You’ve heard me complain about my state’s unemployment rate. I’ve whined about our school budget…to the point where I’m going to homeschool next year. I even complain about state politics sometimes lots of times. But I must give credit where credit is due.
While browsing the news sites last night, I came across an article about the IOUs from California’s state government. Apparently Californians aren’t going to have many places to cash these IOUs after some of the banks stop accepting them today.
As I read through the article, my eyes drifted to a little map on the right side of the page. The words underneath the map begged me to click. “Where does your state rank?” The map, of course, pertains to the recession. I was pretty sure where my state ranked.
On first glance, I was right. Oregon is still next to worse in the unemployment department. We have a 12.4% unemployment rate, second only to Michigan, with a 14.1% unemployment rate.
But it was the next tab that surprised me. State Budget Deficit. I moused over the state of Oregon, and I saw the word. None. We are one of three states with no deficit. I must say, I was very impressed. After ranting about California’s deficit last week, I’m thrilled to see that a state can run a budget without going into the red. Kudos also goes out to Montana and North Dakota, the other states that have no deficit.
I’m particularly impressed, because we’re running this budget without a sales tax. Most states have three taxes. We have two: sales income & property. However, with the current economy, income tax revenue has gone down a lot And yet, the budget is balanced. Which begs the question, why? Why is the budget balanced in Oregon, when 47 other states can’t manage to run their governments without a deficit?
I asked my husband, who is a news and political junkie. Not to mention, he’s lived in Oregon practically his entire life, so he knows a bit more about Oregon than I do. It turns out we have a balanced budget amendment in our state constitution. Both the state government and local governments are required to balance their budgets. Period. No ifs, ands, or buts. The budget must be balanced.
Furthermore, we have a “rainy day fund.” In other words, Oregon has an emergency fund! What a concept!
Yes, our schools are hurting. Yes, our unemployment is high. But at least we aren’t getting IOUs from the government and saddling our children with a debt they can’t repay.
So where does your state stand in terms of state budget deficits? Are you feeling it?
Photo by scazon.
{ 21 comments… read them below or add one }
I used to live in Oregon and was incredibly impressed that they had the amendment requiring a balanced budget. I used to ask why every government couldn’t function the same way and received an answer that just couldn’t happen – especially on a federal level. California is one example of why it just can’t happen that you spend more than you bring in. Sure, some of the limitations in Oregon hurt – the education being #1. But reality is reality and you just can’t spend more than you bring in. Yea for Oregon!
I am an Oregonian also. Hurray for Oregon!
Hi, could you please help me figure out what you mean when you say:
1. I’m particularly impressed, because we’re running this budget without a sales tax. Most states have three taxes.
2. We have two: sales & property.
Do you have sales tax or not?
I think one of those is a typo. Did you mean you have income tax and property tax?
Thanks,
Robert
How about that? At least a little encouragement…
“It turns out we have a balanced budget amendment in our state constitution. Both the state government and local governments are required to balance their budgets.”
What a concept, huh?
I clicked on the map link- thanks for posting! I live in Ohio, which is quoted as having a 3.3 million dollar deficit. We have an awesome governor who has a plan for balancing the budget, however it is stuck in the legislature right now. They already had to extend the deadline because the two sides cannot come to an agreement. Meanwhile, teachers’ jobs (and mine!) are hanging in the balance because funding to education may get slashed if the Republicans have their way.
The legislators in our state are required by law to make the hard choices. They can’t have a deficit. So instead of having whatever they want now and paying for it later like the Congress does, they can only have what they can pay for now.
If the federal government and every state were required to do the same thing, there would be a lot less wasteful spending.
Remarkable concept – a balanced budget.
Surely this should be applied to every person also! :)
Nope, not gonna fly in this gimme, gimme world we live in. :(
If you look at the map, the states deep in debt are also the most populous meaning that there are many people that require government services: police, fire, water, sewer, etc.
I think you meant to say income and property instead of sales and property.
A few weeks back I read someone ranting about Oregon raising its state income tax rate. The gist of the rant was that given the high unemployment rate, raising the income tax rate was the last thing Oregonians needed. In California, we’ve recently raised the state sales tax rate a full percent. Given a choice, I’d take the income tax option.
At least with an income tax increase, it’s more focused on people earning an income whereas sales tax is applied to everyone regardless of ability to pay. And as we can see, a sales tax increase has not stopped the state from issuing IOUs.
I lived in Oregon for the first 20-some years of my life and have been in California for the last 15 or so years. I’ve wanted to return to Oregon for the last several years. Between purchasing a home in Oregon, selling our home here, and employment issues, my fiance and I are trying to find the right moment to make the move.
Given the choice, I’d take the sales tax any day…. A sales tax is a voluntary tax – (usually food and medicine are exempt)… if you don’t buy it you don’t have to pay the tax. Works well for frugal people :) I would pay oodles less under a sales tax than I do under the income tax, even on my very limited income.
An income tax taxes every penny I earn, whether I chose to spend it or not. All it does is negate my interest in making more money – an income tax is a punishment for working hard and earning money – in my opinion. It’s an incentive NOT to make more income. So I get by very easily and very well on under $20,000/yr. Works for me.
