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California's sneeze.

Byline: The Register-Guard

When California sneezes, Oregon catches a cold. But when California sneezed in Tuesday's elections, rejecting five of six ballot measures intended to ease the state's budget crisis, it may have been showing symptoms of a disease that is not contagious.

The size of California's population and economy makes it the biggest market for goods produced in Oregon. It's where the greatest number of Oregon's out-of-state retirees, students and tourists come from. The repercussions of California's vote are sure to spread northward. The main effect could be that Oregon will diverge from California's path rather than following it.

The Wall Street Journal and other observers read the election results as a revival of the spirit of 1978, when California's approval of the Proposition 13 property tax limitation inspired tax revolts nationwide and presaged the election of President Ronald Reagan. If that reading is correct, Oregon legislators should brace for resistance to any tax increases they approve as part of a budget-balancing plan.

But California voters were responding to a set of proposals unlike anything being discussed in Salem. All six propositions on the ballot were gimmicky attempts to borrow, shift funds and otherwise avoid hard choices.

Proposition 1A, for instance, was an extension of previously approved tax increases disguised as a spending cap. Proposition 1C would have allowed the state to borrow against future increases in lottery revenues - a proposal that invited voters to accept debt today to be repaid with income that might not materialize tomorrow. Only one of the proposals, which prohibits pay increases for lawmakers when the state budget is out of balance, was approved.

The Oregon Legislature is considering proposals that look straightforward in contrast - including an increase in corporate income taxes and an increase in personal income taxes paid by people making $250,000 or more a year. Most Oregonians would be unaffected by those increases. Even with the increase, Oregon's highest personal income tax rate would be lower than California's top rate of 10.4 percent - and Californians also pay a sales tax of up to 9 percent, while Oregonians pay none.

After Tuesday's defeats, California faces a budget shortfall of about $21 billion - slightly larger, in proportion, than Oregon's budget gap. But California has been in a budget crisis for years, and the state has already exhausted many of its options and cut its programs. California faces the prospect of steep reductions in public services and continuing infighting between an unpopular governor and an even more unpopular state assembly.

Facing high taxes, declining public services and political deadlock, some people and businesses in California may start looking for a place that is close to their relatives, friends, customers and suppliers, a place with lower taxes, functioning governments and adequate services - a place like Oregon.

Events in California have effects that spread beyond the state's borders. In this case, California's sneeze revealed the state's contrasts, rather than its similarities, to Oregon.
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Title Annotation:Editorials; State's vote will have repercussions in Oregon
Publication:The Register-Guard (Eugene, OR)
Article Type:Editorial
Date:May 23, 2009
Words:489
Previous Article:THE BULLETIN.
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