The case for voting No on 30 is simple.  It rests on some basic truths about Oregon's government and economy.  Understand those truths, and you'll feel compelled to vote "no".  Fail to grasp them, and you'll be tempted to vote "yes".  The "no" vote is based on knowledge, and the "yes" vote on ignorance. 

Big Picture:  Out of Control Spending

Oregon's state government spending has been growing at an average of 8.82% a year since 1991.  Oregon's total private sector income, the source of money to pay for that spending, has grown at an average of 5.72% a year in that period.  The following graph and table show the numbers. 

1992 

1992 to 2002 from left to right.. Spending as a percentage of our ability to pay goes up the left side from the bottom. 100% is the third figure up. Each line represents 20%  The two bars that go down indicate years when personal income growth was higher than state spending growth.  All the other bars indicate the opposite - how much more the state spent than we could afford to pay at the time.

Our expenses are growing faster than our ability to pay.  On average, each point of private sector growth is met by 1.54 points of growth in public sector spending.  In other words, the state government is growing its expenditures 50% faster than the state’s citizens are growing our ability to pay. 

In the long run, this rate of government growth is unsustainable.  Oregon state government already spends (and thus must tax) about 11.5 cents of every dollar its citizens earn.  At current growth rates, state spending will exceed 15 cents by 2012, 20 cents by 2022, and 50 cents by 2054.  There's no way the state can survive - something must give. (ED: In case that didn't register clearly, "50 cents by 2054" means that half of what you earn will be taken from you by the state government, alone.)

The dark line is total personal income of  Oregonians in a given year, beginning on the left with 1991 and ending on the right with 2002. The red line is state spending growth over the  same span of years. The two lines meet where what the state spent equalled what it  collected in revenues. After that it's either borrow money or raise fees and taxes.

Oregon, a High Tax State 

Oregon is already one of the highest spending states in the nation - sixth highest of the fifty states in per-capita state spending, up from eighth highest two years ago. 

But wait - we regularly hear that Oregon is really a moderate or low tax state.  A recent newspaper editorial confidently proclaimed that Oregon is just 37th of 50 states based on how much revenue it derives from taxes on income.  How can we be low tax, but high spending? 

The answer is, we aren't low tax.  In Oregon, taxes get hidden.  Taxes get called by other names - fees, charges, assessments, and so forth.  Since property taxes are capped, government agencies that need more money will collect huge up-front "development charges" that then get passed on (in the form of higher prices) to the buyer, who finances them through a larger loan.  The part you pay that is labeled "tax" is comparatively small, but the amount the government collects is quite large - enough to finance the sixth highest per-capita spending of any state. 

These hidden taxes that drive up the cost of construction also help explain why Oregon has some of the least affordable housing of any state. 

Why So Much Spending? 

So, what's going on?  Are all states growing like this?  Apparently not.  According to the Tax Foundation, state tax receipts for all 50 states this past decade showed 4% average annual growth.  This implies that Oregon's spending grew about twice as fast as the average. 

What caused it?

There are several reasons.  Most of all, state government took the extra tax money it got from the prosperity of the 90s and used it to create new programs, new entitlements, and new long-term obligations. 

Oregon's ruling elite have a big appetite for clever new ways to spend other people's money, usually without accountability.  (Of the 13 largest state agencies, 11 still have no internal audit function to safeguard our tax dollars from waste, fraud, and abuse.)

The Oregon Health Plan is a prime example.  Originally promised as a way to spend less, OHP quickly became a vehicle for politicians to posture, to show how much they cared, through the symbolism of spending a lot of money.  The more you spend, they believe, the more you care.  Over a surprisingly short period of time, OHP's costs skyrocketed.  More and more people were added to it, by politicians seeking to buy votes with taxpayer-financed favors.  As OHP costs quickly spiraled out of control, politicians started to try to force doctors to pay the difference - soon most doctors refused to even treat OHP patients. 

All the early promises for OHP went unrealized.  Most were never even measured in any formal way.  The promise was, more people covered at lower cost.  The reality is, fewer people covered at greater cost.  There is some possibility that OHP will simply collapse under its own weight, and Oregon will revert to standard Medicaid.

Doom and Disaster 

As the economy slowed and state budgets began to really tighten for the first time in a decade, politicians and politicized agency heads began to cry out that the sky was falling.  They set out to make sure that their most vulnerable (and thus most photogenic) clients were the first to be hit by budget cuts.  In one famous example, a man needing $13 a day worth of anti-seizure medication was cut off; he soon had a massive seizure and went into a coma.  The resulting hospital stay cost the state over $1 million.  But the agency that couldn't afford $13 a day somehow managed to afford expensive new computers and personal computer upgrades that its own experts said they didn't need, and most outrageously of all, new $500 office chairs.  They literally put their own asses ahead of their clients.

One of the cruelest tactics has been to fund K-12 education last, after all the more questionable programs have been fully funded.  If you know you’re going to run out of money, you can take either of two approaches - you can fund the important things first, and leave your lower priority items to fight each other for the scraps, or you can fund your least important programs first, and dramatically run out of money for cops, courts, the elderly, the vulnerable medically needy, and the kids.  Oregon regularly takes the second approach. 

In the 2003 general session, a move was made in the Oregon Legislature to fund K-12 education first, get it fully funded, and then fight over what remained.  This move was opposed by the political Left.  This makes no sense if the Left really cared about K-12 education being fully funded.  But it makes perfect sense if they want to use kids as weapons to gain higher taxes.  The average voter will not stand to have his taxes raised just so we can keep the state’s inefficient motor pool from being privatized.  But the average voter might be willing to pay higher taxes for the sake of the kids.  Therefore, the Left’s cynical calculation goes, we always fund K-12 education last, we always run out of money, and we always cut the schools first.  That pattern has held firm for years now, and it has always been led by the Leftist apologists for expansive state government.

Tax Structure or Spending Structure?

Now the mantra of the big tax interests is that Oregon needs to “restructure” its tax system - that we have a “volatile” tax base that causes wild swings in tax revenue.  This generally means that Oregon supposedly needs a sales tax.

That is nonsense. 

No restructuring - not a sales tax, nor any other new tax - is going to rein in spending.  As long as state government spending grows 50% faster than private income, the problems will continue. 

The only answer to over-spending is to stop over-spending. 

Other cities, states, and even whole countries have managed this trick.  We have lots of examples to follow.  From the nation of New Zealand to the state of Colorado to the city of Indianapolis, we are surrounded by examples of how to do better.  We could slash our spending and cut our taxes while increasing the quality of the essential services the state delivers - if we want to do the hard work to get there. 

All that is lacking is the political will to make it happen.  A “no” vote on Measure 30 will help create that political will.
 

Tom Cox is president of Cox Business Consulting, Inc., an Oregon based management consultancy, and is chairman of the Libertarian Party of Oregon.  He was the only candidate for governor in 2002 to release a state budget.

© 2004 Tom Cox