ms Thoughts on Tax Program; Legislatuire D rh P i sagir mm mi
.overnor
Ml
People Must Speak
On New Tax Form,
Patterson Declares
Ignoring Referendum
Said Unsound Finance
By ERIC ALLEN JR.
.Mail Tribune City Editor
Salem The problem of state
finance and that means taxa
tion is the central problem of
this" 48th session of the Oregon
Legislature. And it is also one
of the problems uppermost in
the mind of Gov. Paul Patter
son. Governor Patterson outlined a
tax program in his legislative
message which did not meet with
the approval of a lot of mem
bers of the legislature. But many
of them hesitate to' quarrel
openly with him on the problem,
His principal suggestion was a
repeal of the provision in state
law which permits federal in
come taxes to be deducted from
income before state income taxes
are figured.
Small Chance
It is .pretty generally con-
ceded that this proposal has
small chance of passage at this
session.
Because of the fact that con-
troversy is raging about vir
tually all types of tax proposals,
including a sales tax, I asked
him to outline his basic feelings
on the matter.
The governor believes that
Oregon is now at a point where
income from present methods of
taxation are reaching the limits
of the ability of the taxpayers to
pay.
"At the same time," he said,
I feel that under the state con-
stitution, the people themselves
must speak as to what new type
01 tax they want.
Not Sound Finance
"For the legislature to make
this decision, and to rely on a
new base, thus subjecting state
.. income for the succeeding 18
months to a question, is not
sound public finance. The legis
lature should use present, ap
proved methods of providing a
tax program."
The governor's reference here
is to the fact that each piece of
new tax legislation is subject to
referendum, and traditionally
each such new tax law is re
ferred to a vote of the people.
Such referral automatically
holds up the effectiveness of any
new tax law for-a minimum of
18 months. When urged to go
ahead and write what taxes they
feel are needed, and "let the
chips fall where they may," leg
islators - can reply - that - they
would not be fulfilling their ob
ligations to keep the state going
in the meantime. The sales tax,
for instance, has been defeated
by such a vote five times, and a
cigarette tax has been rejected
several times.)
Should Initiate It
Governor Patterson continued,
"If the people of Oregon want
a new tax (and a sales tax is
the one most commonly men
tioned) they should initiate it,
It takes 250,000 to 300,000 peo
ple to approve a new tax. And
if there are not 20,000 people
who are enough interested to
initiate such 1 a measure, there
would be little hope of its being
approved by a vote of the peo
ple. The governor reiterated
Medford
Tribune
Pages 1-8
MEDFORD, OREGON, FRIDAY, FEBRUARY 25, 1955
Second Section
Icofflomy-MiMed Legislature
leeks Sales Tax Alternative
Salem This is an economy
minded legislature. ?
Seldom in recent years have
senators and representatives
been so conscious of the costs
of government and so deter
mined that taxes shall be in
creased only as absolutely nec
essary. It now appears unlikely that
this session of the legislature
will approve a sales tax, unless
the problem of raising . money
to pay for the state's services
gets worse a lot worse. .
. The action this week of the
ways and means committee - in
voting to make an attempt to
cut some $20,000,000 was just
a symptom of the seriousness
with which legislators view the
overall problem. (Many legisla
tors do not think this cut can
be made without crippling the
state.) ' "
What To Do?
But if the legislators are hot
to approve a sales tax (which,
by the way, a majority of them
probably favors), what will they
do to keep the state operating
in the black?
In an interview, State Sen
Rudie Wilhelm, Portland, chair
man of the senate committee on
taxation, and State Sen. Phil
Lowry, Medford, a member of
the "committee, told of tentative
his statement that the budget
he presented to the legislature is
a good, sound and conservative
one, with no "fat ' left m it. He
pointed out that the department
of finance and administration,
and the budget division have
brought in a basic budget, with
no frills and with no increases
in service.
This, he intimated, may be dif
ficult for the ways and means
committee (which must pass, on
all state spending) to realize,
after many years of taking full
responsibility for line-by-line
checking of each state budget.
If the committee comes to real
ize that only realistic, basic
budgets are going to be present
ed under the new set-up, all they
will have to do is examine the
general policies of the budget,
approve or reject them, and
then bring out those portions
which conform to - the - policies
they adopt.
Would Shorten Session -
This could be done in 30 days,
he said, and shorten the length
of legislative sessions appre
ciably. There are many good, sound
men in this session of the legisla
ture, Governor Patterson -said.
But both the house and senate
are suffering from the lack of
their most experienced leaders
from prior sessions. Many of the
new men are potential leaders
who are now ' "feeling their
way," and pretty much going
their own way, the governor
said. He feels' that more
unity, and sense of direction
through experienced leadership,
are needed..
