S057931, Opinion — McCormick v. Kroger/Devlin

293
On petitions to review ballot title and explanatory statement filed October 28;
considered and under advisement November 5, ballot title referred to
Attorney General for modification; explanatory statement certified to
Secretary of State November 13, 2009
Pat McCORMICK
and Sharon Livingston,
Petitioners,
v.
John KROGER,
Attorney General of the State of Oregon,
Respondent.
(SC S057931 (Control))
Pat McCORMICK
and Sharon Livingston,
Petitioners,
v.
Senator Richard DEVLIN,
Senator Chris Telfer,
Senator Diane Rosenbaum,
Representative Arnie Roblan,
Representative Vicki Berger,
Representative Chris Garrett,
and Kate Brown,
Secretary of State of the State of Oregon,
Respondents.
(S057932)
(Cases Consolidated)
220 P3d 412

294 	McCormick v. Kroger/Devlin
CJS, Statutes § 131.
En Banc
Gregory A. Chaimov and John A. DiLorenzo, Jr., Davis
Wright Tremaine LLP, Portland, filed the petitions and reply
memoranda for petitioners.
Paul S. Cosgrove, Lindsay, Hart, Neil & Weigler LLP,
Portland, filed the brief for respondents Senator Chris Telfer
and Representative Vicki Berger.
Erin C. Lagesen, Assistant Attorney General, Salem, filed
the 	answering 	memoranda 	for 	respondents 	John 	R.
Kroger, Kate Brown, Senator Richard Devlin, Senator Diane
Rosenbaum, Representative Arnie Roblan, and Representative
Chris Garrett. With her on the answering memoranda were

Cite as 347 Or
John R. Kroger, Attorney General, and Jerome Lidz, Solicitor
General.
Steven C. Berman, Portland, filed the memorandum for
amici curiae Steve Novick and Defend Oregon-Yes for Tax
Fairness.
DURHAM,J.
The ballot title is referred to the Attorney General for
modification.
The explanatory statement is certified to the Secretary of
State.

296 	McCormick v. Kroger/Devlin
DURHAM,J.
Petitioners have filed separate petitions in this court
seeking review of the ballot title and of the explanatory state-
ment for Referendum 301 (2010), which the Secretary of
State has denominated as Ballot Measure 66. 1 We consoli-
date the petitions for purposes of this opinion.
Ballot Measure 66 results from a referendum of
House Bill (HB) 2649 (2009), which increased certain per-
sonal income taxes effective for the 2009 tax year to raise rev-
enue that the legislature budgeted for education, human
services, public safety, and other public services. Or Laws
2009, ch 714. Because of the referendum, as we explain
below, HB 2649 (2009) did not take effect. Ballot Measure 66,
if approved by the voters, would enact the increased personal
income taxes that the Legislative Assembly adopted in HB
2649 (2009).
I. 	BALLOT TITLE REVIEW
We begin with petitioners' challenges to the ballot
title. We review the ballot title for "substantial compliance
with the requirements of ORS 250.035." Or Laws 2009, ch 714,
§ 12(4). During the 2009 session, the legislature modified the
procedures that govern preparation of the ballot title and this
court's review of ballot title challenges for Ballot Measure 66.
Or Laws 2009, ch 714, §§ 9, 12. Among other changes, the leg-
islature provided that the ballot title for Ballot Measure 66
shall be prepared by a joint legislative committee and that
"[t]he word limits described in ORS 250.035(2) do not apply to
a ballot title prepared by the joint legislative committee
under this subsection." Id. § 9(1). Additionally, if this court
determines, after review, that the ballot title prepared by the
joint legislative committee does not substantially comply
with the requirements of ORS 250.035, this court "shall refer
the ballot title to the Attorney General for modification." Id.
§ 12(6).
1 Article IV, section 3(a), of the Oregon Constitution, provides:
"The people reserve to themselves the referendum power, which is to
approve or reject at an election any Act, or part thereof, of the Legislative
Assembly that does not become effective earlier than 90 days after the end of
the session at which the Act is passed."

