Oregon battle begins as tax increases inked

SALEM – Gov. Ted Kulongoski signed a $733 million tax hike package into law Monday, calling it a “modest” increase on Oregon’s top earners that will protect schools and state programs from budget cuts.

Business groups and anti-tax activists immediately said they would launch a referendum campaign. Campaign spokesmen said they filed papers Tuesday morning and hope to have signature gatherers in the field by the end of the week. They will need to round up 55,179 valid signatures for each of the tax measures to force a Jan. 26 special election.

Passed by the Democratic-led Oregon Legislature, one measure raises personal income taxes for individuals with taxable incomes of $125,000 a year or joint filers at more than $250,000. A separate measure raises corporate income taxes.

Kulongoski said the increases will make Oregon’s tax system more fair while averting deep budget cuts to vital services.

“Middle-class families will not be paying a single penny more in taxes,” the Democratic governor said.

“We are asking corporations and the wealthiest Oregonians to pay their fair share to help protect services we all depend on – education, health care and public safety.”

Opponents called the taxes a “job killer” that will slow Oregon’s economic recovery.

“It will force businesses to lay off workers, cut wages and benefits or close their doors,” said Pat McCormick, spokesman for a coalition of business groups and anti-tax activists who are opposing the tax.

It will be an expensive campaign, McCormick said, with the signature-gathering effort alone costing at least $500,000 and larger amounts planned for the election campaign.

Supporters of the tax, including school activists, human services advocates and public employee unions, said they, too, are bracing for a spendy and hard-fought campaign.

Kevin Looper, a spokesman for the campaign, said he thinks Oregon voters would be willing to approve tax hikes aimed at Oregon’s top earners – both as a matter of tax fairness and to protect services.

“The consequences of having to cut this money from schools, nursing homes and human services would be disastrous,” Looper said.

Tax opponents will have until Sept. 25 to gather valid petition signatures.