Revenue Measures 66 & 67

1. Revenue Measures 66 & 67 Corporate / Individual Income Tax Ballot Measures Election Date: January 26, 2010 Based on information presented at COSA 10-9-09 This factual presentation was reviewed by the Oregon Secretary of State’s Office.

2. How did legislators balance the state budget? • The Legislature filled the projected 2009-2011 state budget gap of $4.026 billion through: • Budget Cuts $1,994 million • Federal Stimulus $ 978 million • Additional State revenue $ 801 million • State Reserves $ 255 million Source: Legislative Office Research Report #6-09 Pg. 5 Sept. 2009

3. What are the measures on the January 26 ballot? • To balance the state budget, the 2009 Oregon Legislature reduced spending, and passed two bills to raise revenue. These have been referred to the ballot by referendum petition. -- Measure 66 would increase some personal income taxes. -- Measure 67 would increase some corporate income taxes.

4. How much would the tax measures raise? • Measure 66 would raise an estimated $472 million for state services. Measure 67 would raise an estimated $261 million for state services. • These funds were included as part of the 2009-2011 state budget. Source: Ballot titles, Measure 66 & 67.

5. What happens if the measures are approved? • A yes vote on Measure 66 would uphold the personal tax measure, raising an estimated $472 million for state services. • A yes vote on Measure 67 would uphold the corporate income tax measure, raising an estimated $261 million for state services. Source: Ballot titles, Measure 66 and 67.

6. If voters approve Measure 66, what would the impact on Personal Income Taxes be? • Personal income taxes would increase for 2.5% of Oregonians. • This measure would place a tax increase of 1.8% to 2% on any income above: -- $125,000 for individuals -- $250,000 for couples filing jointly Source: Legislative Office Research Report #6-09 Pg. 12 Sept. 2009

7. What services does the state fund? • State funds are used education, human services, public safety, and other services. Source: Oregon Department of Revenue Web site

8. What would happen if the measures are not approved? • A novote on Measure 66 would overturn the personal tax measure, leaving a state budget shortfall of approximately $472 million for the 2010-11 budget year. • A novote on Measure 67 would overturn the corporate income tax, leaving a state budget shortfall of approximately $261 million for the 2010-11 budget year. Source: Ballot titles, Measure 66 and 67.

9. What is the impact on corporate income taxes if voters approve Measure 67? • Corporations would pay an additional 1.3% on profits over $250,000 in 2009 & 2010. • That would be reduced to 1% in 2011 & 2012. • Starting in 2013, the additional tax would be reduced to 1% and will only apply to profits over $10 million. Sources: HB 3405 and Legislative Office Research Report #6-09 Pg. 12 Sept. 2009

10. How would this change the corporate minimum tax? • This bill would raise the corporate minimum tax to $150 for corporations with revenues of less than $500,000. • Corporations with revenues of more than $500,000 would pay about one-thousandth of their Oregon revenue in taxes. Sources: Oregon Corporate Estate and Income Tax, 2008 edition. Oregon Department of Revenue, pages 3-14, and Legislative Office Research Report #6-09 Pg. 12 Sept. 2009

11. What’s the history of the corporate minimum tax? • The corporate minimum tax was set at $10 per year in 1931.

12. Oregon Business Tax Comparison • Oregon’s business taxes are currently at 3.7% of gross state product. • A yes vote on Measure 67 would change the percentage to 3.9% of gross state product. • A no vote on Measure 67 would leave the business tax rate as-is. Sources: “Total State and Local Business Taxes” Council on State Taxation, Ernst and Young 2009, and Legislative Office Research Report #6-09 Pg. 18 Sept. 2009

13. How do Oregon’s business taxes compare with other states? • Neighboring states (Gross state product percentages) • Washington: 5.5% • Idaho: 4.7% • Nevada: 4.6% • California: 4.6% • Oregon: 3.7% Source: “Total State and Local Business Taxes”, Council on State Taxation, Ernst and Young 2009

14. How would Measure 66 & 67 impact K-12 schools? • Of the $733 million raised by both revenue measures, $285 million would be targeted to K-12 schools -- about 40%. • This is part of the $6 billion K-12 school budget for 2009-2011. • If both measures are approved by voters, Oregon schools would receive $6 billion for the biennium. If neither is approved, Oregon schools would receive $5.8 billion. Source: 2009-10 Distribution of Formula Revenue to Districts Oregon Department of Education

15. How would measures 66 & 67 impact North Clackamas Schools? • For North Clackamas Schools, the funding impact this biennium would be $4.4 million for Measure 66 and $2.4 million for Measure 67. • Because 83 percent of the district budget funds salaries and benefits, these areas would likely be impacted the most.

16. How would measures 66 & 67 impact North Clackamas Schools? • If both measures fail, in 2010-11 this could equate to: • 16 fewer school days; or • 109 fewer teaching positions; or • eliminating half of district telephones; all computer & software purchases, all textbook purchases, all library book purchases, 2.5 school days, 6 administrative positions, 28.5 classified positions, & 20 teaching positions. Of course, these are just examples. No budget decisions have been made.

17. How would measures 66 & 67 impact North Clackamas Schools? • This year, we have negotiated concessions equivalent to pay freezes from all employee groups. • If both measures are approved, this would restore two teacher work days and one classified work day this school year. It would prevent budget cuts on the scale we saw last summer.

18. When are ballots due? • Ballots for the vote-by-mail election are due by 8 p.m. on January 26, 2010.