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Say "kicker" in most places and you're probably talking sports or subwoofers. (Or perhaps obscure computer jargon. Or the last story in a newscast, usually with a twist.) But in Oregon the kicker is an income tax refund, sent back to taxpayers when the tax revenue the state collects comes in at least two percent higher than was predicted.
For some people, it's the best tool around to rein in government spending. For others, it's an unfair quirk that just builds economic upheaval into Oregon.
A bill in Salem would change the kicker system so unpredicted revenue would first go into the state's rainy day fund. Taxpayers would get refunds only if collections were six percent higher than projected — or if the rainy day fund were full.
The kicker history goes back three decades. The legislature created the kicker in 1979 as a tax credit. Voters approved it the following year. In 1995, then State Senator Gordon Smith led the change to make the kicker a refund, appearing as a check in the mail rather than a line on your tax return. In 2000 voters put the essential elements of the kicker in the Oregon Constitution (see Article IX, Section 14).
Corporations get a kicker too, though the rules differ slightly from those governing individual rebates. In 2007 the legislature suspended the corporate kicker to start a rainy day fund.
The state has sent out individual kicker checks eight times, including a major refund in 2007. Charities and retailers have benefited as people donated or spent their kickers in the past, and of course some people put their kickers in the bank. How have you spent your kicker? How would you be affected if the money went to stabilize the state budget instead?
GUESTS:
- Nathan Dahlin: Former office manager, currently unemployed. Saved his 2007 kicker check.
- Jonathan Radmacher: Board member, Abernathy Elementary Foundation. