Don’t Kick the Kicker – part II

Last November state economists estimated that Oregon’s tax revenues could exceed their projections by $300 million this biennium. Now that estimate has surged to over $1 billion, and the debate over the state’s “kicker law” has grown louder.

The kicker law states that whenever personal or corporate income tax collections are more than 2 percent higher than state economists project, the excesses are rebated to taxpayers.

The Governor wants to keep the excess tax money, arguing that the state can “invest” it better than those who earned it. But even after returning that billion dollars to taxpayers, the state will likely have another $2 billion to spend next biennium, a 17 percent increase.

The kicker law was enacted by the people as a way to keep their government from overspending. No other state has such a law, although many have a rainy day fund to help cushion spending when the economy turns down. In return for letting him keep the kicker money, the Governor wants to set up a rainy day fund for Oregon.

But the two issues need not be connected. The Taxpayer Association of Oregon is busy collecting signatures for a ballot measure that will limit state spending to a combination of population growth and inflation, and allow a rainy day fund. So, Oregonians may be able to vote for a rainy day fund in November, 2006 and get their billion dollar kicker refund in 2007.

That sounds like a much better deal than letting government grow without limit.

Steve Buckstein is senior policy analyst at Cascade Policy Institute, a Portland, Oregon based think tank.

© 2006, Cascade Policy Institute. All rights reserved. Permission to reprint in whole or in part is hereby granted, provided the author and Cascade Policy Institute are cited. Contact Cascade at (503) 242-0900 to arrange print or broadcast interviews on this topic. For more topics visit the QuickPoint! archive.

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