Gov. John Kitzhaber on Wednesday asked Oregon lawmakers to scale back the kicker checks that taxpayers get when the state takes in more revenue than anticipated.
Kitzhaber lent his support for the proposal in testimony to the Senate Finance and Revenue Committee, the second time in as many days that the governor has testified at the Legislature after he stumped for his education agenda on Tuesday.
Kitzhaber and others who support changing the kicker say it prevents the state from saving money during good times to use during bad times. The governor told lawmakers that the state depends far more on volatile income taxes than most other states, and the kicker law should be changed to create a more reliable savings account.
"It is something that most responsible businesses and most responsible families seek to do, and there's no reason the state shouldn't do the same thing," Kitzhaber said.
No vote has been scheduled for the two kicker measures, SJR 26 and SB 754, but Democratic Sen. Ginny Burdick of Portland promised, "You have not heard the last of this."
Kicker checks are triggered when state income tax collections at the end of a two-year budget cycle exceed projections by at least 2 percent. The most recent revenue forecast, released in March, showed collections from businesses just $6.9 million below that threshold.
If the kicker is triggered, businesses will get at least $16 million in refunds at the same time lawmakers are looking to close a roughly $3.5 billion gap between revenue and the projected cost of continuing current services.
Non-business tax collections are far below the threshold necessary to kick money back to individual taxpayers.
Instead of returning excess money back to taxpayers, SJR 26 would ask voters to send it to a savings account. Businesses would give up all of their kickers, and individuals would give up half until the fund reaches 14 percent of the total budget.
SB 754 earmark some savings for universities and community colleges.
Money in the savings accounts could only be spent during budget crises with the approval of 3/5 of lawmakers.
Lawmakers from both parties have signed on to scaling back the kicker law, saying the checks make Oregon's budget one of the most volatile in the country. Some point to the $1.1 billion in kicker refunds that went out in 2007, which were followed by massive cuts to education, health care and most other state services as the economy soured in the Great Recession.
"We know if we'd saved better during good times...we'd still be making some cuts but those cuts would be significantly less, and that would provide our kids with a more stable and effective school system," said Dana Hepper, Oregon advocacy director for Stand for Children, an interest group that promotes programs for children.
Business groups and labor unions also said they support the measure.
Since voters approved the kicker in 1980, it's been triggered nine times for individuals and eight times for corporations. Lawmakers suspended business refunds twice and personal refunds once.
It was envisioned as a way to control spending, preventing lawmakers from using unexpected money pay for new programs. But, critics say, lawmakers could reach the same result by diverting part of the money to savings instead of to tax refunds.
Lawmakers who want to leave the kicker law alone say taxpayers deserve to get their money back when the state takes in more money than it expects. They say the kicker did not cause the budget deficit and shouldn't be blamed for the problem.
Voters created the kicker with a ballot measure, so changing it will also require approval from voters.
Kitzhaber said after his testimony that he's confident the measure would pass the Senate but is unsure of its chances in the House, where an even split between Republicans and Democrats makes it difficult to predict the outcome of controversial legislation.
- tax refunds
- budget deficit
- income taxes
- savings account
- in the House