Oregon House OKs tax on business to fund schools

Needs 2/3 Senate vote - and could go to ballot

SALEM, Ore. (AP) - Lawmakers in the Oregon House have approved an extra $2 billion in funding for the state's struggling school system, but the debate - and possible ballot fight - are far from over.
The chamber voted 37-21 Wednesday following hours of floor debate. Democrats championed the package, saying it's a necessary investment in Oregon's public schools, which struggle with among the lowest graduation rates in the nation.
The vote aso comes a week before teachers across the state are planning a day of action in protest of decades of disinvestment in the public education system.
But Republicans took issue with the proposed business tax to fund the measure, saying it would be passed onto consumers through higher prices.
The tax package now moves to the Senate, where it needs a two-thirds vote. Even if it passes through the legislative process, opponents may move to put it to the ballot.


News release from Oregon House Democrats:

Student Success Act Clears House, Landmark Investments Advance

Reforms Oregon’s revenue system to invest $1 billion per year in students 

SALEM – Following 15 months of public input and a statewide tour that brought legislators to every corner of Oregon, today the Oregon House of Representatives voted to advance the landmark Student Success Act. 

House Bill 3427 seeks to build a model public education system in Oregon through a dedicated, sustainable investment that will improve student outcomes, require ongoing accountability and close opportunity gaps for historically underserved students.

“The Student Success Act is an unprecedented opportunity to give our children the well-rounded education they deserve,” said Joint Committee on Student Success Co-Chair Rep. Barbara Smith Warner (D-Portland). “Today marks a turning point for our state. After decades of disinvestment in our schools, we took a huge step toward fulfilling an overdue promise to our children.” 

The Student Success Acts establishes the Student Success Fund which will be strictly dedicated to supporting Oregon’s public early childhood education and kindergarten through 12 system. 

The Student Success Act will create unprecedented investment in early childhood education, make accountable investments for all school districts, build a more equitable education system and provide additional services that students need to succeed. Among the specific initiatives targeted by the legislation are smaller class sizes, full funding of career and technical education (Measure 98), increased access to high quality preschool and early childhood programs, universal access to meals and mental and behavioral health supports. 

“Teachers give the very best of themselves to their students day after day. They are strong, compassionate, capable and extremely challenged by our lack of resources,” said Rep. Courtney Neron (D-Wilsonville). “For the educators and education advocates who are demoralized and feel unheard, I believe the Student Success Act will provide much needed relief. For the students who are at the mercy of our vote, I believe this will provide hope, and opportunity for a better future.”

The entire proposal will be a funded through a Modified Corporate Activities Tax (MCAT), developed in consultation with businesses large and small across the state. The MCAT is expected to yield $2 billion dedicated to education per biennium beginning in 2021. The legislation also includes a personal income tax cut for all Oregonians. 

“This bill is the product of negotiation and compromise,” said Rep. Nancy Nathanson (D-Eugene). “This is what we strive for and what our constituents expect of us. We listened to each other throughout this process, finding common ground between the business and labor communities in the interest of a dedicated revenue source for our children’s education.”

Accountability and transparency are central components of the Act. Schools will have performance targets to improve student outcomes including improving graduation rates, third grade reading levels, the rate of ninth grade students on track to graduate, and student attendance. Schools that do not meet their performance targets will receive coaching and enhanced oversight. The lowest performing schools will get additional funding and Student Success Teams will help redirect their investments toward proven strategies. These schools will be regularly audited to ensure strategic investments are going into the classroom and money is being spent to improve outcomes.

Equity is a central component of the Student Success Act. The Act will make unprecedented targeted statewide investments in culturally specific supports for historically underserved students, special education services, and funding universal access to nutrition. Schools will also have performance targets to reduce opportunity gaps for historically underserved students to ensure that all new investments are building the equitable education system that Oregon’s students deserve.

“One common theme we heard on the Student Success tour was that we needed to build a more equitable public education system,” said. Rep. Diego Hernandez (D-Portland). “The reality is, some communities have been historically marginalized and we see the outcomes and disparities. We must address these inequities so that every student has the opportunity to succeed.”

The bipartisan, bicameral Joint Committee on Student Success was formed in early 2018 by Oregon House Speaker Tina Kotek and Oregon Senate President Peter Courtney to explore the best practices employed in Oregon’s most successful schools and address the gaps that are limiting student success.

The Student Success Act fulfills a key piece of Oregon House Democrats’ Pledge to Every Oregonian by investing in the highest quality public education system. 

The legislation, which passed 37 to 21, now goes to the Oregon Senate for consideration. 


News release from House Speaker Tina Kotek:

Speaker Tina Kotek on the House passing the Student Success Act 

SALEM – House Speaker Tina Kotek on Wednesday issued the following statement after the Oregon House of Representatives passed House Bill 3427 – the Student Success Act – by a 37-21 vote.

