Tuesday, February 27, 2007

GOP Fibs Like Mad , Then Kills Rainy Day Bill (Updated)

Right now in the House Chamber (which you can watch on the Oregon Channel and in live stream here {.ram file}, they are debating Engrossed Bill 2707, which seeks to establish a rainy day fund for the state by resecuring corporate kicker proceeds. The Republicans know it's a popular bill, and they've given up any idea of not there not being a rainy day fund.
However, the minority report they're offering opts not to use the corporate kicker, favoring instead a 1% skim from revenue before budgeting, and sharply reducing--by half in the long term--the amount of money that would be kept in reserve, and putting 2/3 majority rules on any spending allocations from the fund.

All that's fine, I suppose--I can see room for disagreement on the amount of money being put away, where it comes from, and what restrictions are placed on how it's spent. But the rationale being used by most of the Republicans I've seen rise to push the minority option is misleading, disingenuous and fundamentally distortive of basic economics.

What are they saying? That diverting the corporate kicker is a "tax hike" that cripplingly takes away money from small business in Oregon--money that "belongs to them." What do I say? Pfffft. Redirecting the kicker is no more a tax hike than having your business fail represents a tax cut--because you don't pay any when you don't show profits.

Here's how it works: the finance people in state government make an educated stab at the amount of revenue Oregon will receive in a particular biennium. It's probably a slightly more exact science than meterology, but it's still inexact--and thus revenues can vary significantly from projections. According to the kicker law, if the revenue projection falls more than 2% of the actual intake, businesses get that "overage" back.

Why did I put "overage" in quotes? Because it's not an overage of revenue over income, but an overage over 2-year-old projections. If you make $10,000 in a year, you'll pay X dollars in taxes. If you make $20,000, you'll pay more. Unless the state GOP is planning to argue that taxation is an illegitimate enterprise, and that the state is not due tax revenue, there's no way it's not legitimately the state money. Or to put it another way, what if you make LESS money than you earlier projected? Do you still pay the tax amount on your projected income, or on what you really made?

It's a load of horse crumbles, and it's bad faith debating in my opinion.

...and now it's a moot point, because the minority version just failed 31-26. The vote to pass the original, majority-backed bill is coming up very shortly.

Update, noon--

Hallelujah! Rep. Phil Barnhart heard exactly the same BS as I did, and smacked it down in the same (but more eloquent) way.

Meanwhile, Rep. Kim Thatcher is whining cluelessly about losing her kicker rebate as a small business owner, again displaying an odd sense of entitlement to money that logically she's not entitled to--and now she's threatening that Intel might leave if we take back the kicker (and then oddly cites them as en example to think about regarding NON-Oregon-based corporations...?)

Update, 12:45pm--
Just as the minority bill failed 26-31, the main bill failed 31-26, requiring 40 votes for passage. Good luck defending your vote on that one, GOP. It's going to be a rough 2008 for you guys, I think.

Update, 2:30pm--
Like I said, a rough 2008. The Democrats aren't ready to forgive and forget:
“For sixteen years House Republicans have failed to lead or deliver on the promise of a Rainy Day Fund for Oregon,” said House Majority Leader Dave Hunt (D-Clackamas County) “Today’s vote is just one more in a long line of road blocks and political ploys used by House Republican leadership to keep a Rainy Day fund from becoming a reality.”

House Democrats have been fighting for nearly two decades under Republican leadership for a real Rainy Day Fund that would ensure funding for schools, health care, public safety and natural disaster recovery but previous proposals have been consistently blocked by Republican leadership. In 2005 alone, House Democrats put forward three specific proposals for a Rainy Day Fund. All were killed by House Republican leadership.

“Without a rainy day fund, the cyclical ‘boom and bust’ pattern will persist, making Oregon one grand casino and our fellow citizens unwilling gamblers,” said State Representative David Edwards (D-Hillsboro). “Because of Republican’s failure today, the fate of our economic stability rests largely on speculation and chance. And worst of all, in periods of recession, the system will continue to be rigged against our most vulnerable citizens—children, the elderly and infirm, the working poor—anyone who relies on essential public services when times are tough.”

In lieu of approving the Democrats plan, House Republicans proposed a minority report that would have saved a half billion dollars less than the Democrats proposal and created a corporate loophole allowing companies earning millions—even billions—to retain their kicker. Republicans claimed the proposal would have supported small Oregon businesses.

But the bill championed by House Democrats had the backing of the state's leading business associations including the Oregon Council of the American Electronics Association, Associated Oregon Industries, Oregon Business Association, Oregon Business Council, Portland Business Alliance and the Smart Growth Coalition.