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Economists project 'kicker' rebates

SALEM — State economists said Thursday they're predicting Oregon taxpayers will receive nearly $350 million in "kicker" income tax rebates next year.

If tax collections hold to the latest projection, Oregonians would get their first kicker rebate since 2007, when more than $1 billion was returned to taxpayers. Unlike past rebates, which were distributed as a check around Christmas, those in the future will be refunded on tax returns thanks to a change in the law three years ago.

Oregon's "kicker" law is triggered when tax collections exceed expectations by at least 2 percent during a two-year budget cycle. When that occurs, the unanticipated revenue gets returned to taxpayers.

The state will be able to tell with more certainty whether the kickers will be credited next year after the tax filing season ends in April, said Mark McMullen, Oregon's state economist. It could be influenced by a variety of factors, including decisions by wealthy taxpayers on when to realize capital gains, he said.

The news earned a mixed reaction from lawmakers. Democratic legislative leaders warned that a kicker would take a bite out of money available for state services but said economic growth would help make up for it.

"It will mean less money for our schools, health care services, and public safety, but the continuing economic recovery should lessen the impact on the services that Oregon families depend on," said Rep. Val Hoyle of Eugene, the No. 2 Democrat in the House.

Republicans were more enthusiastic about the prospect of a kicker.

"These tax refunds are the people's money, not the politicians'," said Rep. Knute Buehler, a freshman Republican from Bend. "Every dime should be returned for Oregonians to save, invest or spend."

Due to a quirk in the kicker law, lawmakers' effort to raise more money may have inadvertently caused the state to earn less, at least in the short term. Without the $87 million from a 2013 tax increase, Oregon would not be forecast to trigger kicker rebates worth $350 million.

That's because the tax increases came after the kicker threshold had already been calculated.

Economist Josh Lehner, right, and state economist Mark McMullen deliver a quarterly revenue outlook Thursday during a Senate Committee on Finance and Revenue meeting in Salem. AP PHOTO.