The present underfunded situation of education in Oregon can be traced to Ballot Measure 5 that was passed in 1990. For review, passage of Measure 5 shifted the primary funding of education from property tax to state income tax. Let’s look briefly at Oregon’s tax structure to gain perspective…
Overall, taxes on Oregonians are low when compared to the rest of the country. In the most recent survey, Oregon ranks 45th in the 50 states for state and local taxes as a percentage of income. The public services that receive the largest portions of the combined local, state, and federal tax dollars for a typical family are:

1. K-12 public schools: 18.3%
2. Social Security: 12.5%
3. National defense: 11.1% (not including veterans benefits)
4. Medicaid and related programs: 8.9%
5. Public safety: 8.6% (prisons, law enforcement, courts, fire protection)
6. Medicare: 6.7%
7. Interest on the federal debt: 4.1%
8. Universities and colleges: 3.8%
9. Transportation: 3.3% (streets and highways)
10. Veterans benefits: 1.5%

Before 1990, Oregon had used a combination of local property tax money and state income tax money to pay most of the costs of public schools, with property tax providing about two-thirds of the total cost. This worked for over 80 years, but the distribution of property and businesses created an uneven base of funding on a per-student basis. Ballot Measure 5 has changed the ratio so that state income tax provides three-fifths of school funding and about one-fourth comes from local money. Equalization of funding is provided by the Legislature in a mix of state dollars and property taxes, federal timber payments, and common school fund earnings to achieve a target amount per student.
A common misconception of taxation is that when the government takes money in taxes, it is taken out of the economy and doesn’t contribute to economic activity. That money goes back into the economy in the form of salaries for teachers, payments to health care providers, etc. and it is still being spent and contributing to overall economic activity.
Decisions regarding business location are rarely based on taxes. A 1993 study by the Oregon Department of Economic Development concluded that there is little evidence that corporate tax breaks are effective in promoting economic development. Labor, transportation, infrastructure, and quality of life have proven to be more important factors.
Oregon’s economy has also experienced wild swings during unchanging periods of state tax policy, casting doubt on the impact of taxation to a strong or weak economy.
While no one would disagree with keeping taxation to a necessary minimum, at the same time we should consider the words of Justice Oliver Wendell Holmes: “Taxes are what we pay for a civilized society.” The most important investment Oregon can make toward its economic well-being is stable and sufficient financing of public education. The bumper sticker sums it up best: “If you think education is expensive, try ignorance.”
DANGER: Measure 48, the proposed TABOR Amendment, could negatively impact school budgets. Log on to http://www.defendoregon.org/get_involved/ to brighten the future of Oregon students.

This entry was posted on Thursday, September 21st, 2006 at 8:28 pm and is filed under Education, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.