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THE DAILY ASTORIAN • FRIDAY, MARCH 30, 2018
Rare loss from tax law leads
to political standoff in Oregon
By TOM JAMES
Associated Press
SALEM — President Don-
ald Trump’s federal tax over-
haul is a short-term boon for
most states, but one is set to
miss out entirely: Oregon.
Instead of a bonus, Oregon
faces a loss of $217 million in
the two years after the over-
haul goes into effect, the larg-
est of any state that has revealed
its predictions. Democrats cre-
ated a plan to avoid losing hun-
dreds of millions of dollars, but
Republicans are using it to try
to make political inroads in this
deep blue state.
The Democratic-controlled
Legislature passed the pro-
posal after a bitter argument,
but weeks later is still awaiting
action from Gov. Kate Brown,
who has expressed hesitation
about her own party’s plan. She
faces re-election in November,
and Republicans said the divi-
sive proposal is one of their
main tools against her.
State Rep. Knute Buehler, a
leading Republican candidate,
said it amounts to “a massive
tax hike.”
The federal tax law that
sparked the fight will mean
extra money for most states.
It sets up Maryland, Minne-
sota, New York and others for
increases of a quarter-billion
dollars or more and is estimated
to give some increase to 14
other states and the District of
Columbia, according to an anal-
ysis by the conservative Tax
Foundation of the 20 states that
have made revenue forecasts.
But Oregon is left out, and
the political debate over how
to respond has heated up. The
state Republican Party claims
that the Democratic fix amounts
to blocking a tax break for small
businesses, while Democrats
and nonpartisan state econ-
omists say it would not raise
state taxes from what they were
before the Trump overhaul.
Unlike most states, Ore-
gon takes into account federal
deductions when it calculates
residents’ state taxes. Many
other states copy information
from federal tax forms to cal-
culate state taxes, but exclude
federal deductions. The Trump
tax overhaul also created a large
new U.S. deduction.
As a result, some Oregon
residents would benefit from
the new U.S. deduction twice:
Once on their federal taxes, and
once when it gets copied onto
their state taxes, effectively
lowering them, too. In the two
years after the overhaul takes
effect, state economists fore-
cast a $117 million loss from
tax changes, including the new
deduction, and an additional
$100 million loss from a second
provision of the overhaul.
Eventually the effect tapers
off — by 2021, the impact of
the overhaul turns positive,
according to a state economist’s
report.
Six other states calculate
their taxes like Oregon. But only
two are expecting net losses —
North Dakota and Montana,
said Jared Walczak, a Tax Foun-
dation analyst. Officials in both
have said the losses are likely
to be smaller than Oregon’s, at
least in the initial years. Some
of the others take losses from
the deduction, but see them can-
celed out by gains elsewhere in
the Trump overhaul.
Giving residents in a few
parts of the country a break
on their state taxes was likely
not intentional, said Richard
Auxier, a tax researcher at the
Brookings Institution who fol-
lowed the drafting of the federal
overhaul. The deduction caus-
ing Oregon’s loss was added at
the last minute.
“I think the people in Con-
gress thought, ‘that’s the states’
problem,’” Auxier said.
The debate over how to
respond turned heated in Ore-
gon’s Legislature earlier this
month and has since spilled into
the gubernatorial primaries.
The Democratic plan would
not interfere with claiming the
federal deduction but would
block it from carrying over
onto residents’ state taxes. But
Republican and Democratic
lawmakers were divided over
whether blocking the deduction
amounted to a tax increase.
“No one’s tax bill will
change if we pass this,” Dem-
ocratic Rep. Phil Barnhart said
during debate.
Republican lawmakers said
that because state laws were
intended to copy federal rules,
blocking the new discount sin-
gled out small-business owners.
“We’re telling them, ‘you
can’t have your tax break,’”
Republican Rep. Julie Parrish
said.
Sue Cody/The Daily Astorian
An increase in license fees is planned for 2021.
Wildlife officials might drop
fee hikes for hunting and fishing
Associated Press
MEDFORD — State
fish and wildlife officials
are considering dropping a
fee increase for Oregon fish-
ing and hunting licenses that
takes effect in 2021.
The Oregon Department
of Fish and Wildlife also
may roll back some fees next
year after revenues exceeded
expectations, the Mail Tri-
bune reported Thursday.
The department is draft-
ing its next two-year budget,
which includes options to cut
the fees or enact the increases
as planned and direct that rev-
enue toward enhancing cur-
rent programs.
Other possibilities for the
Pick
The agency is also consid-
ering requesting general-fund
money form the Legislature
to expand certain projects.
Under this option, the agen-
cy’s budget of about $375 mil-
lion would increase to about
$420 million, Fuhrman said.
Despite what the agency
decides for the next budget,
it would likely seek a license
fee increase in a later budget
cycle, Fuhrman said.
The agency is scheduled
to begin public meetings
on its draft budget proposal
next month. A final proposal
will be sent to the governor’s
office during the summer, and
it will go before the Legisla-
ture next year.
WANTED
Volunteer
of the
budget include cutting some
2019 costs for licenses, which
were increased under a three-
step fee hike enacted by the
state Legislature in 2015.
“We’ve said if we ever
have an opportunity to roll
back our fee increases, we’d
do it,” said Michael Fin-
ley, chairman of the Oregon
Fish and Wildlife Commis-
sion. “Right now there’s good
intent to do that, but it’s really
preliminary.”
About $6 million would be
added to agency’s budget if it
seeks to keep the fee increases
intact, said Roger Fuhrman,
administrator of the depart-
ment’s Information and Edu-
cation Division.
Week
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