended through the end of the year, for those who can’t make their rent payments, plus increased federal unemployment insurance and a federal payroll protection plan of forgivable loans for business employers to keep their workers employed. These all helped alleviate the financial stress of those most affected. Bills passed to help provide or lower the barriers for low-income housing; to assist those displaced from wildfire; to provide services for homeless youth; for those in need of mental health and other social services. These bills passed quickly in a flurry of activity right up to the very last day of session on June 26. A historic clean energy bill, HB 2021 to reduce greenhouse gas emissions associated with electricity sold to Oregon consumers also passed as did several police reform bills.

The LWVOR wrote testimony in support of most of these measures, as well as many others that failed to pass by end of session. There were few new tax revenue bills at all this session since there was little interest in raising revenue when we were so flush with money this session, and we had just imposed the CAT tax in 2019 on corporations with over $1 million in OREGON sales. Instead, two revenue committees and the Joint Committee on Tax Expenditures focused on reviewing tax credits, including one bill, SB 139 that passed to reduce the recent extra benefits for high income Pass-Through business entities. Read LWVOR testimony in support.

We wrote testimony supporting other revenue-related bills; all failed. We were most disappointed the Mortgage Interest Deduction bills, HB 2578 and SB 852, failed that would have reduced the tax benefit for the top 5% of high income earners while retaining the mortgage deduction for the 95% of home owners, and would have redirected those saved revenues to keep low-income homeowners in their homes. The effort failed due to the opposition efforts of the strong realtor lobby, although four realtors testified in support of the bill.

Here are failed bills we supported:

HB 2070 – a renewal of a slightly reformed harvest tax bill. Testimony.

HB 2379 – Holvey’s bill to replace the harvest tax with a timber value-based bill (we worked on the -7 amendment, now HB 3410). Testimony.

HB 2440 – a tax credit for working families providing dependent care. Testimony.

HB 2819 – that would have allowed otherwise qualified individual taxpayers to claim the earned income tax credit using an individual taxpayer identification number (TIN) in lieu of Social Security number (SSI). Testimony.

SB 137Relating to connection to federal tax law. Testimony.

SB 312 – A corporate transparency bill that would allow the public to see certain basic information about Oregon’s corporate taxpayers. Testimony.

Conclusion: This was an exceptionally productive session, with much revenue going out for many much-needed services and for the expansion of agency budgets that were greatly reduced in recent years, so it was good to see a healthy influx of money for our state agencies’ budgets, for which the League has often testified in support. We now have enough revenue to refill our Education Stability Fund and Rainy Day Fund with a little reserve for the next biennium, when we will probably not be getting such a large influx of federal dollars, and when we will still have an economy that has yet to recover from COVID. The LWVOR can be proud of what our volunteers have accomplished to make this such a successful session. We are hoping you will step up to help us with this work next year!