“This is a historic investment in our children’s education after nearly 30 years of underfunding our schools. To the students, parents, teachers and advocates who said we need to invest in our children, thank you. We heard your voices and we took action. Personally, after many years of working on early childhood issues, I’m thrilled by the possibility of millions in dedicated dollars for our youngest Oregonians.”



News release from the Oregon Education Association:

Historic education investment package passes Oregon House; momentum builds

In a decisive vote, the Oregon House has passed the Student Success Act (HB 3427)! The proposal will now move on to consideration in the Senate. Educators, parents, and students are closely watching the proceedings as pressure on lawmakers builds to pass it into law.

“This is a momentous proposal that could change the lives of Oregon students,” says John Larson, high school English teacher and President of the Oregon Education Association. “I’m so heartened to see the House pass this bill. Students deserve schools that can afford to give them what they need. The Student Success Act would directly invest dollars to lower class sizes, increase individual attention from educators, and fund the mental and behavioral health supports students so desperately need.”

For decades, Oregon students have been challenged by large class sizes, missing resources, and the loss of critical programs like art, music, and physical education due to state disinvestment in schools. The Student Success Act would mean an 18% increase in budgets for elementary, middle, and high schools. Those dollars would be dedicated to the staff and programs our students so desperately need.

“The Senate should move quickly to pass the Student Success Act so our schools can finally invest in our students,” says Larson. “Every Oregon child should have the opportunity to reach their full potential, and this bill is one giant step in that direction. Educators will continue to show up and stand together for students – today, tomorrow, on May 8th , and every day.”

Advocates have organized hundreds of actions and events around the state calling on lawmakers to increase school budgets over the past six months. Educators across Oregon will be taking action on Wednesday, May 8th to advocate for students and schools. Large rallies are planned in Portland, Salem, Eugene, Medford, Bend, and many other locations. More information is available here:


News release from Unified Business Oregon:


Business organization says $2 BILLION tax bill carves out some of Oregon’s largest corporations, and money will wind up paying PERS deficit, not reaching classrooms.

TUALATIN, OR.  – Unified Business Oregon (UBO) today denounced the passage of House Bill 3427 as a measure that will leave local and small businesses picking up the tab for PERS, while the state’s largest corporations whose sales predominantly fall outside Oregon will owe next to nothing in taxes to help fund schools.

“Voters at the ballot just a few years ago resoundingly voted against this type of tax measure and lawmakers in Oregon just aren’t listening. Small and local businesses can’t absorb this tax on top of a two-percent sales tax on their healthcare premiums, in addition to another minimum wage increase coming in July, and a proposed carbon tax that will drive up gas prices,” said Lou Ogden, UBO Executive Director. “Worse, because of the way this bill was crafted, behind closed doors with some of the largest and wealthiest special interests in the state, the largest corporations who sell their goods and services out of state won’t be paying much, if any, of this new tax increase.”

Ogden noted recent polling which shows Oregonians are in opposition to this type of tax proposal, even if it means protecting education from cuts and paying down PERS payments. “We’ve been down this path before, and what the polling consistently shows is Oregonians do not want to be saddled with the costs of direct or indirect sales taxes to pay for PERS, and they’re not being fooled that money raised from these kinds of taxes will reach the classroom.”

While Democratic lawmakers touted the personal income tax cut in the measure, Ogden noted that the value of those tax savings amounts to no more than the price of two cups of coffee a month. 

“Working families need real tax savings. This measure provides false hope not just to parents and educators who desire better education outcomes, but for working families thinking they’ll be getting a tax break when in fact, this bill gives them next to nothing in savings.”

Ogden went on to say that there’s nothing ‘groundbreaking’ in this policy that will ‘fix the problem’ of education when the bulk of the money being raised under this measure will be needed to fund a PERS deficit that is growing for lack of solutions from politicians who are beholden to PERS interest groups.

“News outlets across Oregon have done a great job highlighting how great the PERS deficit has become. We cannot tax our way out of a PERS problem, and left unchecked, PERS will consume government budgets until services are cut to the bone. House Bill 3427 is a Band-Aid at best, and really, is more like a generic brand bandage that falls off the first time it gets wet. When the recession comes, the taxes taper off, the PERS bill goes up, and kids will lose school days.”

The measure passed today in the House on a party line vote and will move to the Senate floor next for final consideration.


News release from Oregon Manufacturers and Commerce:

OMC Statement on Oregon House approval of $2.8 billion hidden sales tax 

Salem, Ore. - Oregon Manufacturers and Commerce released the following statement after today’s House vote on HB 3427, the multi-billion dollar gross receipts tax: 

“Oregonians have emphatically said no to a tax on sales. They understand that this form of taxation hurts local Oregon businesses and will ultimately result in higher prices for the goods and services they rely on each day. This is a flawed policy and the product of a flawed process. It’s disappointing that lawmakers have decided to overrule the will of the voters and stick Oregonians with this $2.8 billion hidden sales tax.”

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