Cite as 347 Or 293 (2009) 	297
In response to those requirements, a joint legislative
committee prepared and filed with the Secretary of State the
following ballot title for Ballot Measure 66:
"RAISES TAX ON HOUSEHOLD INCOME AT AND
ABOVE $250,000 (AND $125,000 FOR INDIVIDUAL
FILERS). REDUCES INCOME TAXES ON UNEM-
PLOYMENT 	BENEFITS 	IN 	2009. 	MAINTAINS
FUNDS 	CURRENTLY BUDGETED 	FOR 	EDUCA-
TION, HEALTH CARE, PUBLIC SAFETY, OTHER
SERVICES.
"RESULT OF 'YES' VOTE: 	'Yes' vote raises tax on
income at and above $250,000 for households, $125,000 for
individual filers. Tax rate increases 1.8 percentage points
on 	amount of taxable 	income between $250,000 	and
$500,000, 2 percentage points on amount above $500,000
for households. For individual filers, the rate increases
begin at $125,000 and $250,000 respectively. Eliminates
income taxes on the first $2,400 of unemployment benefits
received in 2009. Raises estimated $472 million to maintain
funds currently budgeted for education, health care, public
safety, other services.
"RESULT OF 'NO' VOTE: 	'No' vote rejects tax changes
on income at and above $250,000 for households, $125,000
for individual filers. Rejects tax exemption for first $2,400
of unemployment benefits received in 2009. Reduces fund-
ing currently budgeted for education, health care, public
safety, other services by estimated $4 72 million.
"SUMMARY: 	Under current law, a marginal tax rate of
9% applies to taxable household income over $15,200 (or
$7,600 for individual filers), taxpayers may deduct federal
income taxes paid, and unemployment compensation is tax-
able. Measure eliminates income taxes on first $2,400 of
unemployment benefits received in 2009. For tax years
2009-2011, the measure increases tax rate 1.8 percentage
points on amount of household income between $250,000
and $500,000, by 2 percentage points on amount above
$500,000 (for individual filers, rate increases begin at
$125,000 and $250,000, respectively). For the tax year
beginning 2012, the tax rate for households with income
above $250,000 (above $125,000 for single filers) will drop
to 9.9%. Measure does not increase tax rate on household
income below $250,000 (below $125,000 for individual fil-
ers). For households with adjusted gross income at or above

298 	McCormick v. Kroger/Devlin
$250,000 (or $125,000 for individual filers), reduces federal
income tax deduction. Raises $4 72 million to maintain
funds currently budgeted for education, health care, public
safety, other services. Because some state money brings in
federal matching funds, Oregon will likely receive more
federal money if measure passes than if it fails. Other
provisions."
Petitioners are electors who are dissatisfied with the
ballot title prepared by the joint legislative committee for
Ballot Measure 66 and, therefore, are entitled to petition this
court seeking a different ballot title. Id. § 12(1). Petitioners
contend that, for several reasons, each segment of the ballot
title fails to comply substantially with statutory require-
ments. In response, the Attorney General argues that the
ballot title complies in all respects with statutory require-
ments. We discuss four of petitioners' challenges.
The caption of a ballot title must reasonably identify
the "subject matter" of a state measure. ORS 250.035(2)(a).
Petitioners focus on the following phrase in the caption:
"MAINTAINS FUNDS 	CURRENTLY BUDGETED FOR
EDUCATION, HEALTH CARE, PUBLIC SAFETY, OTHER
SERVICES." They argue that Ballot Measure 66 does not
purport to "maintain[ ] funds currently budgeted" for the
listed public services because the legislation authorizing
increased taxation is subject to a referendum and, as a
consequence of Article IV, section 1(4)(d), of the Oregon
Constitution, 2 the legislation did not take effect. According to
petitioners, the referendum, if approved, would authorize the
collection of additional or new revenue, but it does not "main-
tain[]" any currently budgeted revenue. They assert that, in
suggesting that the measure would "maintain[ ]" funds, the
caption 	inaccurately 	states 	the 	subject 	matter 	of 	the
measure.
The Attorney General responds that the phrase
"[m]aintains funds currently budgeted" is both accurate and
2 Article IV, section 1(4)(d), of the Oregon Constitution, provides:
"Notwithstanding section 1, Article XVII of this Constitution, an initiative
or referendum measure becomes effective 30 days after the day on which it is
enacted or approved by a majority of the votes cast thereon. A referendum
ordered by petition on a part of an Act does not delay the remainder of the Act
from becoming effective."

