There is a reason that Oregon is the only state in the nation that rebates surplus tax collections to citizens. It’s a bad idea.
The “kicker” was a bad idea 37 years ago when it was first enacted by the Legislature and it’s a bad idea today. What many other states do with their surplus, and what we should do with ours, is to save it for a rainy day.
Rainy days always come, especially in Oregon, which has one of the most volatile tax systems in the country, one that is especially sensitive to economic downturns.
Like the last time the kicker kicked.
It was in 2007, on the eve of the Great Recession. Taxpayers received a $1.1 billion kicker just before the bottom fell out of the state and national economy and the state budget. The next few years saw huge cuts to school funding, to higher education funding and to other needed services. Higher education funding still has not recovered nearly a decade later.
Now we are about to repeat the same mistake. If the Legislature does nothing, an estimated $473 million in kicker funds will be credited to state taxpayers when they pay their state income taxes in 2016.
That’s $473 million that we ought to be saving for a rainy day. We know, for example, that the recent Oregon Supreme Court decision to overturn unconstitutional cuts to PERS retirees’ pensions will cost the state and the schools hundreds of millions in the 2017-19 budget cycle. The kicker funds could soften the blow considerably.
Besides giving away money that we ought to be saving, there is another problem with the kicker that the Oregon Center for Public Policy recently pointed out. The kicker is a huge gift to the rich and provides little or nothing to lower income Oregonians. An analysis on the OCCP website (ocpp.org) shows that nearly $1 out of every $5 in kicker funds will go to the top 1% of Oregon taxpayers. Sixty percent of taxpayers will get only 15% of the benefit.
The average kicker for the lowest 20% of taxpayers will be $11, and the average kicker for the top 1% will be $5,373.
Representative Tobias Read of Beaverton has introduced House Bill 3555 to suspend the kicker and put half of the $473 million into a rainy day fund and use the other half to increase funding for K-12 schools and higher education.
We’d rather see all the funding go into a rainy day fund, but Representative Read’s bill, which would require a two-thirds vote of the Legislature to pass, is a better alternative than perpetuating a foolish giveaway to the rich.
Salem Weekly editorial board members:
Lois Stark, Russ Beaton, Jim Scheppke, William Smaldone, A.P. Walther.