SALEM, Ore. (AP) — The Oregon House on Wednesday approved the first piece of a five-bill package aimed at lowering public-employee pension costs and raising new revenue for education, mental health and services for seniors.
The House voted to raise taxes for some individuals and businesses and lower them for others. It’s the most politically complicated because revenue-raising measures require a supermajority and because many lawmakers are reluctant to go on the record supporting a tax increase, fearing opponents might use it against them in a future campaign.
It passed after it initially fell short of the three-fifths supermajority. After a long delay, three Democrats changed their votes and it passed with a bare minimum of 36 votes.
Gov. John Kitzhaber has been trying for nearly a year to build support for lowering public-employee pension costs. To make that palatable in the Legislature, the pension cuts were packaged with tax changes and a measure prohibiting cities and counties from banning genetically modified crops.
Legislative leaders and Kitzhaber have agreed that the bills will live or die together, so the failure of the tax bill would derail the entire five-bill package.
The tax bill is the most politically complicated.
Higher-income individuals and some businesses with more than $1 million in income would pay a higher tax rate. Cigarette taxes would go up as well. But other businesses — known as pass-through entities because their profits are taxed on the owners’ individual tax return — would pay a lower rate under certain circumstances.
Some Democrats criticized the business tax breaks, which they fear will balloon into an expensive giveaway to rich people.
“This is a tax cut that is hanging an albatross around Oregon that we may not be able to get rid of,” said Rep Jules Bailey, D-Portland.
Proponents, however, said it would provide relief for small businesses and spur hiring.
“This is a difficult one, but it’s one I think we will be glad we did in the long run,” said Rep. Tobias Read, D-Beaverton.
The tax measure goes next to the Senate, which is expected to take it up promptly. If the Senate approves, both chambers will take votes on the other pieces of the compromise.
Copyright 2013 The Associated Press.