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Bennett's Blog: Kickers, forecasts and payday loans Print E-mail
chuck-bennettby Chuck Bennett, Director of Governmental Relations

That old Oregon saw, "if you don't like the weather, wait ten minutes and it will change," is becoming more apropos for state tax collections than predicting rainfall.

Take a look at the most recent economic forecast. Every aspect of Oregon's tax producing economy is breaking records. More smoking, more drinking, more gambling and more income mean more taxes. It's not a present our Methodist fore-parents dreamed as the state's future. Apparently it's not the present our state economist could predict even a couple of years ago. In fact, predictions were far enough off that under the state's one-of-a-kind "kicker" law most of the excess collections – some $1.3 billion – is going to be returned to individual and corporate taxpayers.

It must look to outsiders like Oregonians are living in some isolated gilded age where unbridled revelry at the video slots is being financed with tax rebates handed out by a state where education spending has reached Appalachian proportions, state police protection has been halved and health care – well, what health care?

That’s from the outside. Inside, just look at the newspaper the same day the economic forecast was released and a few headlines down is the report on Oregon school bond measures. In a kind of fiscally fearful symmetry, districts are going to voters in November for about $1.4 billion to deal with long-delayed or critically-needed building bond proposals.

In a kind of bi-partisan game of chicken, both major party candidates for governor have agreed something needs to be done. Do you think? So what does this pair have in mind? They want to hold onto the corporate kicker and put it into a rainy day fund. “Tough” tax-talk for candidates in a race where breakthrough issues are in short supply. What’s missing is a serious debate over the personal portion of the kicker, which makes up the bulk of the give back.

Remember, kickers were instituted by Democrats in the late 1970s in response to public outcry over property tax payments. In those days the state lawmakers were seeing 30 and 35 percent increases in state income. There never was a time the income tax didn’t produce surpluses, and no need for a plan during good years to bank revenues against lean years. Faced with mounting public concern they began the kicker plan and sent back income taxes to all taxpayers to help quiet the grumbling. It worked until the bottom dropped out of Oregon’s economy in the 1980s and taxpayers, never content with a little tax relief, decided to break the local bank with Measure 5 and its successors.

Despite lots of public fretting by lawmakers over the impact of the property tax law changes on local governments like schools, cities and counties, nobody mentioned that plummeting property taxes might be slightly counterbalanced by removing the now purposeless kicker law. Instead, the Oregon-only law made its way to the Constitution through a voter approved referendum.

So, here we are. Both candidates for governor are taking the politically-unimaginative position that sending hundreds of millions of dollars out-of-state to corporations doesn’t make sense, and avoiding the elephant in the living room – sending every Oregon family around $260 in tax kicker checks while we charge students (and, by association, their families) a similar amount or more in student fees to participate in sports or take a lab science.

It’s amazing all of this happens in a state where we just outlawed payday lending. If the legislature is smart enough to help Oregonians on personal finance, what is so hard to understand about this jury-rigged tax policy they so carefully avoid addressing?

Comments (3)Add Comment
written by Brody Guthrie, September 07, 2006
would it be possible to state our case and present it to the voters? Some schools have put off maintenance to better educate kids. Asbestos removal is just one reason to ask voters. I have heard that only 10% of people under thirty vote, (ouch), so it would be difficult to sell but worth the effort for the safety of our kids.
written by Craig Hawkins, COSA, September 07, 2006
One part of COSA's early agenda for the 2007 is to work with the Legislature and our education partners to have a measure referred to voters that will revise the current "kicker" law. At a minimum, we're discussing a measure that would require that kicker funds are used to build a "rainy-day" fund for the entire state budget before the remainder is returned to voters. COSA's legislative agenda is still under development, and will be discussed at length at the OASE Funding Coalition and Off The Record meetings on September 22.
Principal, Talmadge Middle
written by Beau Horn, September 12, 2006
I too saw the irony that the request for construction/maint.bonds was close to the kicker figure. But the madness doesn't stop there. The govenor wants to add 125 state troopers but can't find a funding source. We have to go to a private company to build a toll road to alleviate a chronic traffic problem in Dundee. Our elementary school class sizes are the second largest in the country (behind Utah). Add to all this that the voters are considering a draconian spending limit!

Several years back, I would have been optimistic that the upcoming legislative session would "solve" all of this but I am regretfully cynical towards the process.

How can we bring some sanity back to financing the needs of our schools and our state? Thanks for 'listening', I'm better now!

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