Business plan envisions new business tax combined with state cost cuts to benefit education
Gov. Kate Brown (from left); Lisa Vance, Providence Health & Services chief executive; Maria Pope, Portland General Electric chief executive; and Julia Brim-Edwards, Nike senior director, discuss Oregon’s biggest challenges Monday at the Oregon Leadership Summit in Portland. (Photo by Jake Arnold, OSBA)
Panelists and presenters at the 16th Oregon Leadership Summit on Monday spoke passionately about the need for increased education spending for children, for Oregon’s future and for the good of Oregon businesses. Discussions of revenue reform and cost containment, though, acknowledged the reality that legislative supermajorities have put Democrats in the driver’s seat for Oregon tax policy and they can raise taxes without Republican or business support.
The Oregon Business Plan -- a joint venture of the Oregon Business Council, Oregon Business & Industry and the Portland Business Alliance – brought about 1,200 attendees to the Oregon Convention Center in Portland.
“It’s encouraging to hear a wide, diverse group of folks from around the state talking about making a significant investment in education,” said OSBA Executive Director Jim Green, a panelist at the event.
The summit, themed as “Time to Act,” addressed issues ranging from affordable housing to Medicaid, but much of the day was focused on education-related concerns.
“A key purpose of the fiscal reforms envisioned by the Oregon Business Plan is to generate ample and stable funding so Oregon students can achieve success,” the plan’s fiscal initiatives report says.
The plan points out the volatile nature of Oregon’s income-tax reliant system and recommends the personal kicker, a refund when tax collections exceed projections, be redirected to a reserve fund. Projections of a $724 million personal kicker come at the same time the state faces a $623 million budget shortfall for current service levels. The corporate kicker, projected to be $230 million next year, was redirected to K-12 education by voters in 2012.
To reform revenue, the plan proposes a business activities tax coupled with reductions in personal and business taxes. A business activities tax would be based on business revenue minus purchases from other businesses. The business community favors revenue reform that would apply to a broad range of businesses and would be less affected by economic upheavals and that would lead to measurable improvements in education and health, according to the plan.
Education advocates had a voice at the table throughout the day.
Gov. Kate Brown opened the discussions on stage with a panel that included Julia Brim-Edwards, a Nike executive and Portland Public Schools board member. Brim-Edwards helped launch the Coalition for the Common Good, which has brought together public employee unions, long-term care providers and business representatives to push for a tax package in 2019. The group has avoided tying new revenue to Public Employees Retirement System cuts, a major component of most cost-containment conversations.
After Brown made a plea to “fund our education system at a level our children deserve,” Brim-Edwards made the business case for increased education spending.
A top-notch education system is not only key to a skilled workforce but is also important for attracting workers and executives to move to Oregon, Brim-Edwards said. She said investments are needed to drive education improvements, including a longer school year, class-size reductions and more early learning and career and technical education.
Sen. Arnie Roblan, D-Coos Bay, wearing a tie with school buses on it, opened a panel discussion by members of the Joint Interim Committee on Student Success with a short version of “A Time to Listen.” The video, part of “The Promise of Oregon” education advocacy campaign that OSBA began in 2014, explains recent education funding history and why Oregon schools need revenue reform. Both the short version and the full video can also be viewed at The Promise of Oregon website.
“I felt it captured what we wanted to talk about,” said Roblan, Student Success Committee co-chair.
Committee members discussed targeted education spending and accountability and said their recent public hearing tour of the state revealed a deep need for more student support and school programs.
OSBA’s Green was part of an afternoon session on PERS reforms, a key ingredient of the Oregon Business Plan. The average PERS rate for Oregon school districts for 2019-21 is expected to be more than double the rate for 2015-17, about 29 percent before including side accounts.
Green warned that although PERS rates are taking a crippling bite out of school finances, districts must still offer an adequate retirement to retain staff. About a third of school employees are eligible to retire today and districts don’t have enough replacements in the pipeline if they suddenly bolted in the face of PERS reforms, Green told the crowd.
Oregon also needs a compensation plan that is competitive with Washington’s increased spending on teachers, he said.
“If we’re going to make changes to PERS, we need to be smart about it,” Green said. “We need to think about consequences.”
The Oregon Business Plan promotes a mixture of ideas to bring pensions for longer-served public employees in line with more recent hires’ benefits and to move more employees into a defined contribution plan that is less expensive for employers. The proposals include reinstating employee contributions and offering an early retirement plan that would allow workers to collect retirement while still working for five years, reducing public employers’ overall pension liability.
Public policy consultant Tim Nesbitt said that business’s cost containment goal was not to take money out of the state budget but to redirect it to education.
- Jake Arnold, OSBA
jarnold@osba.org