O regon’s tax kicker will be a record-breaker next year. The state’s latest — and last, for the 2017-19 biennium — revenue forecast shows the state will be required to send $1.6 billion back to the taxpayers.
The kicker law, which is part of the state constitution, is unique to Oregon. It works this way: When state income tax revenues exceed initial budget forecasts more than 2% in the two-year state budget cycle, everything above that first forecast must be returned to taxpayers. Today, the extra money is applied first to taxpayers’ income taxes, and if they owe less than what they’d get from the kicker, the balance is mailed out in a check.
The idea behind the kicker is to put some kind of control on spending. It prevents lawmakers from spending what amounts to a windfall that comes from having a strong economy and the resulting higher tax revenues than expected.
Not surprisingly, some lawmakers have toyed with the idea of changing the kicker provision. They’ve talked of using kicker dollars to pay off some of the state’s whopping $23 billion-plus unfunded liability in the Public Employees Retirement System. They’ve permanently diverted the kicker for corporations, a move approved by taxpayers.
And, already this year, they’ve changed the 2017-19 budget to reduce the kicker for the biennium that ended June 30.
They must leave the balance of the kicker alone. Only under the most tortured legislative logic is the excess tax revenue something the state of Oregon is entitled to. Lawmakers can be remarkably good at torturing logic, to be sure. This time, however, they must let the constitutional kicker provision play out as voters intended when they added the kicker to the constitution in 2000.