PORTLAND – Oregon voters approved two measures raising taxes on businesses and the wealthy Tuesday, averting budget cuts legislators said would have meant larger classes in the schools and less help for the poor and the elderly.
Both Measure 66, which raises rates on people earning well above six figures, and Measure 67, which increases business taxes, had 54 percent approval. More than 80 percent of the vote had been counted.
It was a victory for public employee unions and the Democratic majorities in the Legislature that imposed the taxes last year, arguing that deep cuts in school aid and social services were the alternative.
It was a defeat for business groups that sponsored a referendum drive to put the taxes to a statewide vote, saying they would cost a state with 11 percent unemployment even more jobs.
The revenue from the new taxes, $727 million, is expected to account for about 5.5 percent of the general fund in the next two-year budget.
“We know now that Oregonians heard the message of what these measures were about – supporting the most vulnerable,” said Elana Guiney, a spokeswoman for the pro-tax group Vote Yes for Oregon.
The most recent reports had labor outspending business in one of the state’s most expensive issue campaigns. Common Cause of Oregon said Guiney’s group raised $6.85 million to the $4.55 million raised by Oregonians Against Job-Killing Taxes.
“The bottom line is the unions bought the election,” said State Republican Chairman Bob Tiernan. “It’s going to be a sadder day as more businesses leave the state and more don’t want to come here.”
Passage of the measures spares the Legislature a month of budget-cutting when it starts a four-week session Monday.
“Even with this result, we still have some challenges before us,” Gov. Ted Kulongoski said in a statement. “It is going to be a slow-growth recovery from this recession for Oregon and the entire nation.”
Approval of the two tax increases ran counter to the state’s history of turning down tax increases.
But Democrats who have commanding majorities in the Legislature said they were careful to target the upper 2 percent of individual taxpayers and the businesses with the biggest sales, many based out of state. The increases will be reflected in returns filed this year.
The state’s top income tax of 9 percent rises to 10.8 percent on taxable income above 125,000 for single filers, $250,000 for joint filers, and to 11 percent for those with twice those amounts in taxable income.
Prominent among the business tax increases is one that affects many companies: The annual minimum $10 – unchanged since it was created in the 1930s – goes up to $150.