Senate panel links 'kicker' to capital gains

Senate panel links 'kicker' to capital gains

SALEM, Ore. (AP) - A state Senate committee voted Wednesday to advance a bill that would ask voters to reduce the "kicker" checks they get when state revenue exceeds projections.

In a compromise to pick up bipartisan support, lawmakers linked the proposed kicker changes to a reduction in capital gains taxes — an idea that could help it get through the Senate but which is likely to get a frosty reception in the House.

The Senate Finance and Revenue Committee sent the proposal to the full Senate on a 4-0 vote.

Corporations and individuals in Oregon get kicker checks when the state collects more in taxes than anticipated. Some lawmakers from both parties say the checks promote volatility in state budgets and make it difficult to save surplus money during good times for use during economic emergencies.

If approved by voters, the Senate proposal in SJR 26 would end kicker checks for corporations and cut them in half for individuals, sending the money instead to state savings accounts that could only be tapped during economic downturns.

"It's a very thoughtful, disciplined way of saving," said Sen Frank Morse, R-Albany, a chief proponent of changing the kicker.

The capital gains proposal would cut taxes in half for income on business assets held for at least five years. It also would reduce capital gains taxes by up to 40 percent on all other businesses.

The tax cut would take effect only if voters approve the kicker changes and would reduce state revenue by $354 million once fully implemented in the 2019-2021 budget.

Leaders in the House said capital gains and kicker changes should not be linked. Republicans are reluctant to scale back the personal kicker, saying voters want lawmakers to balance the budget on existing revenue. Democrats say the proposed capital gains cut is too large.

The two parties are sharing power in the evenly divided House.

Sen. Ginny Burdick, a Portland Democrat who has worked extensively with Morse on changing the kicker, said disagreements between the House and Senate are part of the legislative process and don't automatically doom a bill.

"We hope we come out of the process with something to stabilize an unsustainably volatile SYSTEM," Burdick said.

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Copyright 2011 The Associated Press.