Whittling Oregon's Supermajority Requirement
In a new article published by Tax Notes State, a weekly trade publication for tax professionals, Nikki Dobay and I discuss the legal and political history surrounding the Oregon Constitution's supermajority requirement for bills for raising revenue. In recent years, lawmakers and funding advocates have exploited workarounds to these constitutional supermajority requirements. Oregon is not an outlier in these developments; however, the gamesmanship behind the scenes to exploit perceived loopholes is arguably among the most egregious examples.
As often occurs in tax controversies, only a few court cases provide guidance on applying the state's constitutional supermajority requirement on bills for raising revenue. And, like most tax litigation, these cases focus on narrow inquiries about applying the requirement, leaving lawmakers and advocacy groups with a fragmented understanding of the rule. These conditions have unleashed a new willingness in the Oregon legislature to test the bounds of the supermajority requirement, seeking to open the floodgates and eviscerate the voter-approved control on legislative tax increases.
Article IV, section 25 of the Oregon Constitution provides:
(1) Except as otherwise provided in subsection (2) of this section, a majority of all the members elected to each House shall be necessary to pass every bill or Joint resolution.(2) Three-fifths of all members elected to each House shall be necessary to pass bills for raising revenue.
(3) All bills, and Joint resolutions passed, shall be signed by the presiding officers of the respective houses.
There are two court proceedings guiding our understanding of Oregon's supermajority requirement, both from the state supreme court. In Bobo v. Kulongoski (2005), the court held a measure is only a "bill for raising revenue" if it collects or brings money into the treasury. If that is not the effect of the legislation, the inquiry ends; if the bill brings money into the treasury, however, the second prong of the test determines whether the bill contains the "essential features of a bill levying a tax." Then, a decade later, in City of Seattle v. Oregon Department of Revenue (2015), the court had the opportunity to apply both parts of its Bobo framework. In this case, the court held a bill only contains those "essential features" if it levies a tax with a rate. Thus, a bill regulating the tax base by eliminating deductions, credits, or other features (besides a rate) does not require a supermajority vote.
Our article explores the political ramifications of these decisions and how they unleashed a wave of creative thinking among tax-friendly advocacy groups and lawmakers seeking to raise revenue for new and expanded public services on a simple majority vote. We also address the legislature's newfound willingness to further test the bounds of the court rulings to raise revenue in nontraditional ways, some of which raise constitutional infirmities given the cases available today. We also suggest that lawmakers heed the advice of their own lawyers and expedite constitutional challenges regarding the supermajority requirement.