Cite as 347 Or 293 	299
properly included in the caption. The Attorney General
emphasizes that the legislature approved its current budget
with the additional tax revenue in mind and passed HB 2649,
providing for the tax increases that would generate the new
revenue needed to balance the budget. Additionally, amici
curiae argue that petitioners read the phrase "[m]aintains
funds" out of context, stressing the significance of the phrase
"currently budgeted for* **."According to amici curiae, the
phrase "[m]aintains funds currently budgeted for" does not
assume that the described tax funds have been received or
that the tax provisions have taken effect.
We agree with petitioners. The terms of a ballot title
that state or imply the law that the proposal would enact
must describe that law accurately. Novick/ Bosak v. Myers,
333 Or 18, 24, 36 P3d 464 (2001). The term "maintains" in the
phrase "maintains funds currently budgeted for" incorrectly
describes the operative effect of Ballot Measure 66 in the
context of existing law. Because the referendum measure,
by operation of Article IV, section 1(4)(d), of the Oregon
Constitution, will become effective only if the voters enact it,
the measure will not "maintain" the revenue that the pro-
posed tax increases will produce. Rather, an approval of the
measure will provide the additional revenue.
The issue that the voters must address is whether to
approve, and thereby provide, the funds currently budgeted
for education, health care, public safety, and other services.
The term "maintains," in context, implies inaccurately that
funds necessary for the described services already are legally
available and that disapproval of the measure will nullify
currently available revenue.
To remove the inaccuracy that we have noted, and to
insure substantial compliance with statutory requirements,
the term "maintains" should be stricken from the caption,
and it should be replaced by the term "provides." The Attor-
ney General must effect those changes on referral.
Petitioners point out that the word "maintain" also
appears in the "yes" vote result statement and the summary,
and that it creates the same misleading inference in those
parts of the ballot title. The "yes" vote result statement must
be 	a 	"simple 	and 	understandable 	statement * * * that

300 	McCormick v.
describes the result if the state measure is approved." ORS
250.035(2)(b). The summary is a "concise and impartial state-
ment * * * summarizing the state measure and its major
effect." ORS 250.035(2)(d).
The "yes" vote result statement states, in part:
"Raises estimated $4 72 million to maintain funds currently
budgeted for education, health care, public safety, other serv-
ices." 	(Emphasis 	added.) The 	summary states, in part:
"Raises $4 72 million to maintain funds currently budgeted
for education, health care, public safety, other services."
(Emphasis added.)
We agree with petitioners' objection. Although those
passages in the "yes" vote result statement and summary are
not identical to the challenged phrase in the caption that we
have discussed and, in context, are somewhat more accurate
in describing the measure, the term "maintain" still creates
the same erroneous inference in those parts as well.
To cure that problem and to bring the "yes" vote
result statement and summary into substantial compliance
with statutory requirements, the term "maintain" must be
stricken and replaced by the word "provide." The Attorney
General must effect those changes on referral.
Petitioners also contend that the following clause in
the "no" vote result statement is inaccurate:
"Reduces funding currently budgeted for education, health
care, 	public safety, 	other services by estimated $472
million."
(Emphasis added.) The "no" vote result statement is a "sim-
ple and understandable statement * * * that describes the
result if the state measure is rejected." ORS 250.035(2)(c).
According to petitioners, the term "reduces" in that clause
incorrectly describes the result of a rejection of the measure
for reasons that mirror their challenges to the terms "main-
tains" and "maintain" in the other parts of the ballot title that
we have discussed above. Consistent with those arguments,
petitioners contend that a rejection of the proposed measure
will not "reduce" funding currently budgeted because, as a
result of the referendum, the additional funding for the listed
services has not been approved or enacted in the legal sense.

301
For that reason, they argue, a rejection of the measure, cor-
rectly 	understood, 	will leave 	the legislature's 	approved
budget for the affected public services out of fiscal balance by
the estimated sum of $4 72 million.
The Attorney General responds that the phrase
"[r]educes funding currently budgeted" is accurate. Accord-
ing to the Attorney General, the legislature's revenue meas-
ure, HB 2649, is the predicate for the legislature's current
budget. Consequently, a rejection by the voters of Ballot
Measure 66 will nullify the new revenue provisions in HB
2649 (2009) and, thereby, "reduce" funding that the legisla-
ture currently has budgeted.
We agree with petitioners. The term "reduces" in the
phrase "[r]educes funding currently budgeted" creates an
inference that a rejection of the measure by the voters will
nullify an available source of revenue. But, as our discussion
of the term "maintain" indicated, one consequence of the ref-
erendum on HB 2649 is that the new revenue provisions do
not take effect unless the voters approve them. Thus, a rejec-
tion of the measure by the voters will not reduce funding.
Rather, a rejection of the measure will leave the legislature's
budget with insufficient funding to pay for the affected public
services. We do not agree with the Attorney General's prem-
ise that the words "currently budgeted" will adequately con-
vey that important distinction to most voters.
When the legislature provides insufficient revenue
to pay for the public services that its budget describes, the
legislature's approved budget is underfunded. See Merriam-
Webster's Collegiate Dictionary 1363 (11th ed 2004) (defining
"underfund" as "to provide insufficient funds for."). A rejec-
tion of Ballot Measure 66 by the voters will leave the legisla-
ture's budgeted services underfunded, but will not "reduce"
funding for those services.
To correct the shortcoming that petitioners have
identified, and to bring the "no" vote result statement into
substantial compliance with statutory requirements, the
clause in question in the "no" vote result statement must be
modified to state:

