Kicker tax rebate eyed to help school and state budgets

Kicker tax rebate eyed to help school and state budgets
- By BRAD CAIN
Associated Press Writer

SALEM, Ore. - The political debate over Oregon's unique "kicker" law was revived Wednesday by a new state revenue forecast that predicts that more than $650 million in tax rebates will go to individual taxpayers and corporations in 2007.

The tax refunds to individual taxpayers will be the first such rebates since Oregon's economy slipped into a recession in 2001.

Read more about Oregon's education budget problems

State economists cautioned that the state won't know for sure that the tax refunds will materialize until the September 2007 revenue forecast is issued.

But they said it appears highly likely Oregonians will get the tax rebates as a result of Oregon's 1979 law requiring excess revenue to be returned to taxpayers.

Word that individual taxpayers are in line to get $461 million in "kicker" refunds next year along with corporations receiving $205 million in tax rebates came Wednesday as legislators received the state's latest quarterly revenue and economic forecast.

Lawmakers said they were pleased that continued economic recovery in Oregon is putting the state government on track to receive $666 million more in tax revenue than had been expected for the two-year budget.

But some lawmakers said that especially at a time when the state Department of Human Resources is facing a $172 million shortfall because of rising caseloads, it makes no sense to send that extra money back to corporations as "kicker" rebates.

"It's folly," said Rep. Mark Hass, D-Beaverton. "We're having to deal with a deficit in human services while we're sending out refund checks."

The kicker law stipulates that when income tax collections exceed state economists' estimates by 2 percent or more, all of the excess must be returned to taxpayers. The amount of the tax refund depends on income.

The kicker law was passed by the Legislature in 1979, partly in hopes of heading off a property tax limit like the Proposition 13 measure passed by Californians.

But many Democrats oppose the kicker law on grounds that it hampers sound financial planning and prevents the state from investing the excess income tax revenue in education and other programs when economic times are good.

The Oregon AFL-CIO has filed several proposed initiatives for this November's ballot that would either reduce the amount of tax rebates corporations receive or eliminate the corporate kicker altogether on grounds that most of the money goes to out-of-state corporations.

"We think voters would prefer that the $205 million (in kicker tax rebates to corporations) be spent instead on schools and public safety," said Jennifer Sargent, a spokeswoman for the labor federation.

In 2000, Oregon voters approved a ballot measure to lock the combined personal and corporate kicker into Oregon's constitution. In the years since then, no policymakers have proposed ending the personal kicker.

Jason Williams of the Taxpayers Association of Oregon said that despite grousing by public officials, the kicker refunds are popular with Oregonians.

"Kicker money is unexpected and over-collected funds that belong to the taxpayers," Williams said.

(Copyright 2006 by The Associated Press. All Rights Reserved.)