Death, Taxes and Tuition Increases

Legislation proposed by state Rep. Marty Wilde offers money for a tuition cap

Marty WildePhoto by Todd Cooper

Death and taxes no longer sum up the inevitable in Oregon. Due to dwindling financial support from the state, Oregonians can now add tuition increases to the list. A bill introduced by state Rep. Marty Wilde, a Democrat whose district stretches across Lane and Linn counties, aims to put a cap on tuition increases.

Wilde’s legislation, House Bill 3434, would bring in more money for Oregon Opportunity Grants and universities through tax reform. The legislation won’t see a vote this session, but the bill continues the conversation about rising tuitions in the state and restoring the promise that Oregon’s education investment doesn’t stop at high school, Wilde says.

Wilde says he attended University of Maryland and paid in-state tuition. He worked a minimum wage job part time and received scholarships — and graduated without debt. When he went to law school, he graduated with a low enough debt that, he says, he could go into public service.

“What I see now are kids mortgaging their future and having their options constrained,” he says. “They have these huge debts that really limit their choices and ability to make those choices.”

HB 3434 would eliminate the stepped-up basis for capital gains and raise the estate exemption, raising $154 million to split between the grants for low-income students and universities.

Stepped-up basis is a loophole that allows filers to pay less on an inheritance tax return.

“That stepped-basis inheritance disproportionately goes to very wealthy people,” he says.

HB 3434 would also raise the requirement to file an estate tax (also known as an inheritance tax) return to $5 million after Jan. 1, 2020. Although the exemption would rise, the elimination of the stepped-up basis loophole would change the system from one where estates under $1 million aren’t taxed to one where all estates would see some tax.

The impact of the tax reform would be positive and be small business friendly, he adds. By raising the state estate tax exemption, it would help those who inherit businesses and want to operate them without relying mechanisms like getting a loan to pay that tax.

One half of the money generated would go to fund the Oregon Opportunity Grants.

Brett Rowlett, public affairs director at Lane Community College, says the grants benefit low-income students, much like the federal Pell Grant. LCC has 1,756 recipients, he adds.

However, with increasing tuition over the past decades and spreading the grants to more students, the grants don’t cover the amount of costs they once did, he says.

HB 3434 would increase the amount available by 50 percent, offering aid to 36,000 students.

Since there are more students who meet the criteria than how many grants the state offers, money for grants would be welcome, Rowlett adds.

The other half would go to Oregon universities.

But there’s a catch.

To receive that money, universities cannot increase tuition by more than 2 percent plus inflation two years before the bill takes effect, according to the legislation.

The tuition cap, which would amount to be about 4 to 5 percent, is based on what Oregon universities told the state it needed earlier this legislative session, Wilde says.

“If we give you the money you need, will you hold at that rate?” he adds.

Currently, it looks like many universities wouldn’t qualify for it if tuition increases remain. Portland State University raised tuition 11 percent and Oregon State University increased it by 4.44 percent. Western Oregon University is proposing a range of 8.5 to 13.5 percent and the University of Oregon is considering a tuition increase that ranges from 8 to 11 percent.

The state’s Higher Education Coordinating Commission must approve any tuition increase that surpasses 5 percent.

The UO says it won’t comment on the tuition cap because the bill won’t get a vote this session. However, in terms of the funding, the UO says it appreciates Wilde’s efforts to increase funding for the UO and statewide financial programs.

“We know Oregonians are increasingly concerned about the rising cost of a college degree, and any efforts to improve access and affordability should be given strong consideration,” Zack Barnett, a spokesperson for the UO, adds.

If the bill had passed this legislative session, universities enacting a high tuition increase wouldn’t have received their share of the revenue increase. Instead that money is deposited in the School Districts Unfunded Liability Fund to support PERS.

“That was to say, ‘Look, we want to give you every incentive to do the right thing, but if you’re not going to do the right thing, the state is staying on a level playing field,’” Wilde says.

With the Legislature and Gov. Kate Brown approving the Student Success Act this session (although it could be referred to voters in a January special election), Wilde says it’s time to start looking at higher education. HB 3434 won’t move this session, but he says he wants to start a conversation so the bill could be re-introduced in a future session.

“It’ll provide better stability,” he says of HB 3434. “And a guarantee that if you’re a kid who does the right thing and wants to go to community college or university you should be able to graduate without so much debt that you’re limited in choices.”