302 	McCormick v. Kroger/Devlin
"Leaves amount currently budgeted for education, health
care, public safety, other services underfunded by esti-
mated $472 million."
The Attorney General must effect that modification on
referral.
Petitioners assert a number of additional challenges
to the ballot title. We have considered each challenge, but, in
applying the substantial compliance standard of review, we
conclude that no further changes to the ballot title are nec-
essary. We will refer the ballot title to the Attorney General
for modification for the reasons discussed above.
II. 	EXPLANATORY STATEMENT REVIEW
ORS 251.215(1) requires a committee appointed
under ORS 251.205 to "prepare and file with the Secretary of
State, an impartial, simple and understandable statement
explaining" any state measure to be submitted to the people.
The legislature enacted certain modifications to the proce-
dures that generally govern the preparation of the explana-
tory statement for Ballot Measure 66. For example, in lieu of
the procedure described in ORS 251.205(2), providing for
appointment of a committee of citizens to prepare the explan-
atory statement, Oregon Laws 2009, chapter 714, section
9(2), provides that the explanatory statement in this circum-
stance shall be drafted by a joint legislative committee.
A joint legislative committee prepared and filed with
the Secretary of State an explanatory statement for Ballot
Measure 66. Petitioners seek review of that explanatory
statement, asserting that it is "insufficient or unclear" under
Oregon Laws 2009, chapter 714, section 13(1). Subsection (2)
of that section provides that, if a petition challenging the
joint legislative committee's explanatory statement is prop-
erly filed and served, this court "shall review the statement
and certify an explanatory statement to the Secretary of
State * * *."
The legislature, in providing for explanatory state-
ment review in this court, did not modify the statutory stan-
dard under which this court has reviewed explanatory state-
ments in other cases. See ORS 251.235(1) (authorizing any
dissatisfied person to petition this court "seeking a different

Cite as 347 Or 293 	303
statement and stating the reasons the statement filed with
the court is insufficient or unclear"). Thus, in reviewing the
explanatory statement for Ballot Measure 66,
"[o]ur task is to determine whether the explanatory state-
ment contains a sufficient and clear statement explaining
the measure."
Sizemore v. Myers, 327 Or 456, 459, 964 P2d 255 (1998). We
turn to that issue.
A joint legislative committee prepared the following
explanatory statement for Ballot Measure 66:
"EXPLANATORY STATEMENT: 	Measure 66 estab-
lishes new marginal state income tax rates for households
with income over $250,000 a year, and individual filers
with income over $125,000 a year beginning in tax year
2009. The Measure would not increase taxes on household
income under $250,000 (or $125,000 for individual filers).
The Measure would exempt from income taxes the first
$2,400 in unemployment compensation received in 2009.
The Measure would raise approximately $4 72 million,
which would maintain funds currently budgeted for educa-
tion, health care, public safety and other services. Approxi-
mately 90% of the state general fund budget goes to educa-
tion, health care and public safety.
"Under current law, unemployment compensation benefits
are taxable income. The Measure eliminates income taxes
on the first $2,400 of unemployment benefits received in
2009, so that individuals who received unemployment com-
pensation in 2009 will have not to pay state income taxes on
those benefits.
"Under current law, a marginal tax rate of 9% applies to
taxable household income over $250,000 a year, and indi-
vidual filers with income over $125,000 a year. Measure 66
increases the marginal tax rate by 1.8 percentage points on
household income between $250,000 and $500,000 and by
2 percentage points on household income above $500,000.
For individual filers, the marginal tax rate increase of
1.8 percentage points begins for income over $125,000 and
the 2 percentage points increase begins for income above
$250,000. For the tax year beginning 2012, the tax rate for
households with income above $250,000 and $125,000 for
individual filers will drop to 9.9%. The Measure also phases

