Oregon Public Broadcasting

Oregon has a quirky law called the kicker.  That means when times are good and state coffers are flush, taxpayers can expect a kicker refund check in the mail.  

Times are certainly not flush now, but economists are warning that despite a looming three billion dollar budget deficit, the state could still be in the position of dishing out kicker cash two years from now.  

A group of Oregon lawmakers introduced a measure Tuesday that would prevent that.  Salem correspondent Chris Lehman reports.

A group of education advocates has gathered in the marbled lobby outside the House chamber.  They’re here to hand over a batch of petitions to lawmakers signed by people against cuts to education funding.

Dena Hellums:  “We’re here to present you with over 8000 signatures, two weeks after....”

But cuts will happen anyway.  That’s because lawmakers have to plug an $855 million hole in this year’s budget.  The hole is big -- but it’s smaller than the $1.1 billion in kicker refunds the state sent out just over a year ago.

Under a new proposal in Salem, more than half of that kicker would have instead gone to the state’s rainy day fund.
Democratic Senator Ginny Burdick of Portland says it’s about smart money management..

Ginny Burdick:  “It’s a mandatory savings program, so when the hard times hit we are not closing schools, we are not closing courts, we are not taking state police off the road.”

Here’s how the kicker works now.  It’s not as complicated as it sounds. At the end of each legislative session, state economists predict how much tax money the state will bring in over the next two years.  With me so far?

Lawmakers base their spending on that estimate. 

If less money comes in than predicted, then lawmakers have to cut programs. 

But if more money comes in, then the kicker kicks.  The excess is refunded to taxpayers in the form of a kicker check.

Right now it’s only triggered when the state brings in two percent more than predicted.  This proposal would raise that to six percent.  

It doesn’t rule out a kicker entirely -- it just makes it far less likely to happen.  

Former Republican lawmaker Lane Shetterly chaired a task force that developed the proposal.  He says basing the kicker on a revenue forecast that’s two years old doesn’t make sense.

Lane Shetterly:  “The one thing we can safely say about the revenue forecast over its history is that it’s always wrong.  And that’s not the fault of state economists.  That’s just because it’s a tough number to pick.”

Tom Potiowsky:  “It’s gotten very hard most recently.”

That’s state economist and chief revenue forecaster Tom Potiowsky.  He says the economy is so volatile right now that predicting state revenues over the next two years is  really just a guessing game.

Tom Potiowsky:  “We have to be proactive in essence of saying we know recessions generally end—in fact, every one has so far.  But when does it actually end, how deep is it going to be before the end, the speed at which it comes out of recession.  Those are the tricky questions.”

So an unexpectedly early economic recovery could result in a huge kicker rebate, even after lawmakers make huge cuts to state programs.  Heading off that possibility is a main motivation behind the proposal to scale back kicker checks.  

Since the kicker is in the Oregon Constitution, this plan would have to go to voters. 

Critics of the plan, like Steve Buckstein of the Cascade Policy Institute, say there’s nothing to stop the Legislature from simply spending less money and stashing the rest away into savings.  He’s not sure Oregon voters are going to go for altering their kicker.

Steve Buckstein:  “This is technically not a tax increase.  But it is, in the sense that it would be reducing the amount of the kicker which means less money in the private sector, more money in the public sector, the government sector. So I think a semi-organized opposition would simply say “they’re taking your kicker” and they would stand a good chance of succeeding with that campaign.”

Supporters of the proposal say the kicker checks would resume as usual once the state’s rainy day fund is full.  That’s an amount that’s roughly ten percent of the state’s spending plan.