Kitzhaber backs tax hikes; would look at changes

The Oregonian: Former Oregon Gov. John Kitzhaber said Wednesday that he supported the tax hikes passed by the state Legislature this year, but he said he'd be willing to look at making modifications sought by the business community if he is elected governor again next year. His tax stance was not surprising since he repeatedly opposed actions during his two terms as governor that would cut deeply into state services, which he said would happen again if voters reject the $733 million tax package.

In addition, the state's major public employee unions are leading the defense of the tax hikes - and they will also be a key funding source for Democratic candidates. At the same time Kitzhaber sought to also reassure the business community by saying he appreciated that they tried to come up with a compromise tax package they could support, he said that he was willing to work them on changes. Sandra McDonough, the association's president, said Kitzhaber's comments would not affect the determination among many in the business community to defeat the tax measures. "We've come way too far down the road" to talk about letting the taxes pass in exchange for a later conversation, she said. That kind of discussion "is exactly what should have happened in May or June" during the last Legislative session, she added.

Kitzhaber also showed at points that he has indeed been out of the political mix for years. He talked about having a "one-day special session" to deal with the budget hole if the tax measures are defeated in January. However, the Legislature in 2008 began the practice of meeting regularly in February during even years, and leaders said they would deal with any budget problems then. Kitzhaber also referred to the Legislature's decision to expand health care for children as having been finance by tobacco taxes. That had been proposed before, but this expansion was paid for by a tax on insurers and hospitals.
Kitzhaber told the business group that, "I'm not going to support creating a $700 million hole in the general fund in in the 09-ll biennium period."  However, he added, "if there are legitimate concerns about whether or not certain portions of it should be sunsetted, if there are concerns about overall tax equity, those should be done in the context of a full legislative session." 

Later in the morning, at his press conference at the EcoTrust Building, Kitzhaber added: "I don't see any positive outcome from this ballot measure fight. We are going to create enormous divisions and polarizations between business and labor, which are two of the key coalitions that have got to come together if we are going to come out of this recession whole." Several business groups are leading a campaign to refer the $733 million in tax hikes to a Jan. 26 ballot. One measure would raise corporate taxes while the other would raise income taxes on higher income individuals. Business leaders in particular wanted the new taxes - with the exception of a corporate minimum tax - to end after two years, but legislators instead decided to keep some of the taxes permanent.

Sandra McDonough, the association's president, told Kitzhaber that some businesses would be forced to lay off workers to pay for additional taxes. Kitzhaber responded that he didn't disagree with what she said, but he added, "Is a Bill Sizemore-type response to this problem what you want to do?"  Sizemore is a conservative activist who has sponsored several ballot measures and who ran against Kitzhaber in 1998. Kitzhaber also said that "we're going to lose jobs" no matter how the election goes - either in the public or private sector.

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