304 	McCormick v. Kroger/Devlin
out the federal income tax deduction for households with
adjusted gross income at or above $250,000 and individuals
with income at or above $125,000. Income tax rates will not
increase on household income under $250,000 and individ-
ual income under $125,000.
"Because some state money brings in federal matching
funds, the state is likely to receive more federal money if the
Measure passes than if the Measure fails."
Petitioners are dissatisfied with that explanatory
statement for numerous reasons. The Attorney General
argues that the joint legislative committee's explanatory
statement is "an impartial, simple and understandable state-
ment explaining the measure[,]" within the meaning of ORS
251.215(1), and urges the court to certify the explanatory
statement to the Secretary of State without modification.
Petitioners focus one of their objections on the fol-
lowing sentence in the explanatory statement:
"The Measure would raise approximately $472 million,
which would maintain funds currently budgeted for educa-
tion, health care, public safety and other services."
(Emphasis added.) As petitioners argued with respect to the
ballot title, they contend that the term "maintain" in the
emphasized passage of the explanatory statement will mis-
lead voters because the new revenue provisions in HB 2649
have not taken effect due to the referendum and, therefore,
the proposed measure does not "maintain" those new sources
of revenue.
The Attorney General argues that the legislature did
pass HB 2649, which contains the new revenue provisions,
and "designed the current budget around it."
We 	agree 	with 	petitioners for 	reasons 	that we
explained in requiring modification of several parts of the
ballot title that exhibited the same problem. The use of the
term "maintain" in the emphasized passage quoted above
renders the explanatory statement insufficient and unclear.
To resolve that deficiency, we will replace the word "main-
tain" with the correct word, "provide," in the explanatory
statement.

Cite as 347 Or 293 	305
We have examined petitioners' other challenges to
the 	explanatory 	statement 	and 	the 	Attorney 	General's
responses. We do not discuss the details of the parties' con-
tentions concerning those additional challenges. We conclude
that none of petitioners' other challenges is well-taken. Pur-
suant to Oregon Laws 2009, chapter 714, section 13(2), we
certify the following explanatory statement to the Secretary
of State:
"EXPLANATORY STATEMENT: 	Measure 66 estab-
lishes new marginal state income tax rates for household
with income over $250,000 a year, and individual filers
with income over $125,000 a year beginning in tax year
2009. The Measure would not increase taxes on household
income under $250,000 (or $125,000 for individual filers).
The Measure would exempt from income taxes the first
$2,400 in unemployment compensation received in 2009.
The Measure would raise approximately $4 72 million,
which would provide funds currently budgeted for educa-
tion, health care, public safety and other services. Approxi-
mately 90% of the state general fund budget goes to educa-
tion, health care and public safety.
"Under current law, unemployment compensation benefits
are taxable income. The Measure eliminates income taxes
on the first $2,400 of unemployment benefits received in
2009, so that individuals who received unemployment com-
pensation in 2009 will have not to pay state income taxes on
those benefits.
"Under current law, a marginal tax rate of 9% applies to
taxable household income over $250,000 a year, and indi-
vidual filers with income over $125,000 a year. Measure 66
increases the marginal tax rate by 1.8 percentage points on
household income between $250,000 and $500,000 and by
2 percentage points on household income above $500,000.
For individual filers, the marginal tax rate increase of
1.8 percentage points begins for income over $125,000 and
the 2 percentage points increase begins for income above
$250,000. For the tax year beginning 2012, the tax rate for
households with income above $250,000 and $125,000 for
individual filers will drop to 9.9%. The Measure also phases
out the federal income tax deduction for households with
adjusted gross income at or above $250,000 and individuals
with income at or above $125,000. Income tax rates will not

306 	McCormick v. Kroger/Devlin
increase on household income under $250,000 and individ-
ual income under $125,000.
"Because some state money brings in federal matching
funds, the state is likely to receive more federal money if the
Measure passes than if the Measure fails."
The ballot title is referred to the Attorney General
for modification.
The 	explanatory 	statement 	is 	certified 	to 	the
Secretary of State. 3
3 Chief Justice Order No. 09-061(Oct29, 2009) provides as follows in regard to
these proceedings:
"Notwithstanding ORAP 11.30(12), any petitions for reconsideration
must be filed and physically received by the Office of the Appellate Court
Administrator no later than 12:00 noon on the day following issuance of the
Court's decision."