How Oregon Democrats Kept a Tax Increase Away From Voters

They outfoxed Republicans to pass a series of end-of-session bills to make a ballot initiative to overturn the tax increase more difficult.

Oregon Capitol. (Justin Katigbak)

The biggest story in Oregon politics this month was something that didn't happen. On July 16, business interests abandoned an effort to repeal the Legislature's $1 billion corporate tax increase to fund schools.

For decades, Republicans referred taxes to voters whenever they felt Democrats overstepped the will of the electorate. When timber executive Rob Freres wrote a $1 million check in June to fund an initiative campaign that would put the tax before voters, a 2020 trip to the ballot seemed inevitable.

But Democrats outfoxed Republicans at the close of the legislative session to pass a series of end-of-session bills to make a ballot initiative to overturn the tax increase more difficult.

Here's what the Dems did.

1. They made it more difficult to collect signatures.

Democrats passed Senate Bill 761, which sets new rules for gathering the tens of thousands of signatures needed for a ballot initiative. Campaigns used to be able to mass-email signature sheets to their mailing lists. Now, they can send the e-sheets only if voters ask for them. In addition, the sheets must contain the full text of the initiative, whereas in the past only a summary was required.

2. They picked who describes the measure to voters.

Dems also passed Senate Bill 116—requiring that if enough signatures are gathered to send the tax measure before Oregonians for a vote, that election must take place in January, when turnout is low and Democrats think they have a better chance of beating back a repeal. SB 116 also gives lawmakers the authority to write the ballot title, typically the responsibility of the attorney general. (The wording of the ballot title often influences whether an initiative succeeds or fails.) That "could well be the kiss of death for it," says campaign finance expert Dan Meek.

3. They made sure the tax wouldn't affect powerful interests.

To finance an initiative to repeal the tax, opponents need big donors. Democrats already made sure some potential opponents were satisfied. Nike, the state's biggest company, supported the tax; state and local business associations agreed to remain neutral. Then at the end of the session, they "fixed" the tax increase so even fewer opponents would be motivated to fight it.

House Bill 2164 included a clarification that car dealerships could pass along the cost of the tax to customers. The bill also clarified that tips to restaurant workers would not be taxed. Lithia Motors and the restaurant lobby have previously fought tax increases, but these fixes were expected to keep them on the sidelines.

4. They required two elections.

Opponents say Democrats added language that would require two trips to the ballot to overturn the tax increase—one in January 2020 and another in November 2020. Two elections would mean two campaigns—and double the campaign bankroll—to repeal the tax. Legislators "have rigged the system so far in their favor that our chances of success at this point are very remote," read a July 16 email from Oregon Manufacturers and Commerce announcing the decision to referendum supporters.

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