We read last week that the new forecast for the 2007-09 state general fund is $15.3 billion, up 22.4% from $12.5 billion this biennium.
You'd think that would be enough, but no. Kulongoski's spokesperson said they still need 1) a cigarette tax to pay for expanding the Oregon Health Plan; 2) an insurance tax to pay for more state troopers; 3) an increase in the corporate minimum tax; and 4) keeping the corporate kicker to put into a rainy day fund.
One reason why tax receipts are so high is because the stock market has been strong, and Oregon taxes capital gains as if they were ordinary income. So the new budget will basically addict the state to the current level of capital gains tax.
Guess what? The economy is slowing. Housing starts are way down. The yeild curve has been inverted. Capital gains tax income will almost certainly slide in the 2009-11 budget period, and we will once again have a crisis on our hands.
It is totally irresponsible to addict a state to capital gains tax receipts, but the spending lobby is totally in charge now, so forget about fiscal restraint of any kind, (Not that we had all that much of it when the Republicans were in charge.)
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4 comments:
Rob,
I am today celebrating my first thirty days of not smoking. I had many reasons for quitting, but the impending additional tax was definitely a factor. I don't think I will be the only one.
Dave good luck with the struggle. If you had not quit yet, I assume that you were hooked big time. I am glad that you found a big enough reason to stop smoking.
Having said that, I think that Rob's post was about the Gov't's addiction to more money, especially in sight of a period were we will have less money.
I agree with Rob totally. We are flush with new revenues for the next biannual, and we should be socking half of it away for rainy day fund (w/o the need to raid the CorpKicker). But instead, we will spend all the extra money in the good times AND raise taxes to spend even more. When the bad times come (and we can see them on the horizon already) we will have no one to blame but the House Dems and Kulo, just as we had the House Reps and Kitz to blame in 2000-01 for not socking away all that 97-99 boomtime capgain tax revenue.
This state doesn't learn - they are like a teenager with $5 burning a hole in their pocket. They can and WILL find SOMETHING new to fund. Then when revenues decline they will wring their hands and whine about how we HAVE to fund this program - even though 2, 4 and 6 years ago it didn't exist and we got along fine without it.
As for the 'emergency fund'? Every time there is/will be a shortfall in a program (that means any time there is money in the 'emergency fund') - the money will be spent. Every program thinks IT needs the money, and if there is money to be had, they will try to get it. The emergency fund will be short lived and raided eagerly and often.
Enjoy Governor K, Oregon - as the saying goes, be careful what you ask for ... you may get it - and Oregon, you got it.
Hello Rob,
More needs to be said and done with regards to the Governor's designs. As a lone voice, I've published a series at rightoregon.org regarding the Governor's budget and its assumptions regarding the future economic situation of Oregon. You touched on this briefly with your reference to the Oregon economy.
As an opposing minority voice, I am alarmed at the changes being seriously discussed in what seems to be a government/media echo chamber and, the lack of a coherent, organized opposition. These are two huge problems, first their ideas and, second their organization (or perhaps the order is reversed).
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