Ballot Measure 97, the most expensive measure in state history, failed after a campaign that pitted public employee unions against businesses.

Voters rejected the measure after a campaign in which opponents said the tax would trickle down from business to business before reaching consumers. Opponents called it a hidden sales tax.

Despite vast uncertainty over how the state would plug a billion-dollar budget deficit, lawmakers said they were optimistic they’d be able to use the defeat and create momentum for tax reform in the Oregon Legislature.

“We have to move forward (and) we’ll move forward systemically,” said Rep. Mark Johnson, a Hood River Republican. “You have to look at what’s got us into this situation of a budget deficit. Part of it is spending.”

“Let’s see what we can do,” said Sen. Mark Hass, a Beaverton Democrat who opposed the measure, “and see if we can find something that’s a better fit.”

Measure 97 would have levied a 2.5 percent tax on businesses that generate $25 million or more in Oregon sales. State economists said it would raise $3 billion per year, about a third of the state’s current budget, which proponents said would boost schools, senior services and health care services.

The measure was pitched by Our Oregon, a group largely backed by public service and teachers unions. Both sides reported raising and spending more than $42 million combined.

After receiving support from Democrats who said the measure would help stabilize the state’s budget and shift the tax burden from individual taxpayers to large corporations, the measure’s support declined closer to the election.

Opponents, mainly funded by large donations from big businesses, bought ads that told voters their bills would rise on most common items they buy.

Despite losing the vote, the campaign in favor declared a victory.

“While we did not win this election this time, we did win the debate,” the proponents said in a statement Tuesday night. “Because of the work we did no one is going to accept school budget cuts, or more expensive health care, without first asking: Instead of cuts, why not make large corporations pay their fair share? That’s a victory in its own right, and it’s something to be proud of.”

— Reporter: 406-589-4347,

tanderson@bendbulletin.com