Oregonians face a big decision this fall, as they consider how to vote on a $3 billion corporate tax measure that could reshape the state's finances and the future of government services.

Measure 97 would charge certain C corporations a 2.5 percent tax on their gross annual sales in Oregon above $25 million. State economists estimated the tax would raise at least $6 billion for every two-year spending cycle, a 33 percent increase in tax revenue from the state's current $18 billion general fund budget.

That money could allow lawmakers and Gov. Kate Brown to avoid difficult cuts to government services next year, when state budget analysts expect to face a $1.35 billion deficit as a result of employee raises and other personnel costs, a shortfall in the public employee pension fund and the cost of expanding Medicaid under the Affordable Care Act.

Businesses with high sales volumes but low profit margins, such as grocery stores and vehicle dealerships, have said the tax would consume any profits and force them to choose between passing the cost on to customers or going bankrupt.

Here are answers to some questions Oregonians are asking about Measure 97.

Q: Would Measure 97 be the largest tax increase in Oregon's history?

A: Yes, by at least one measure. Legislative Revenue Officer Paul Warner said the $3 billion tax would probably be the largest based purely on the amount. But Warner has not researched whether it would be the largest state tax increase on a percentage basis. "I don't know if it would be proportionally," Warner said. "Certainly it would be the largest in dollar terms just because the economy's so much larger."

Pat McCormick, a spokesman for the campaign to defeat the tax, had no reservations about calling this the largest tax increase in state history. "There's never been any tax proposal that amounted to close to 30 percent of the general fund," McCormick said.

Q: Would businesses pass the tax on to consumers?

A: Probably, at least in some cases. Economists for the Legislature and at Portland State University have said companies tend to pass this type of tax, known as a gross receipts tax, to consumers. The Portland State University study was paid for by the union-affiliated group Our Oregon, which also got the measure onto the ballot.

Costs could be passed along on groceries, utility bills and even insurance premiums.

The state economists used a computer model to predict how much the potential wage and price changes might cost consumers. They found low- and middle-income households would be hardest hit, with an annual reduction in income of $372 or 0.9 percent for households earning less than $21,000. Households earning $103,000 to $137,000 annually could see an $868 or 0.8 percent reduction in their income.

Q: What would the tax pay for?

A: Measure 97 says the Legislature must spend the new tax revenue in three areas: early childhood and K-12 education, health care and senior services. However, it turns out lawmakers could spend the money however they want.

That's because legislators can also pass new laws, and in this case all it would take is a routine budget bill to change how the state would spend the new corporate tax revenue, according to a lawyer for the Legislature.

If voters pass Measure 97, lawmakers might feel political pressure to follow spending priorities laid out in the measure. But they'll also face pressure to pass legislation aimed at minimizing economic downsides of the tax, and that would mean less revenue for the state.

Gov. Kate Brown released a plan earlier this summer to expand or create tax credits and deductions to offset the impact on certain businesses. The governor also wants to spend all the taxes collected on gas and diesel sales on transportation, which she said is required under the state Constitution.

Q: Would the tax cause layoffs?

A: Not according to the two economic studies of the tax proposal. Instead, economists for the state Legislature and at Portland State University found the tax would probably result in the private sector adding fewer jobs than it would have without the tax. It would have the opposite effect for the public sector, because governments would use some of the new tax revenue to hire more employees.

-- Hillary Borrud

503-294-4034; @hborrud