Jeb Bladine: Pay out the 'kicker,' then look at change
Most people agree it’s smart to set aside funds in a rainy day savings account. But, apparently, that good advice is lost on Oregonians as it relates to their state government.
We already have a vehicle to begin that fund — Oregon’s unique “tax kicker.” A portion of future tax kickers — perhaps one-third or even one-half — should finance a capped rainy day fund, with taxpayers receiving all kicker money once the savings account is fully funded.
There should be stringent rules for how, and when, that fund can be used, limited to times of significant financial shortfalls that threaten basic services.
Such a public policy would require a statewide vote of approval, which is very different from the monkey business proposed this month for diversion of the 2013-15 tax kicker. Controversy over that proposal will be short-lived, I suspect, since supporters will not gain the required two-thirds majority in the state House of Representatives.
Meanwhile, here’s how the personal tax kicker works, and how nearly $500 million should be returned to Oregon taxpayers next year:
When personal income tax receipts exceed the official two-year forecast by more than 2 percent, the entire surplus is returned to taxpayers. That surplus surfaced for 2013-15, so those who paid state income taxes for 2014 will get a pro-rata credit applied to taxes owed for 2015. If you don’t owe taxes for this year, you still must file a tax return to receive a mailed refund on your 2014 tax bill.
But back to the future:
Oregon depends in great measure on income taxes to fund critical services. That revenue can skyrocket from a sudden boom in the economy, which is why Oregonians created the constitutional tax kicker in 1980. Likewise, an economic downtown can dramatically reduce tax receipts, which is why a rainy day fund makes sense.
Consideration of that idea, however, will elicit responses such as this recent comment from longtime anti-tax activist Bill Sizemore (yes, he is still around):
“(Taxes are) confiscated from working people, the majority of whom would not pay the money if they had a choice … money that if left with those who earned it would improve their lives and raise the standard of living of their families.”
It’s easy to agree with that sentiment. But it also is reasonable to maintain a state savings program for basic funding of critical services in an economic downturn.
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