Tax increases for high income Oregonians and corporations passed by surprising margins Tuesday night thanks to an avalanche of "yes" votes from Northwest counties.
Meanwhile, voters in the southern and eastern parts of the state overwhelmingly rejected them.
"Even with this result, we still have some challenges before us," Gov. Ted Kulongoski said after the first returns Tuesday night. "It is going to be a slow growth recovery from this recession for Oregon and the entire nation."
With almost all ballots counted Wednesday morning, Measure 66 won with 53.69 percent of the vote, while Measure 67 drew 53.03 percent.
The Oregon Secretary of State's office reported voter turnout at 59.57 percent, slightly lower than the predicted 62 percent turnout for the special election.
Measure 66 raises income taxes for individuals earning between $125,000 and $250,000; it also rolls back taxes for individuals on unemployment.
Measure 67 raises the corporate minimum tax from $10 to $150 per year; it raises taxes on companies that register a profit from 6.6 percent to 7.9 percent; and it would create a new corporate tax applied only to companies reporting $500,000 or more in sales that claim no profits, requiring them to pay either the minimum corporate tax or 7.9 percent of their sales, whichever is higher.
Both Measures 66 and 67 originated as Democratic lawmakers' efforts to plug a state spending hole estimated at more than $775 million over the next two years. Partisan anger over the Democrats' proposed tax hikes eventually landed them on the ballot for voters to decide.
Republican gubernatorial candidate Allen Alley told a gathering of ballot measure opponents in Clackamas that the vote would result in job loss in the state.
"Other states are waiting with open arms for the jobs that will either leave or never
come to Oregon as a result of this vote," he said. "Oregon needs to create jobs and deliver better value to taxpayers. We have to start treating Oregonians like customers not like ATM machines."
An estimated $727 million is expected from new taxes, about 5.5 percent of the general fund in the next two-year state budget. While the state legislature meets in a special session next month to iron out the details, much of the money is promised to education and state and county services to cover projected budget shortfalls in the tens of millions for agencies around the state.
The latest spending disclosures show labor unions were the biggest contributors to the "yes" campaign, which pulled in a total of almost $7 million, compared to the business-supported "no" campaigns, which brought in about $4.5 million from big donors Phil Night of Nike and Tim Boyle from Columbia Sportswear.