1859 Spring 2010

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The Kicker
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kicker when you click on this
article at 1859magazine.com
The kicker is a constitutionally mandated rebate for individual and corporate Oregon taxpayers that is triggered
when a biennial tax revenue surplus exceeds the biennial revenue forecast by more than two percent. The kicker
law was approved by voters in 1980 but was not made part of the constitution until 1999. Proponents of the kicker
law cheer that is has kicked back revenues to taxpayers eight times since its inception. Opponents to the kicker say
that boom-time revenues should be saved to alleviate bust-time deficits.
Ted
Kulongoski
Governor
Vs.
Don
McIntire
Taxpayer Association of Oregon
Oregonians are tired of our roller-coaster budgeting that
results from our inability to save when revenues are up and the
imperative to cut deeply when revenues decline. The hard truth
is that we will never get ahead during good times—and we’ll
continue to fall further behind during bad times—if we fail to
enact responsible, balanced kicker reform. We will never end
this yo-yo budgeting and begin true fiscal stability without a
strong, constitutionally protected reserve fund.
I have long advocated for the state to establish a rainy day fund
to better protect critical services for Oregonians. In 2007, the
legislature joined me in creating a rainy day fund. Without these
reserve funds, cuts to schools, human services and public safety
would have been far more severe in this recession.
During the 2009 legislative session and 2010 special
session, I wanted the legislature to take the next step
in responsible fiscal planning and refer to the voters a
constitutionally protected emergency reserve fund financed,
in part, by the kicker. Unfortunately, there wasn’t the
political will to refer this critical measure to the public for
the upcoming general election. I believe that the choice to
push this debate to a future legislative session is a missed
opportunity and a disservice to the people of Oregon.
This last boom-bust economic period reminds the public how
critical it is that we have a strong emergency budget reserve that
protects services when Oregonians need them most and values
their investments as taxpayers during more prosperous times.
We must put politics aside and take the necessary steps of
forcing the state to save during good times by reforming the
kicker. These two actions are the only way we can achieve fiscal
stability for future generations of Oregonians.
26 1859 oregon's magazine spring 2010
Unfortunately, the Oregon legislature, unrestrained, spends every
last cent it can extract from Oregon citizens and businesses.
Legislative budgets are not made on the basis of what is
necessary but are simply the last budget with new programs, “rollups”
and fudge factors added in. This method over the last ten
years produced budgets, which increased at three times the rate of
inflation. Even corrected for population growth, the increases have
been breathtaking.
It could be worse but for two sensible provisions in the Oregon
constitution which protect us at least somewhat from the politicians.
The first is that the budget must be balanced. That precludes legislators
from piling us into debt. The other protection, which was more recently
adopted, is the kicker law. The kicker was first adopted by voters as a
statute in 1980 and later put into the constitution.
The kicker requires that once the legislature adopts a budget,
any money collected from income taxes beyond what is needed for
that budget is returned to taxpayers. It’s a sensible protection and
one of the few disciplines we have to mitigate against the spendeverything
philosophy of the government class.
Compared to the amount of total spending by the state, the
amount of money returned to taxpayers in kicker checks is really
peanuts, except to the taxpayers. The larger benefit, however, is
that the money refunded is not included in the base for the next
budget. Had those kickers been included in successive budgets,
current spending would be higher by $2.57 billion on the personal
side and $527 million on the corporate side. In other words, the
budget the legislature just struggled to fund would have been $3.1
billion bigger. Without this modest slowing of spending—still
multiples of inflation—we would have had to raise taxes, not by
$727 million, but by $3.8 billion.
sketches by Paul Harris