Oregon: This is one thing Oregon has gotten right regarding balanced budget. (I’m a native who lived there until I was 31.) Robert is correct — Oregon has property and income tax, but no sales tax.
Other states: Since leaving Oregon, I’ve lived in WA, VT, and CO. WA has sales and property tax; the latter two have sales, property, and income tax. I’m more in favor of the WA system (doesn’t punish frugality).
Cautions: No matter where you live, always do your homework, especially on major purchases. For example, the last vehicle I purchased was in WA state. The dealer almost made a major error wherein I would have had to pay Sales and Use Tax (completely in addition to regular sales tax) on my trade-in. I knew that was incorrect (I’m a licensed CPA in OR and WA), so I did my homework and presented information they were incorrect. It saved a lot of money. When I moved from WA to VT and registered that vehicle I bought in WA, I did the homework up-front. Since I proved I paid the sales tax in WA for the purchase, I saved several thousand on paying additional sales tax in VT. CO is a silly state on taxes (and they are deficit) and I didn’t have any similar issues to register my vehicle (although their registration fees are hefty).
All of this to say, wherever you live, do your homework on taxes. Also, the CA situation is truly sad, but it points to poor planning. Over the course of the last few decades, that state has implemented many “nice” programs that really are comparable to welfare. This especially includes their public medical benefits (hmmm – I wonder if the federal gov’t could learn from this?). The state didn’t plan on how to pay in the course of economic downturns and look what happened. The world’s 8th largest economy issues IOU’s! It gets even sillier. I remember last year I read articles where developers were offering BOGOs (buy one get one free) on house building! Sure they had it great in the late nineties, but what about planning for cyclical downturns? GREEDY, GREEDY, GREEDY!
I hope this post offends no one, but in these hard times, it has become even more important that spending w/o a plan is ridiculous.
Robert in SF: Yep, that’s a typo! Thanks for catching it. We have an income and property tax. I’ll correct that shortly.
Marci & Diana – I would much prefer property and sales tax, too. But I’m glad we don’t have all three!
I have lived in Oregon for 47 years. I am about to move to some other state, but I don’t know where at the moment. I love the fact that Oregon does not have a sales tax and have voted it down every time, but I would vote it in if we would be assured that the property tax would be eliminated. Are there states where there is no property tax? I feel the property tax is the most unfair tax of all. As long as there is a property tax one never really owns the land they buy because every year you have to pay the government taxes on that property and if you don’t you lose the land. A sales tax is fair as long as basic necessities like food are exempt, but I say that not having any experience living with a sales tax. I would much rather pay a sales tax than property tax.
I forgot to say that I also am very happy Oregonians voted in the balanced budget amendment. Doesn’t that just make sense? Doesn’t seem like we would even have to vote on that. It should be a given but apparently it is not. I don’t understand why some think it is a bad idea to have a balanced budget amendment for the Federal Government. Can anyone explain that to me?
The argument that the US suffered violent economic cycles in the laissez faire markets of the nineteenth and early twentieth centuries from which we have been spared by the wise actions of the Fed and counter cyclical federal spending is demolished in two ways. First, these periods were characterized by frequent overzealous lending of fiat money, sometimes by private banks, sometimes by banks set up by the government, and it doesn’t matter who creates the bogus money. Second, much of the economic history of the period is stated in terms of nominal dollars, and in some periods, when the money was actually stable while production increased, nominal prices fell, as they must
Oregon girls: Engaged by 22, unengaged by 24. True in almost every case I’ve seen.
Lunette – question re property tax -
Although I’ve not conducted work for every state, I’ve not ran across one yet that does not have property taxes. Because your inquiry intrigued me, I did some looking and found the artcile at the address below:
http://articles.moneycentral.m.....eRank.aspx
Honestly, I was suprised that Alaska has property tax (and not one of the lower at that), since there are so many stipends to get people to live there.
There are days when I’m tempted to think “it’s all the same; the gov’t gets your dollars one way or another — it just takes different forms.” Deep down, however, the biggest difference is substance over form. In other words, it comes down to how the state stewards the taxes and also where you want to live (even if your state is not the best). In my situation, I would LOVE to live in Colorado forever and pray God provides for me to stay here (although taxes are somewhat high and the state has a small deficit). My best job prospect right now is to move to a state where the taxes (in total) are relatively less. That state is one where there are sales, property, and income taxes, but the biggest source is sales (due to high tourism).
Go figure!
Glad to hear it can be done- a balanced budget! More states should try it . . .
I’m from Michigan…so we’re the worst in unemployment, and our deficit is pretty serious, 2.1 billion. Oh yeah, we feel it. So many people lost jobs b/c of the big 3 car companies having trouble. Many schools are closing because people are leaving the state. Houses are for sale everywhere, and no one can sell. Def. tough times, I’m glad I know how to budget, live frugally, and feel blessed that my husband has a job (for today, at least)!!! What an interesting link!
My Wife and I are likely moving to NC, TX, or some other Southeastern state. Most states on the West Coast are overpriced and have severe legislation/budget/unemployment problems. NC and TX regularly make the list as the best places to live and raise a family, mainly because they are affordable and have better job opportunities. I personally can’t wait to get out of the West Coast.