The Oregon State Legislature has received from Congress a $2.6 billion grant under the American Rescue Plan Act to help it cover losses in tax revenue resulting from the COVID-19 pandemic, and to pay for special projects made necessary by the pandemic and other emergencies that have come up over the last few years. This money is a rare windfall for the state, an amount unlikely to be seen again in the next decade – possibly in the next generation. What is the best use the state could make of this money?
It should be spent quickly, because the state is in need on a dozen fronts right now. It must be spent by 2024, because the ARPA says otherwise Oregon will lose the money.
Those who are most passionately devoted to Oregon’s “kicker” rule, unique-in-the-nation for being enshrined in our Constitution, would say to simply divide the $2.6 billion among the state’s 2.6 million adults and let them each spend their $1,000 as they pleased. That would certainly get the money spread widely across the state, and ensure it was spent quickly and would stimulate the economy in a hurry. Some would call it a brief test (though probably too brief to be scientifically useful) of the Universal Basic Income concept. Since the money won’t be replaced once it’s gone, though, perhaps it should be handled more cautiously than that.
The money could be used to fill out the state’s budget while a new tax schedule is eased into place, so that people whose income is reduced this year because of the pandemic won’t be struck by too heavy a tax bill all at once. That means that the tax code could be rewritten dramatically without anyone’s tax bill having to increase by a lot this year, when it might be especially difficult to pay.
A plan has already been written in the Legislature which devotes $1.3 billion to existing services such as early-childhood education, college-education grants for low-income students and health-care subsidies for low-income Oregonians. It also applies $780 million to new services, without specifying what they will be. The Oregon People’s Budget has a list of possible new programs which might be funded out of that part of the money, such as child care, housing support and increased income support. Some people would call these “handouts,” but the authors of the People’s budget prefer to call them “investments”.
Again, though, that is only what would be done with the money from the ARPA – how would the Legislature pay for these services in later years? The existing tax structure has been examined and found to be deeply flawed. Even without a tax as obviously regressive as a sales tax, which Oregonians have resisted for so many years, the wealthiest Oregonians still pay the least as a fraction of their total income and their total assets, which is the opposite of what Oregon’s graduated tax code was intended to produce.
Whether the Legislature, shaken by walkouts and right-wing terrorism, will be able to reform the distorted tax code this year or in the next biennial session, is an open question. Some people would paraphrase Sir Winston Churchill, and say that you can always count on Oregon’s Legislature to do the right thing…after they’ve tried everything else. Time will tell what they will actually do in this case.
By John M. Burt