The Oregon Constitution requires that all bills that raise revenue must originate in the House of Representatives. Article 4, section 25 (2) of the Oregon Constitution further states: “Three fifths of all members elected to each House shall be necessary to pass bills for raising revenue”.

This Constitutional amendment, proposed by the Legislative Assembly through House Joint Resolution 14 in 1995, was adopted by the voters of Oregon in May of 1996 as Ballot Measure 25. The Legislative Argument in support of Ballot Measure 25 stated in part: “Ballot Measure 25 would thus ensure that higher tax rates could be passed by the Legislature only if there was a broad consensus throughout the state on the need for such measures”.

A bill for raising revenue can be either a bill that increases taxes or a bill that reduces or repeals tax expenditures. Tax expenditures are tax breaks, such as specific tax deductions or tax credits, that reduce the amount of taxes owed.

One example of commonly used tax expenditures is the home mortgage interest deduction used by virtually all home owners with a current mortgage. Another example would be the Earned Income Tax Credit that is accessed by virtually all low income Oregon families to receive a refund on their Oregon income tax.

A three fifths majority vote usually requires bipartisan support because it is unusual for one political party to hold three fifths of the seats in both chambers. For instance, even if all members of the Democratic Party voted for a bill to increase taxes, the current makeup of this Legislative Assembly would require a minimum of two Republican votes in the Senate and four Republican votes in the House in order to enact the law.

It is very troubling to me that the current Democrat leadership of the House of Representatives appears to be attempting to circumvent the clear meaning of the constitutional amendment adopted by the people of Oregon that requires that three fifths majority vote. They appear to be reading the constitutional amendment to mean that any bill that is “revenue neutral” would not require the constitutionally required three fifths majority vote.

They appear to believe that by drafting a two part bill, that is revenue neutral, they can avoid the constitutional requirement for a three fifths majority vote. The apparent plan is to draft legislation that increases revenue by enacting new taxes and that simultaneously and equally reduces revenue by enacting new tax expenditures.

Legislative Counsel is employed by the Legislative Assembly and is charged with the responsibility to professionally draft all Oregon legislation and to advise members on the meaning and the constitutionality of Oregon law. It is even more troubling to me that our own professional legal counsel appears to be complicit in this blatant attempt to scam the people of Oregon by circumventing the clear meaning of the Oregon Constitution.

All sorts of untenable and disingenuous legislative games may occur if this “brave new world” interpretation of the Constitution is allowed to prevail.

For instance, a real estate transfer tax might be enacted that is offset by increasing the earned income tax credit. This would extract taxes from home owners when they sell their property and redistribute the new revenue to low income Oregon families. This new interpretation of Oregon law would mean that the tax increase paid by the homeowner who sold their property would not be considered a tax because the money raised was redistributed to low income families in the form of tax credit expenditures.

Another scenario might be to reduce, or eliminate the home mortgage interest deduction and offset that tax increase with an equal tax reduction by raising the Earned Income Tax Credit. The possibilities to redistribute wealth are endless using this new found formula.

Whether our state needs to raise more revenue, through new or increased taxation or by reducing or eliminating certain tax expenditures, is a legitimate conversation. In my opinion, the more than thirteen percent increase in revenue already projected for this budget period should be more than enough to meet our spending needs.

But the apparent House Democrat plan to redistribute income by circumventing the clear meaning of the Oregon Constitution would make a mockery of both the Constitution and fair tax policy. We have not yet seen the contents of the contemplated bill, but it is common knowledge in the Capitol that such a bill is being worked.

All Oregonians should vigorously oppose such blatant manipulation of Oregon constitutional law.

A second equally onerous bill was voted out of the Oregon Senate today.

SJR I-A proposes and amendment to the Oregon Constitution to issue General Obligation bonds to finance the Oregon Student Opportunity Fund. The Resolution asks the people to decide whether the state should borrow money to create an endowment fund for the State Treasurer to invest in financial markets.

The plan would be to use any return on investment from the corpus of the endowment fund to give to students to help pay for the cost of higher education. The principle and interest on the borrowed money would be paid by the taxpayers of Oregon through General Fund appropriations.

The Resolution also provides that, if the Governor declares an emergency, the Legislative Assembly may use the money in the fund for any other lawful purpose if they approve of that use by a four fifths majority of the members present in each chamber. Please note that this resolution does not require an eighty percent majority vote of all members, but only an eighty percent majority of the members actually present in the chamber at the time of the vote.

One Senator observed in her comments on the Resolution that “this is a good business proposition”:

Although I had not planned to speak on this bad bill I did respond in part:

“So the plan is to borrow money to invest in the markets, give away any investment returns, and allow someone else, the taxpayer, to pay off the debt. Take that proposition to your local business banker… if you have the nerve!”

Please remember, if we do not stand up for rural Oregon no one will.

Best Regards,

Doug