Once again the idea of repealing Oregon’s income tax kicker is being chatted up in Salem. That’s no surprise: The 2019 Legislature may face as much as a $1 billion revenue shortfall, and raising taxes is far easier than cutting programs or bringing reason to the state’s underfunded Public Employees Retirement System.
Ditching the kicker does not solve the problem, and while changes to it might make sense, elimination of the program does not. It is one of the only ways Oregonians have of trying to keep state spending under control.
Lawmakers wrote the kicker bill in 1979, and voters approved it the next year. It requires the state to kick all excess revenues back to taxpayers when they exceed biennial projections by anything over 2 percent. That happened in 2017; it likely will happen again in 2019.
The law could stand some tweaking. It makes sense, for example, to allow the state to keep unexpected revenues up to the magical 2 percent mark, then refund anything over that. Looking two years out, as the state now does, makes predicting revenues accurately difficult.
Lawmakers could also consider asking voters to approve a revenue estimate each year. Accuracy would no doubt improve as a result, and kickers might still be paid occasionally, but almost certainly not as often as they are now.
More important, the Legislature could, at long last, get serious about reforming PERS. The state’s unfunded PERS liability is measured in billions of dollars, and for the last few years lawmakers have been unwilling to seek a legal method of overhauling the pension program. That’s bad enough, but the PERS problem hits nearly every tax-supported agency in Oregon.
Then there are plain, old-fashioned budgeting changes. Too many lawmakers apparently believe they’re in Salem to spend, and only to spend. Yet deciding what can be cut is also a key part of budgeting.
The kicker serves as a valuable check on legislative spending, and as such it must not be abandoned. Fine tuned, perhaps, but certainly not eliminated.