Oregon tax and carbon measures

30/10/16

Raising the Oregon Corporate Minimum Tax

Oregon has a reputation for being a liberal state, however its government is starved for revenues because corporations have not been paying their fair share. Oregon collects a lower percentage of revenues from corporations doing business in-state than anywhere else in the US, and spends less per K through 12 student than all but a handful of states. Oregon does not have the power to increase taxes through the normal legislative process because republicans in the legislature will not vote for a tax increase.

Measure 97 on the ballot in Oregon this November would rectify this situation and help bridge the gap between reputation and reality. The measure would raise the corporate minimum tax on corporations with more than $25 million in sales in the state from 0.5% to 2.5%. The Legislative Review Office estimates that Measure 97 would increase state revenues by $3 billion per year, or roughly 10%, which the measure specifies must be spent on K-12 education, healthcare, and elder care programs - all of which are terribly underfunded.

This initiative is noteworthy for a number of reasons:

1. There is a strong consensus among progressive organizations in the state that the government is seriously underfunded because corporations have been getting off scot-free. However, although the measure does not affect small businesses - and may even benefit them relative to their larger competitors – the business community in Oregon as a whole tends to oppose this measure. It is predicted that the campaign against Measure 97 this fall will break all spending records in Oregon.

2. Right wing anti-tax campaigns have been successful in many states. They generally take the form of limiting increases in property taxes. This has broad appeal at the ballot box because property taxes can increase even when owners’ incomes are not rising comparably or at all. Polls of likely voters indicate little support for proposals to lift limits on increases in property taxes to solve revenue shortfalls, but indicate strong support for Measure 97 which increases taxes instead only on large corporations.

3. Measure 97 is truly unprecedented. It is not a tax on corporate profits - which corporations have become adroit at hiding - or a general gross receipts tax, as it applies only to some firms in an industry. In fact, only 1051 corporations - less than one quarter of one percent of all businesses in Oregon - would be affected at all, and the Legislative Review Office estimates that over half of the tax would be paid by as few as 50 corporations.

It remains to be seen whether this strategy to defeat underfunding of public services and corporate tax avoidance will prove successful. If Oregon passes Measure 97 this November, progressives in other states would do well to take notice.

Burning coal is the world’s largest contributor to climate change, and the state of Oregon has ambitious goals for reducing greenhouse gas emissions over the next several decades. However, these goals cannot be met without eliminating coal from the electricity sector. More than 30% of Oregon homes and businesses still rely on dirty coal power for energy, and this energy comes from both in-state and out of state plants.

In March of 2016, Oregon Governor Kate Brown signed landmark legislation to transition from coal to clean, renewable energy. The Oregon Clean Electricity and Coal Transition Plan will remove coal from Oregon’s electricity by 2030 and double the state’s Renewable Portfolio Standard to 50% by 2040. The bill will:

• increase the amount of wind and solar energy supplied to Oregon homes and businesses
• attract clean energy investment to the region
• protect ratepayers from the growing financial risks of coal-fired generation
• encourage expansion of electric vehicle infrastructure - a key strategy for reducing carbon pollution in the transportation sector
• bring the benefits of solar power to low income households through an innovative community solar program.

This climate legislation raises the bar for de-carbonizing electrical power in other states. Because the plan includes such a large increase in renewable energy, it prevents Oregon’s emissions from plateauing if there were merely a transition to natural gas, and actually helps to decrease the state’s overall emissions by about 15%.
The renewable energy component of the bill requires utilities to reach
27% renewable power by 2025
35% by 2030
40% by 2035
50% by 2040 – the highest renewable energy percentage in the country.

Natural gas may still have a role to play in the energy mix, but only as a backup resource for wind and solar, not to produce base-load power. Passage of this plan is especially timely since utilities need to decide how they will replace coal plants that are scheduled to close in the coming years.

The plan is also an important step toward electrifying the transportation sector in Oregon. Switching from gasoline and diesel fuel to electrically run vehicles is a key strategy for meeting Oregon’s climate change goals. The plan encourages this transition by enabling utilities to make prudent investments in charging stations and related electric vehicle infrastructure in their service territories.

This success demonstrates the real power of the climate movement when diverse interests work together to build a wide-spread coalition fighting for change that benefits multiple constituencies. This campaign sets an important example for other states looking to enact change and be environmental champions.

Oregon Clean Fuels Program

Roughly one-third of Oregon's greenhouse gases come from the transportation sector – including cars, trucks, airplanes, ships, pipelines, and any other vehicles used to transport people and goods. In 2009, the state legislature passed House Bill 2186 authorizing the Oregon Environmental Quality Commission to adopt rules to reduce average carbon emissions within Oregon’s transportation sector. The oil industry fought against these regulations and sought to re-establish a monopoly over Oregon’s fuel choice. However, successful lobbying by Oregon Climate Solutions helped pass Senate Bill 324 in 2015, allowing the Department of Environmental Quality to implement the Clean Fuels Program.

The Clean Fuels Program aims to lower carbon emissions associated with transportation in Oregon by 10% percent over the next 10 years. The program requires oil companies to blend low-carbon biofuels, or to buy credits that support electric vehicles, natural gas, and other cleaner-fuel alternatives. Because Oregon has abundant clean fuels available from farms, forests, and waste disposal facilities, the program will also create market demand for local fuel alternatives.

As environmentalists work to decarbonize Oregon’s transportation sector, the oil industry continues to be their most powerful opponent - and the one with the deepest pockets and political footholds. Challenging big oil directly has required a growing effort to educate the public about environmental issues and to rebut false claims from industry spokespersons. Environmental organizations are coming together and working with government officials to defeat endless attempts to derail environmental policy and progress.