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Oregon Legislature

A group of Oregon industrial companies said Tuesday they are giving up on efforts to repeal $1 billion annually in new business taxes.

The news means the tax on Oregon sales will almost assuredly go into effect in January, providing a considerable boost in Oregon education spending.

“Though we will not be moving forward with the referral effort, we will continue to explore opportunities to minimize the negative impacts of this new tax on Oregonians by any means possible, including through legislative action or a potential initiative in a future election,” Oregon Manufacturers & Commerce said in a written statement.

Education boosters, meanwhile, immediately hailed the manufacturers’ retreat while allowing for the possibility some other organization might yet mount a repeal effort.

“Our kids have waited too long for us to make the investments our schools need,” Jim Green, executive director of the Oregon School Boards Association, said in a written statement. “Every obstacle we can clear from their path is a victory.”

Tax opponents had already raised $1 million toward the repeal effort and were preparing to gather 75,000 signatures to put the tax before Oregon voters. Political observers considered the signature threshold a relatively low bar and anticipated a heated campaign before a January vote.

Campaign challenges

On Tuesday, though, Oregon Manufacturers & Commerce said it’s giving up. The group said legislative constraints would make it difficult to run a successful campaign.

The organization cited three factors in particular:

n A new law that bans voters from printing their own petition forms would make it more difficult to gather the necessary signatures.

n The Legislature’s vote to move a prospective election to January 2020, instead of the following November. While the early election reduces uncertainty about taxes and funding for businesses and schools, it also leaves less time to raise money to campaign against the tax.

n And late in the session, lawmakers passed a series of fixes to the new law. Opponents said the changes were significant enough that they would require a second repeal effort that would appear on the November 2020 ballot.

House Bill 3427 levies a 0.57% tax on companies’ sales inside Oregon, above $1 million. It sets aside about half the money for grants to local school districts, then divides the rest among programs for toddlers and preschoolers, career and technical education, and programs to prevent dropouts and improve school performance.

Political complexities

The new tax passed in May on a strict party-line vote, with Democrats muscling the legislation through on the strength of their supermajorities in both chambers. But the partisan nature of the vote belied the political complexities underlying the debate.

Nike, Oregon’s largest company, was a strong proponent of the tax and more funding for the schools. And Oregon Business & Industry, the state’s largest business association, cut a deal to remain neutral on the tax in exchange for provisions that allow companies to exempt a portion of their labor and capital spending from their taxable revenue.

The new tax revenue, coupled with other spending hikes approved during the last Legislative session, deliver the boost in school spending that education activists had pursued for years.

Opponents, though, complain the new tax adds to burdens of Oregon businesses that include annual increases in the minimum wage, a new family leave law, mandatory sick time, pay equity requirements and restrictions governing overtime pay.