Oregon Senate GOP a no-show for schools tax vote

SALEM, Ore. (AP) – Republicans in the Oregon Senate were a no show Tuesday for a $1 billion education tax vote, bringing the chamber to a halt.

All 12 Republicans were missing Tuesday morning, denying the Senate a quorum. That means there weren’t enough legislators on hand to formally move ahead with a vote on House Bill 3427.

Senate President Peter Courtney waited for Republicans to show and sent the chamber’s chief law enforcement officer to track members down. When no Republicans showed, Courtney recessed the Senate until later the afternoon.

Senators were set to vote on a tax on large businesses to raise an additional $1 billion per year for schools one day before a statewide teacher walkout over funding.

Senate Minority Leader Herman Baertchiger told reporters Monday Republicans were cut out of discussions and don’t agree with the proposed tax on businesses to fund schools.

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News release from state Sen. Tim Knopp, R-Bend:

Senator Knopp Stands in Solidarity with Senate Republicans & Oregon Voters

Salem, OR – Senator Knopp gave the following statement on his absence from today’s Senate Floor session:

“While partaking in negotiations to end this stalemate, I have been in the Capitol building today continuing my normal schedule of hearings, constituent meetings and working on “Kaylee’s Law,”, which I have made a commitment to the Sawyer family to see through to the end,” said Knopp.

“However, I will not be present at today’s floor session in solidarity with my caucus members and the voters who rejected a similar tax just two years ago. Oregon needs real PERS reform now, and we will continue to use whatever tools are available to us to achieve the best outcome for Oregon students, taxpayers, small business owners, educators and families.”

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News release from Oregon Senate Democrats:

Senate Democrats show up to support schools HB 3427 would provide stable, dedicated funding source for Oregon’s classrooms SALEM – For several years, Oregon has lagged near the bottom of the pack nationally for high-school graduation rates. The Oregon Senate Democrats showed up for work Tuesday to vote on a measure to reverse the downward spiral. But the Senate Republicans, instead, elected to deny the quorum necessary for the Senate to advance any legislation.

The Student Success Act – House Bill 3427 – is designed to counter years of disinvestment in public education dating back to passage of Ballot Measure 5 and Ballot Measure 50 in the 1990s. The bill includes a transformational plan to provide students and schools the resources they need to be successful, as well as training to help teachers better serve students. It also includes a dedicated funding package to pay for those elements, which can be used only by schools.

“This is the culmination of 16 months of work, beginning with traveling across the state to hear what students, teachers, administrators, business leaders and community members have identified as priority educational needs,” said Sen. Arnie Roblan (D-Coos Bay), who co-chaired the Joint Committee on Student Success which authored this legislation. “We listened to the people and, based on those conversations, we developed a plan of action. Every dollar that we collect will go into the classroom, and we have written that into the legislation by requiring that all funding goes to hiring teachers and staff and purchasing supplies to serve our students; not for covering PERS liabilities or any other costs.”

The bill is the product of more than a year of work. It started with a bipartisan, bicameral group of legislators – the Joint Student Success Committee – touring the state, logging nearly 3,000 miles and visiting more than 55 different schools. The group visited with hundreds of students, teachers, school administrators, community members, business leaders and others to hear about what’s working and what needs improvement. The group put together legislation based on what it heard in communities all over the state. When the day finally came that the Senate could vote on the landmark legislation, Republicans chose instead to be absent.

In addition to a dedicated funding source to be invested only in the classroom and programs that help students succeed, the bill includes several accountability measures, including regular reports to the Oregon Legislature and audits to ensure educational investments are yielding the best results for every dollar. The funding source is a Corporate Activity Tax that would be assessed only to Oregon’s largest businesses. Of the state’s 460,000 businesses, 420,000 would not pay a dime. The other 40,000 would pay a $250 flat fee on the first $1 million in revenue and 0.57 percent on each subsequent million in Oregon revenue, minus certain business expenses. Sales on groceries, fuel and medical products and services are exempt and won’t be taxed under the plan. Oregon’s individual taxpayers also would see a break on their taxes.

The legislation is written to prevent the new funding from going anywhere but into classroom programs and hiring teachers and support staff necessary to do the work. It will not be used to pay down any PERS liability. Concurrently, the Legislature is working on PERS reforms in the Capital Construction Committee to help bring down costs of the public employee pension system and save schools even more money.

