Lawmakers take first steps to tax reform.

Byline: David Steves The Register-Guard

SALEM - Lawmakers took their first stab Tuesday at coming up with tax and spending reform packages for a June special session.

But their half-day meeting brought legislators no closer to answering their biggest question: Will there be a special session at all?

Legislative leaders remained unresolved on whether to go ahead with the June meeting that was ordered by the 2003 Legislature, but could be canceled if half or more of the House or Senate refuse to sign on for such a meeting.

In the meantime, the Joint Tax Reform Committee held its first meeting since conducting a series of town hall meetings across the state to gather citizen comment on questions of how and whether to remake Oregon's tax system.

Ideas discussed Tuesday included a pair of tax overhauls and a pair of spending limits. Although all four proposals varied, their advocates seemed to agree that in the wake of February's voter defeat of the Measure 30 tax proposal, this was no time to raise Oregonians' taxes.

Rep. Dan Doyle, R-Salem, said Measure 30 drove home what he said is a long-term sentiment reflected by decades worth of voter rejection of general tax increases.

"They are not going to approve any increase of their own taxes," said Doyle, who pushed a plan to create a rainy-day fund and impose a tougher limitation on state spending growth than the one adopted by the 2001 Legislature.

Doyle, who presented his proposal with grocery industries lobbyist Joe Gilliam, recommended setting a limit on government spending growth based on a to-be-determined rate.

Revenues that exceed this rate would be diverted into a rainy-day fund, and would be available to stabilize public services in economic down times.

Another spending limit was proposed by veteran limited-government activist Don McIntire, who is pushing an identically worded ballot-measure proposal, which hasn't yet received signatures to qualify for the ballot. McIntire called for a constitutional amendment that similarly would cap spending growth based on population and inflation.

A bipartisan team of senators, Republican Ben Westlund of Bend and Kurt Schrader of Canby, proposed a plan that would impose a new sales tax or some other tax on consumption for reductions in income and property taxes. It eventually would raise $1 billion in additional taxes, but would generate the increase entirely from people not currently paying Oregon taxes: nonresidents visiting the state and Oregonians who are currently avoiding taxes through what Schrader called the "underground economy" of bartering and receiving under-the-table payments for work.

Rep. Tom Butler, R-Ontario, recommended the elimination of Oregon's income tax on capital gains, in exchange for higher tax brackets for those with income of more than $200,000 and lower taxes for those with income of $20,000 to $30,000.

The committee's first foray into debating ways to rework and stabilize Oregon's revenue and spending scheme followed a series of meetings throughout the state. Rep. Betsy Johnson, an Astoria Democrat who attended most of those meetings, said Oregonians made it clear that they don't share a single vision of how the tax and spending system should be revamped, although she heard most frequently support for a rainy-day fund.

Johnson said she also heard from Oregonians that they do not want legislators to rush in with far-reaching proposals.

"Whatever we do needs to proceed very deliberately, slowly, and with great attention to detail," she said.

Democrats and Republicans are growing further apart on the question of whether it still makes sense to hold a special session to consider such proposals in June. Besides disagreement on whether tax reform proposals can be worked out and supported by majorities in the House and Senate in the next eight weeks, the two parties differ on whether the gay-marriage issue should be addressed.

Republican leaders, such as House Speaker Karen Minnis of Wood Village, want to push a ballot referral limiting marriage to a union between a man and a woman. Senate President Peter Courtney of Salem is among several top Democrats who oppose such a move, saying it shouldn't pre-empt an impending Oregon Supreme Court ruling on Multnomah County's decision to issue marriage licenses to same-sex couples. However, Courtney said he has "built up a firewall" between that issue and the tax-reform effort.

Although Courtney said it was hard to say if the committee would be able to produce a package that could get through a special session and past the voters, he would not let the gay-marriage issue stop the Legislature from carrying out its work on taxes and spending.

"The name of the game is, can the committee come up with a package that has a good shot of passing in a special session and win at the ballot box," he said.

"And if that can't be done, then we don't need to get into a special session."

Minnis spokesman Chuck Deister said his boss was confident a special session would occur.

"The speaker believes this is a good opportunity to take up the proposals being discussed in committee today," he said. "We hope there is still time in April and May for the proposals to be refined and presented to the Legislature in June."

WHAT'S NEXT

The Joint Interim Committee on Tax Reform will meet again April 29

at the Capitol to continue working on tax reform proposals for possible consideration in a June special session.