Daunted by record deficits, lawmakers and governors in almost every state capital are confronting a nightmarish choice between dismantling cherished programs or piling on new taxes -- inciting the wrath of voters either way.
Here in Oregon, after five special legislative sessions and still no solution, the politicians punted. They told the voters to decide for themselves.
Last fall, when lawmakers scheduled the referendum for Jan. 28, the notion that this famously tax-averse electorate would vote to raise its own income taxes -- even as credit card bills from Christmas season were arriving -- seemed laughably remote. Polls showed them poised to crush the proposal by 25 points. Business opponents didn't even bother to fight it, although it would raise corporate taxes, too. "Everybody said, 'This is going nowhere,' " said Joe Schweinhart of Associated Oregon Industries.
But while pundits looked the other way, Oregon voters apparently were having a change of heart. With Ballot Measure 28 before the people today, the latest survey shows them split, 48 percent to 48 percent, between more taxes and less government, with 4 percent undecided.
"Frankly, I'm stunned that this has happened," said independent Oregon pollster Tim Hibbitts, who supervised both polls. "In 60 years of combined experience, my partners and I have never seen a tax increase referendum come from this far behind and put itself in a position to win."
Ballot Measure 28 asks voters to close a budget gap of roughly 12 percent by increasing income taxes for three years or allowing broad budget reductions already approved by the legislature to take effect on Jan. 31. Individual taxes would rise on average $107 a year, or 0.5 percent. The program cuts, detailed exhaustively in newspapers and on television, include laying off 101 state troopers, canceling medical benefits for thousands of elderly, disabled and mentally ill Oregonians, and closing public schools from several days to more than a month early, depending on the district.
Recent interviews in the Portland area, home to 43 percent of Oregon's voters, turned up deep divisions. But significantly, many initial naysayers said they had decided to support the increase, having calculated that it would cost them less than the budget cuts. They ranged from Portland State University students whose tuition would go up $120 a term, to a working mother anticipating steep child care bills if city schools close early, to men and women with elderly parents slated to lose prescription drug coverage or spouses fearful of losing state or school district jobs.
"My husband and I will probably vote by the pocket instead of by our gut, but our gut says to vote no," said Sue Jeremiah, a school district purchasing officer who lives in the suburb of Milwaukie. Her district would close five days early, she said, a loss of income much bigger than the tax increase.
"I will support it just because kids are important and their education is important," said Jorine Rollins, a Republican and a nurse who said her own children are grown. "It's time to be honest and say there is a value to these government services."
Even if the referendum fails, the fact that recession-weary Oregonians came close to raising their own taxes is a barometer of a political storm tossing state governments amid their deepest fiscal crisis since World War II. A Washington Post-ABC News poll last week found that 70 percent of voters nationally believe their state has serious budget problems, and well over half of those blamed their governor and state legislature as well as the national economy. Forty percent also put significant blame on President Bush.
With revenue sinking, unemployment rising and demand for services increasing in almost every state -- all against the backdrop of a shaky world order -- the old rules hardly seem to apply.
"We live in cognitively dissonant times," observed Phil Keisling, a former Oregon Democratic state legislator and secretary of state, now a business executive.
While almost every state faces yawning budget gaps, Oregon's crisis is one of the more severe. A trophy state among anti-tax activists, Oregon used direct democracy and referendums in the last decade to reduce its state and local tax burden from 12th-highest in the country in 1992 to 41st in 2002, according to the Tax Foundation. By comparison, Virginia's rank moved from 41st to 40th; Maryland's fell from 21st to 37th.
At the same time, voters approved referendums requiring massive new spending on education and prisons -- a conflict obscured by soaring Oregon incomes and tax revenue in the 1990s, particularly in the high-technology sector. When the bubble burst, Oregon was left with the nation's highest unemployment rate -- 7 percent -- and a $2 billion hole in its biennial budget, about 15 percent of the total. In five special sessions, cutting programs and shifting funds, the legislature delved into every corner of government, with noticeable effects. The cutbacks in higher education, for example, led to tuition hikes that made Oregon public universities among the most expensive in the country.
The final $310 million of reductions -- affecting elderly, mentally ill and disabled Oregonians and public schools -- were too grueling for legislators to agree on. So were tax increases. That's where Ballot Measure 28 came in.
While pundits and politicians were writing it off, Oregon's public employee unions mounted a largely under-the-radar campaign to call everyone in Oregon likely to be affected by the cuts. Their total budget was under $500,000 -- too small for television ads or high-priced media consultants, just enough for phone banks, a couple of radio spots and a massive, people-to-people network.
As details of the cutbacks became public, newspapers in every area of the state ran front-page articles with alarming headlines: 9,000 elderly people slated to lose spaces in long-term care facilities; thousands more slated to lose prescription drug coverage; mentally ill and disabled Oregonians losing medical and housing aid. And every day brought news of another school district preparing to cut school days, cancel spring sports or pare enrichment activities.
Those targeted to lose services proved a formidable lobbying force. Take Katherine Wright, 84, who has impaired vision and a pacemaker, and would lose her status as "frail elderly" because she is too robust for the new standard: "Needs assistance with eating and toileting."
Wright would lose Medicaid coverage and would be forced to leave an assisted-living facility here called ElderPlace, where she receives room and board, medical care and personal aid. For weeks, she has created "Yes on 28" posters and flyers, written letters to editors and e-mailed talk-show hosts. She became a media star when Providence Health System, owner of ElderPlace, recently hosted a news conference there to support Measure 28. Asked what she would say to voters, the tiny, white-haired woman in pink and lime green looked wide-eyed into the camera and answered, "I'd tell them my life is in their hands."
Most voters interviewed who opposed Measure 28 said they believe politicians are lying to get their money and won't follow through with the cuts. "They're playing a game of chicken with me," said conservative radio talk show host Gregg Clapper, "and I don't give in to blackmail."
Indeed, voter cynicism toward government and politicians for what many called gross mismanagement seemed the biggest force helping the opposition. "I don't want to hurt anyone, but voting no is the only way to make my voice heard," said Gary Holland, a contractor renovating a home in northeast Portland. "It's the frustration of being powerless to get somebody to wake up."
Well aware of the crisis of confidence, newly elected Gov. Ted Kulongoski (D) vowed in his inaugural to give Oregonians a government they can trust. And then he reminded them how far away the roaring '90s already are: "We will neither surrender to our fears nor surrender to the illusion that there is an easy and painless way to balance the budget. There isn't."