Kitzhaber backs Oregon tax increases

SALEM — Democratic gubernatorial hopeful John Kitzhaber says he supports the Oregon Legislature’s $733 million tax increase. But Kitzhaber says he also would be open to a discussion of modifying those taxes in a future legislative session.

It’s likely that a referendum campaign by opponents will force a January election on the tax increases on high-income households and corporations.

Kitzhaber, who served as governor from 1995-2003, says he does not think it would be responsible to repeal those budget-balancing taxes, which are meant to protect schools and other state services from cuts.

However, Kitzhaber says if the voters uphold the tax hikes, it might make sense to have the 2011 Legislature look at possible changes in the taxes.

Business groups had wanted the tax increases to be temporary, but the Democratic majorities in the House and Senate made some of the taxes permanent.

Regardless of the outcome of the January special election, the tax hike could become an issue in next year’s governor’s race.

The three announced Republican contenders — state Sen. Jason Atkinson, former businessman Allen Alley and former legislator John Lim — all oppose the tax hikes.

“It shows a clear delineation between the two political parties,” Alley said. “There is a big difference. I’m going to be talking about why we shouldn’t have supported those taxes in the first place.”

Kitzhaber, the former two-term governor who’s hoping to make history by reclaiming the office in the 2010 election, noted that he had no role in crafting the $733 million tax package.

“I wasn’t there when this was done; I wasn’t a party to it,” he said in an interview. “But repealing it is not the answer. Repealing this measure without a plan for how you deal with the fiscal consequences is just not responsible.”
At the same time, Kitzhaber noted that business groups and even some Democrats opposed making some of the tax hikes permanent.

At one point, Democratic Sen. Mark Hass of Beaverton voted against the package, saying the tax increases shouldn’t last beyond four years. Hass ended up supporting the tax hike after Democratic leaders advanced legislation saying that after four years any extra revenue gained from an increase in the corporate minimum tax will be directed to the state’s rainy day fund.

Kitzhaber said that if voters approve the tax hikes — and he’s elected the next governor — he would be open to a renewed debate about the tax package.

“If we want to have a discussion about modifying or sunsetting portions of it, it should be done in the context of the next full session of the Legislature in 2011, where we can fully weigh the consequences,” Kitzhaber said.

While Republicans say they plan to make an issue of the tax hike in the governor’s race, Portland pollster Tim Hibbitts said he’s not sure it’s going to play a big role.

“It could be a factor, but I think it is likely to be more of an issue in legislative races” with Republicans targeting swing-district Democrats who supported the taxes, Hibbitts said.

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