Senate Democrats will return to the Senate Chamber at 2:30 p.m. today.

“When the people send you here to serve, I think you ought to show up for work,” Senate Majority Leader Ginny Burdick (D-Portland) said. “It costs the taxpayers about $6,750 per day in Senator salary and per-diem costs, not including support staff and other expenses. When we don’t have a quorum, none of the work we were sent here to do can get done, at a significant cost to Oregon’s taxpayers. We came here to work for every Oregonian, and the Senate Democrats take their responsibilities not just as a duty, but as a privilege. We’ll be here when the Republicans decide to come back to work.”

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Letter to senators from several Oregon business groups:

Dear Senator:

As representatives of businesses large and small and many of Oregon’s most vital industries, we wanted to register our strong opposition to HB 3427. While we support the Legislature’s efforts to make game-changing investments in our schools, we have serious concerns with the structure of the revenue portions of this legislation and how it will impact our state’s economy.

First, HB 3427 is a tax on Oregon sales, not profits. That means even businesses that lose money would be forced to pay the tax. Gross receipts taxes are often referred to as a “tax on a tax” because goods and services are hit at each step in the supply chain, leaving Oregon businesses paying an effective tax rate far higher than what is proposed in HB 3427. This phenomenon, often referred to as “pyramiding,” is particularly harmful to Oregon industries like manufacturing, which rely on a long supply chain of Oregon-based goods to produce their products. A former state economist previously characterized a gross receipts tax as functioning “like a sales tax on steroids.”

Additionally, the $1 million exemption threshold in HB 3427 is far too low and translates into tens of thousands of small, family-owned businesses being included in the tax. This tax also punishes high-investment, high-growth startup businesses and creates significant barriers to new competitors. For the startup businesses that are investing in production and spending high amounts of overhead to grow the business, they will be paying taxes under a gross receipts tax while most likely incurring what would otherwise be non-taxable losses under a corporate income tax. This hurts the startup culture and upsets competitive balance between new and established businesses.

Similarly, many Oregon industries rely on a high-volume, low-margin business model to earn a profit. Those margins would be destroyed by the compounding impacts of pyramiding under a gross receipts tax. Businesses that compete in regional and global markets would be placed at a significant competitive disadvantage with their competitors in jurisdictions without this harmful tax structure.

While we appreciate that lawmakers have made some attempts to lessen the negative impact on businesses by included a 35% deduction for labor or inputs, we have concerns about this portion of the bill as well. Legislative lawyers have previously concluded the tax deductions, like those included in HB 3427, can be eliminated on a simple majority vote. While this position is heavily disputed by third-party attorneys, the Legislature has previously revoked these deductions on simple majorities. As lawmakers inevitably look for additional revenue in future sessions, the deduction included in HB 3427 will undoubtedly be a target, meaning Oregon businesses could be stuck paying an even higher tax bill and consumers facing additional price increases.

Finally, it was just over two years ago that Oregonians overwhelmingly said no to a tax on Oregon sales that bears a strong resemblance to the one included in HB 3427. 34 of Oregon’s 36 counties opposed Measure 97, with nearly 60% of the total votes cast statewide voting no on the proposal. Please honor the will of Oregon voters and protect Oregon employers by opposing this harmful tax increase.

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News release from the Democratic Party of Oregon:

Senate Republicans Walk Off The Job, Refuse To Support Oregon Schools
Statement from Democratic Party of Oregon Chair KC Hanson

“The only thing standing between Oregon students and a game-changing reinvestment in our schools today is the Senate Republican Caucus.

“Their insistence on blocking a vote on the Student Success Act is petty and disingenuous, and we will not let their disappearing act go unnoticed.

“Oregon voters spoke loud and clear in the most recent election by electing legislators that campaigned on reinvestments in our classrooms. Meanwhile the work of the Joint Committee on Student Success, traveling all over our state for the last year and a half, has ensured that we have a policy and a proposal that will do the greatest amount of good for the greatest number of students across our state.

“There has been plenty of time for input — now is the time for action. Our classrooms are in crisis. It’s time to vote.”