Reject transferring billions of dollars from
the private to the public sector
March 12, 2009
Chair Burdick and members of the Committee, my name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute, a non-partisan, non-profit public policy research organization based in Portland. Our mission is to promote policies that enhance individual liberty, personal responsibility and economic opportunity in Oregon.
As a member of the Task Force on Comprehensive Revenue Restructuring I must express reservations about Senate Joint Resolution 29 which seeks to amend the Oregon Constitution to, among other things, direct income tax kicker money into the Rainy Day Fund.
I agree with the Task Force consensus that establishing more reliable forecasting and more prudent budgeting is a worthy goal. I do not agree, however, that the state is the best repository for ending balances above the point estimate. That money rightfully belongs to the individuals and corporations who earned it.
I was appointed to the Task Force to represent taxpayers, and taxpayers have very few ways to control the growth of government in this state. The kicker law is one of those ways, and it doesn’t need to be altered in order to improve budget forecasting.
This Resolution assumes that the kicker law has prevented the state from building a substantial Rainy Day Fund, when in reality there is no prohibition against lawmakers spending less than the point forecast now, and saving the balance for a rainy day.
If, for example, the revenue estimate for a biennium is $15 billion, this body is free to budget spending of $14 billion, and budget one billion dollars toward a reserve fund.
Under this Resolution, if the point estimate is $15 billion and the top of the range is $16 billion, the legislature can budget and spend $15 billion and must save the additional billion dollars. The effect is to transfer one billion dollars from the private to the public sector, and effectively grow government faster than the people have allowed it to grow under the current kicker law.
This Resolution as written will therefore make it easier for the state to avoid exercising the kind of fiscal discipline that Oregonians should expect.
My recommendation is to accept the part of this Resolution that improves state revenue forecasting, but reject the part that, over time, would transfer billions of dollars from the private to the public sector.
Then, require that the legislature can only budget to spend up to the low end of the forecast range, and save everything else up to the point estimate until the Rainy Day Fund is full. That would be reform that many taxpayers could enthusiastically support.
Thank you, and I’ll be happy to answer any questions.