! plans which they see as a pos
sible and admittedly "stop
gap" solution, at least for this
biennium.
The budget as presented by
the governor calls for the ex
penditure of about $200,000,000,
plus $18,000,000 for new build
ings, both of the institutional
type and for higher education.
The first step would be to pare
this building sum down to a
bare minimum for previously
approved structures, or about
$10,000,000. '
Deficit $55,000,000
.Thus, with an overall spend
ing budget proposed at $210,000,
000, and with expected revenues
at $155,000,000, the deficit to be
faced is $55,000,000.
Senator Wilhelm thinks the
ways and means committee can
cut perhaps $5,000,000 from the
budget without seriously hurting
anyone (although he believes the
proposed $20,000,000 cut is im-
pi3ctic3l)
Resulting deficit: $50,000,000.
, He also feels that estimates of
revenue from state income taxes
for the 1955-57 biennium are
about $5,000,000 too conserva
tive. He would increase the esti
mates by about that amount.
Resulting deficit: $45,000,000.
He also feels that income from
the Oregon Liquor Control com
mission, and from the tax on
insurance premiums, can be in
creased for an overall total of
about $3,000,000 or $4,000,000.
Resulting deficit: $41,000,000
or $42,000,000.
Increase Income Tax
Next, his suggestion would
provide for an increase in the
state personal income tax of
somewhere around 30 or 40 per
cent. Just how this would be
done by an across-the-board
increase, by an increase mostly
in the higher brackets, or some
other adjustment has not been
decided. But it is estimated that
about $25,000,000 could be rais
ed in this manner, perhaps
$30,000,000.
Resulting; deficit:- $11,000,000
or $12,000,000.
Finally, the proposal also calls
for a '3 cents per package tax
on cigarettes, to raise about
$10,000,000.
Resulting deficit: $1,000,000 or
$2,000,000.
That's pretty close to a bal
anced budget.
Two Assumptions
But this whole structure, which
even its advocates admit is pure
ly a device. to get the state by
during the next two years, with
out really facing up to the long
range problem of state finance,
is predicated on two assump
tions: 1. The legislature, on a non
partisan basis, . is determinedly
opposed to the collection of a
state tax on property; and
2: The legislature " will not
pass a sales tax this year, despite
the. fact that it appears a ma
jority of the members favors it,
on principle.
The sales tax, through its re
peated defeats at the hands of
the voters of Oregon, has come
to be a bugaboo to members of
the legislature.
There is an increasing feeling
that sentiment throughout the
state is more favorable toward
a sales tax now than at any
time in the past. There have
been evidence that farm groups,
heretofore unalterably opposed
to such a form of taxation, are
beginning to think of it as a
sound proposition and far bet
ter than an increase in real prop
erty taxes.
Voters Uninformed
But these same legislators also
have the feeling that the voters
of the state are perhaps not well
enough informed on just how
desperate the state's financial
pinch is to go for such a 'new
form of taxation any more this
year than in years past.
And while they haven't said
so publicly, there is the thought
that by cutting down state serv
ices, by juggling and patching
and scrimping, they will create
a public consciousness of how
important state services are, and
of how a basic revision in the
tax structure is more and more
becoming ah overriding neces
sity. All of the foregoing could
be overthrown by other develop
ments during this session, how
ever. Difficulties Seen
Perhaps the ways and means
committee, in going over the al
ready "tight" budget simply can
not, in all conscience, cut it any
more. Perhaps it will be decided
that the building program, in a
state which is growing as rapid
ly as Oregon, cannot safely be
brought down to a bare and
precarious minimum.
If these things happen and
they might these tax planners
may have to throw in the towel
and start over again from
scratch. r'--r .-. -
And if they do, you'll be hear
ing more about that old bugaboo
Sales Tax.
HOLDUP LOOT RECOVERED Loot from the $300,000
jewel robbery in San Francisco was recovered when po
lice opened safe deposit box belonging to alleged "fence,"
James Brumback, who maintains he was duped by the
holdup gang into storing their loot. Shown above after
box was opened are Police Lt. Marty Lee (left), holding
packets of jewels; Dr. Brumback (2nd from left); Police
Capi. James English, seated before $160,000 cash; and in
surance representative M. P. Voorhees (standing right). ,
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Ellsworth Prepares Bill
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Washington (U.PJ Rep. Har
ris Ellsworth (R-Ore.) said yes
terday he is preparing legisla
tion to permit local utility com
panies in Oregon to develop the
power phases of the contemplat
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river.
J
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