Oregon voters bucked decades of anti-tax and anti-Salem sentiment Tuesday, raising taxes on corporations and the wealthy to prevent further erosion of public schools and other state services.
The tax measures passed easily, with late returns showing a 54 percent to 46 percent ratio. Measure 66 raises taxes on households with taxable income above $250,000, and Measure 67 sets higher minimum taxes on corporations and increases the tax rate on upper-level profits.
The results triggered waves of relief from educators and legislative leaders, who were facing an estimated $727 million shortfall in the current two-year budget if the measures failed.
"We're absolutely ecstatic," said Hanna Vandering, a physical education teacher from Beaverton and vice president of the statewide teachers union. "What Oregonians said today is they believe in public education and vital services."
The double-barreled victory is the first voter-approved statewide income tax increase since the 1930s. Other states, facing similar budget woes, are watching the outcome closely because Oregon, after all, is a state that capped property taxes and locked a surplus tax rebate program into the constitution.
The last time voters approved a tax increase was 2002, when they agreed to bump up tobacco taxes to help pay for the Oregon Health Plan. Voters rejected income tax increases twice in recent years.
"You're going to find a lot of people are going to be talking about this," said Kevin Looper, campaign director for Vote Yes for Oregon, the main support group for the measures.
Looper was among more than 300 supporters who packed the Wonder Ballroom in Northeast Portland to watch results. Within 15 minutes of the polls closing, counties around the state released a flood of vote counts and it became clear that both measures had passed.
Multnomah County was key to the victory, with voters approving both measures by more than a 2-1 ratio. There was deep support elsewhere around the state, including Washington, Lane and Benton counties and communities on the coast. Even in more conservative areas, support was stronger than expected.
Overall statewide turnout was expected to be around 60 percent of Oregon's 2 million voters.
Tuesday's strong support also validated a strategy by Democratic lawmakers to single out the rich and corporations for targeted tax increases.
Campaign ads by supporters highlighted banks and credit card companies and showed images of well-dressed people stepping off private jets. They also hammered on the $10 minimum tax that most corporations have paid since its inception in 1931.
Those messages helped counter warnings by opponents that the taxes would lead to job losses, worsening the state's 11 percent unemployment rate, and prompt wealthy residents to move elsewhere.
"They did a great job of pounding, 'It's only $10,'" said Bob Tiernan, chairman of the state Republican Party. "We got swamped by the union money."
Supporters spent at least $6.9 million, most of it coming from teacher and public employee unions. Opponents, led by a coalition of business organizations, spent at least $4.6 million, donated by wealthy entrepreneurs such as Nike's Phil Knight and Columbia Sportswear's Tim Boyle. Opponents who gathered at the Grand Hotel in Salem were optimistic early, but as the results came in, the mood quickly darkened.
"It's disappointing and discouraging," said Pat McCormick, spokesman for Oregonians Against Job-Killing Taxes. "The tone and tenor was often venomous, trying to pit the haves against the have-nots."
He said the business community now must figure out "how to participate in a system that's largely disconnected from us."
Lawmakers, who are scheduled to convene Monday in Salem for a monthlong session, are expected to move onto other issues, such as tackling Oregon's unique "kicker" law that rebates revenue surpluses totaxpayers and reining in rapidly expanding tax credits for green energy companies.
They also may be looking to repair a broadening rift between the state's business leaders and Democrats who control both chambers of the Legislature and the governor's office.
"It means the February session won't be focused on cutting hundreds of millions of dollars from schools, public safety and health care," said House Speaker Dave Hunt, D-Gladstone.
"It's a great sign of hope that Oregonians continue to be ruggedly independent and continue to be focused on a long-term vision for the state."
Gov. Ted Kulongoski thanked voters for approving the measures but tried to set a tone of reconciliation. "The election is over," Kulongoski said in a statement. "Tomorrow is a new day, and we must make a commitment to put our differences aside and work together to make the best choices we can for Oregon's collective future."