February 12th, 2013 | by NIGEL JAQUISS News | Posted In: Politics, Schools, Legislature

Report: State Government is Fat, Lousy at Collecting Taxes

     
Tags:
cash-l

A report released today says Oregon's state government has too many managers and does a terrible job of collecting income taxes compared to other states and the federal government.

Often, such reviews of government waste and inefficiency come from right-leaning groups. But today's deep dive into the workings of the state comes from a bunch of public employee unions and non-profits such as AARP and PTA-Oregon and the Oregon Health Care Association.

The report contains some interesting metrics on what it says is state government's bulging middle-management layer and its failure to collect income taxes owed—missing out on millions of dollars in potential revenues.

The report says state agencies are making progress toward complying with new state laws requiring that agencies with more than 100 employees maintain an 11 to 1 or better ratio of management to line staff, but there are still plenty of savings to be had.

"If the work continues and a 1 to 11 ratio is achieved, the estimated savings for the 2013-15 biennium could be as much as $2.8 million/month (General Fund). That’s more than $66 million over the biennium, if agencies continue their work to reach the 1 to 11 ratio. $66 million could fund more than 300 full-time teachers for the biennium."

On income taxes, the report says Oregon has an 18.5 percent "tax gap," which is the difference between personal income taxes owed and the amount the state collects. For comparison, the report says, the tax gaps in Idaho and California are just 11 percent. Collecting what's owed could eventually bring in hundreds of millions of new revenue.

Here's the meat of the tax gap issue:

"We believe that reducing the Oregon personal income tax gap to near the IRS level of 15% over the next three biennia is an attainable goal if there are resources and a commitment from every level of government. If the agency reduced the tax gap by three quarters of percentage point during the 2013 – 2015 biennium to 17.75% (still well above the tax gap faced by other states and the IRS) it could create an additional $101 million for the biennium. Reducing the gap an additional 1.25% each following biennium over the next two biennia would make Oregon’s rate 15.25%, slightly higher than the IRS rate of 15%, by 2019. By not focusing on this in the last two years, the state lost hundreds of millions that could be available today to fund services. Reducing the tax gap to 15.25% would yield an additional $945 million to the General Fund by 2019."
The purpose of the report is to get more money into direct services, such as classroom teaching.

"Legislators are looking at many places to find funding for schools and basic priorities like health care. One of the first things they should do is make sure that we're collecting the money that's actually owed to the state, and that means improving collections and increasing enforcement of tax cheats. We're way behind other states and the IRS in terms of collecting what is owed, and the problem has only gotten worse in the past year, growing by $184 million just in 2012," says Otto Schell, Legislative Director of the Oregon PTA. "If we close the gap by just a fraction of a point, we can raise $100 million over the next two years for our classrooms and senior services. That's the equivalent to a week of school for every K-12 student in the state."
 
  • Currently 3.5/5 Stars.
  • 1
  • 2
  • 3
  • 4
  • 5
comments powered by Disqus
 

Web Design for magazines

Close
Close
Close