House Democrats Push for Rainy Day Fund

By the time you read this, the House Democrats will have moved to pull HJR 53 from Committee for an up-or-down vote on the floor. Why should you care? HJR 53 would set up a rainy day fund for the State to help even out its income in good and bad years. To be adopted, it would have to pass both houses of the Legislature, and be approved in a statewide election.

Given that House Republicans ran on the idea of setting up a Rainy Day fund, with an emphasis on former Rep. Dan Doyle’s “bucket plan,” it is surprising that the issue has not come up during this session. There has not yet been a single hearing in the House focused on this issue.

HJR 53, if adopted, would take half of the ending fund balance at the close of each biennium, plus half of the income tax receipts attributable to capital gains, and place those funds in a Rainy Day fund to be spent when it is raining hard. HJR 53 does not change Oregon’s existing spending limits. Any alternative Republican plan that might come out would set artificially low or arbitrary spending limits.

Why did we choose the provisions in HJR 53? The most variable part of the income tax in Oregon is the capital gains tax. In good years, it may generate several hundred million dollars. In bad years, it generates almost nothing. Income from wages, on the other hand, changes much less in response to the economic cycle. Thus, ending fund balances may also swell in good years.

This measure will help establish greater fiscal responsibility and accountability.

During the time Republicans have controlled the House, Oregon has borrowed over $2 billion just to balance budgets. The popular impression that the House Republicans are fiscal conservatives is completely false. They have foisted this huge debt on our grandchildren, as well as the grossly irresponsible tax kicker, while establishing several billion dollars of tax loopholes for their friends.

HJR 53 will make such abuse much harder to do while protecting schools, health care and public safety from the ups and downs of Oregon’s economic cycle.

Stay tuned…

May 25, 2005 by Phil Barnhart
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