There was a rumbling of the earth on the North Coast last month, but it wasn’t the Cascadia quake.
Instead it was a chamber of commerce presentation in Seaside. Local members, including Cannon Beach Chamber of Commerce Executive Director Court Carrier, heard from state business leaders warning of a likely 2016 state ballot measure, Initiative Petition 28.
Some people call it the “gross receipts tax,” others call it “an alternative to the minimum corporate tax to the largest corporations doing business in Oregon.”
You might not even pay much attention to it, unless you’re a $25 million corporation.
These could be taxed on 2.5 percent of their gross Oregon sales. Proponents say it will add $5.3 billion over two years to the state’s general fund, and help fund education and infrastructure.
“We feel that this is important because our schools are underfunded,” Melanni Rosales of Our Oregon said last week from Portland.
Because of funding gaps, schools are laying off teachers, trimming school days and class-sizes are swelling. “We have the third-largest class size in the country and fourth-lowest graduation rate,” Rosales said. “There are clear examples of why we need to do things to bring revenue back, and raising the minimum taxes for the biggest corporations doing business in the state is the most viable solution.”
Their opponents, like the pro-business group Grow Oregon NOW, call this an “extreme proposal” that would “force local businesses to pass on the costs of the tax in the form of higher prices for everyday items.”
At the November meeting, local chamber members heard a representative of Grow Oregon NOW call the initiative “the largest tax increase in state history,” with damage to our economy, job losses and higher prices for Oregon businesses and consumers.”
“This is highly polarized,” Sen. Betsy Johnson, D-Scapoose, said last week. “I think the business community will come out in unified opposition to the gross receipts tax. I think the unions that are under Our Oregon will support it. I have publicly said I think it’s bad for Oregon.”
Johnson said she fears the tax will drive Oregon businesses to neighboring states.
“When do we load up the existing businesses with such a burden that we kill the golden goose?” Johnson asked. “We haven’t had a business correction in some time, and if the cyclical nature of recessions holds true, we’re going to be due for an adjustment here shortly.”
It could become “impossible to recruit” new corporations to Oregon in the future, she said.
The state spent “all this money to recruit Intel, with all kinds of tax incentives, and now we treat them like a chew toy, a punching bag for more tax revenue.”
Johnson acknowledged that the funds are much needed in Salem.
“Absolutely, but do we need $5 billion in taxes sucked out of businesses right now?” Johnson asked. “And what would really be done with that $5.2 billion? Would we perhaps be better off designating where that should go rather than just be stuffing it back in the general fund? Would it really go to the things we need: emergency bridge and building upgrades for people in the tsunami zone, quality education initiatives that would improve our graduation rates and competitive edge?”
“It’s a scary deal, when you look at the impact it will have on Oregon,” said Court Carrier at last week’s Cannon Beach Chamber of Commerce coffee meeting. “There will be about a $5 billion impact flowing into the coffers of the general fund, and there’s no designated way for them to spend it. Let’s say Safeway gets hit with a $25 million plus tax, are they going to do sit back and absorb it? No, they’re going to pass it along to everyone in their chain of supply, including the consumers. If the wholesale food supplier Sysco gets hit for food and beverage, we’ll all get hit.”
Along with an increased minimum wage proposal, Carrier said, smaller hotels like many in Cannon Beach would be forced to scale back their staffing and minimize employees, hiring fewer and doing more with the staff they do have.
The Cannon Beach Chamber of Commerce, which is not affiliated with the Oregon State Chamber of Commerce, is prohibited from taking political stances. Carrier said Initiative Petition 28 could change everything. He plans a review of chamber bylaws at the Dec. 15 Cannon Beach Chamber of Commerce meeting.
“We’re already advocating for schools and affordable housing,” Carrier said. “We’re a business organization. I understand why we shouldn’t use clout to advocate for political offices, but when it comes to business and livability issues in general, that’s something where we have to have a place in the table.
“We will share this information with members,” he added. “We will not tell them how to vote.”
Whether the proposed initiative is a sincere attempt to bolster the state’s quality of education or a partisan political battle writ large, it’s not quite clear.
It’s unlikely that multi-million-dollar corporations are going to desert Oregon. It’s also uncertain whether this is most sensible way to raise $5 billion. Right now, millions are headed just for the legislative fight, and it’s guaranteed to be bruising.
“I think the left is getting leftier and the right is getting rightier,” Johnson said. “The place in the middle where most thoughtful Oregonians are is disappearing. It’s been my experience growing up as a native Oregonian, most Oregonians are laissez-faire on the social stuff, I don’t care who you sleep with, I just don’t want to hear about it. We’re pretty fiscally conservative, we want to create an environment where business flourishes. Business has been portrayed as the enemy and fair game for raising taxes.
“If I were queen, your editorial would be a clarion call to the governor to use her convening power to see if we can stop this train wreck,” Johnson added.
R.J. Marx is The Daily Astorian’s South County reporter and editor of the Seaside Signal and Cannon Beach Gazette.