OHCA Spring/Summer 2019

The Oregon Caregiver SPRING/SUMMER 2019 www.ohca.com 14 PUBLIC POLICY T he Oregon Health Care Association (OHCA) generally focuses our legislative advocacy efforts on issues that directly impact long term care providers. However, there are times when we engage on broader issues that will impact not only our members but also the entire state. One of those issues this session is tax reform. Reforming Oregon’s tax system is a high priority for the Governor and legislative leadership with the goal of generating at least $1 billion more in revenue per year ($2 billion per biennium) to invest in early childhood and K-12 education. Taxes in Oregon Oregon is one of five states in the nation without a sales tax and has constitution- ally mandated limits on property taxes. In 1990, voters approved Ballot Measure 5, which reformed Oregon’s property tax system and also shifted the primary responsibility for funding K–12 schools from local property taxes to the state general fund. The state’s general fund receives 80% of its funds from personal income taxes, 4% from corporate income taxes, and the rest from other sources. Because Oregon does not have a sales tax, it has some of the highest personal income taxes in the country, with individuals paying a 9% tax rate on all income above $8,700 (or $17,400 for joint filers) and a top rate of 9.9% on all income above $125,000 (or $250,000 for joint filers). One aspect of being highly dependent on personal income taxes, is that state revenues tend to rise rapidly during times of economic growth and con- versely decline sharply during recession- ary periods. This creates a boom-bust cycle for state resources. Whereas, taxes on consumption, like a sales tax, tend to be more resilient and stable through various economic cycles. The state general fund this biennium is projected to be approximately $24 billion for the next two-year period, or roughly $12 billion a year. The state receives additional funds from fees, fines, and federal funds. These funds pay for critical public resources for Oregonians like education (early childhood, K–12, community colleges and universities), health care, human services, public safety, and others. Each biennium, OHCA competes for scarce resources in the state budget to fund Medicaid for long term care services and supports. These efforts are going to be more challenging in the years ahead when the economy inevitably takes a downturn and as demographic growth puts more pressure on the human services’ budget. Oregon Legislature Tackles Revenue Reform and School Funding By Phil Bentley, J.D., Oregon Health Care Association 2019–2021 Oregon General Fund Resource Sources 80% 4% 5% 6% 1% 1% 3% Personal Income Taxes (80%) Carry Over (6%) Lottery (5%) Corporate Income Taxes (4%) Other (3%) Estate Taxes (1%) Tobacco Taxes (1%) Source: 2019–21 Governor’s Budget, https://oregon.gov/das/Financial/Documents/2019-21_gb.pdf