The State of Oregon is on the verge of enacting its ninth “kicker” tax rebate and returning an estimated $470 million to Oregon taxpayers. The kicker, which was voted into the Oregon State Constitution in 2000, is enacted whenever state revenues are 2 percent more than the calculated budget. A quickly improving economy and the ongoing intricacies of projecting state revenues two years in advance has led to renewed debate and a new proposal to kill the kicker and retain the surplus for schools and a rainy day fund. Here, Chuck Sheketoff from the Oregon Center for Public Policy and Republican state representative Vic Gilliam rekindle this debate.
illustrations by Karen Eland
Director, Oregon Center for Public Policy
It was late 2007. The Great Recession was starting, though its arrival wasn’t yet apparent. Even though its finances were about to tank, the state spent $1.1 billion of unanticipated revenue on a tax credit called “the kicker.”
Had Oregon saved that money in its “rainy day” fund, it could have cushioned the blow of the ensuing recession. Instead, the kicker exacerbated the sharp drop in state revenue that accompanied the recession and added to Oregonians’ widespread misery—teacher layoffs, shorter school years, cuts to the Oregon State Police, college tuition hikes, reduced services for vulnerable seniors and children. The list goes on.
The kicker kicks in when revenue comes in 2 percent or more above what state economists forecast two years earlier. That’s a wafer-thin margin for error, especially when making two-year predictions on something so complex as a state economy tied to the much larger national and world economies.
Saving unanticipated revenue to help alleviate fiscal emergencies is the prudent and fiscally conservative course of action. But the irresponsible kicker law directs the legislature to spend the money on a tax credit that disproportionately benefits the wealthiest Oregonians, those who least need help.
A fiscally responsible legislature would set aside the unanticipated money to prepare Oregon to weather the next recession. We don’t know when the next recession will hit. We do know, however, that at some point another recession will strike.
While lawmakers don’t have the power to suspend the business cycle, they do have the power to suspend the kicker spending. They can choose to save the money for the next rainy day. All they need is the will and the support from Oregonians to be fiscally responsible stewards of our state.
Oregon State Representative, District 18
A well-intended kicker related bill recently appeared on the Oregon House docket because so many folks are currently vying for their share of the budget. Constituents, senior legislators, crafty lobbyists and most importantly, vulnerable Oregonians in need—all are clamoring for more funding. So it’s awfully tempting to exercise the extreme option of overruling a kicker by a two-thirds majority of the legislature. Given the most recent economic forecasting (which is how the kicker is charted), the kicker is projected to be nearly a half-billion dollars.
Did I mention the kicker is in the Oregon constitution by a vote of the people?
The time to initiate a discussion on negating, changing or otherwise abolishing the kicker is not in the middle of a session. How can you maintain an unbiased perspective with budget fights in full bloom?
It would be far better to examine this issue when a large sum of hard-earned money is not in the immediate balance – avoiding the appearance of greedy legislators eager to spend money promised to taxpayers.
State representatives and state senators are elected to serve the people and to balance the state budget with fairness. Many of those same voters said something loud and clear several years ago. Namely, that Oregon’s kicker law gives rebates to individual taxpayers when state revenue exceeds its previously projected total by more than 2 percent. Simply put, the money is the taxpayers, and we are under oath to return it to them.
If times have changed, attitudes have shifted, we must find a more appropriate time to debate, poll, educate and campaign. Those who oppose the kicker will be more credible in their effort to kill the kicker, but not in mid-session when that hulking heap of money tempts legislators to stir it back in the state spending pot.