Oregon's one-of-a-kind "kicker" law has come in for its share of ridicule in this space. Now, in the form of Ballot Measure 85, voters have the opportunity to make something positive out of at least a part of the kicker mechanism. They should take that opportunity and approve the measure.
Oregon law requires the governor, with the help of the state economist, to predict how much income tax revenue the state will collect in the coming two-year budget period. The Legislature uses that forecast as a basis for the state budget.
The kicker law says that, when actual tax collections exceed the forecast by 2 percent or more, the amount in excess of the forecast must be returned to personal and corporate income tax payers as a rebate.
In good economic times, when more state residents are working, the state does well, too. But the law penalizes state government by forcing it to refund the unexpected tax revenue rather than banking it for the next downturn.
Oregon voters are so enamored of this backwards approach to public policy that they have enshrined the kicker in the state Constitution, which protects it from being changed by the Legislature.
Measure 85 would amend the Constitution to redirect the corporate kicker — the portion that applies only to businesses — to benefit K-12 education.
Backers of this measure figure they can convince voters to help support schools by redirecting taxes businesses are required to pay anyway for the benefit of public education — the largest share of the state budget and the recipient of harsh budget cuts in recent years.
It should be noted that the kicker operates only when tax revenues exceed projections, and the amount refunded varies wildly — as does state income tax revenue in general. Since it was created in the 1989-91 biennium, the kicker has been triggered only five times. The corporate kicker generated amounts ranging from a low of $18 million (in 1990-91) to a high of $344 million (in 2005-07). Twice, the Legislature suspended corporate refunds to balance the state budget.
Kicker refunds go only to corporations that pay more than the corporate minimum tax. Half of those receiving refunds are out-of-state companies, and those account for 70 percent to 80 percent of the money refunded.
There is little organized opposition to this measure. The Citizens Review Panel appointed by the state voted 22-5 to endorse it. Those voting against it noted that it would not provide a stable or reliable source of funding for schools, and might give voters the mistaken impression that the school funding crisis had been fixed.
We think voters are smarter than that. We also think it makes more sense to use legitimately collected tax money for schools than to send it back to out-of-state corporations.
The Mail Tribune Editorial Board recommends a yes vote on Ballot Measure 85.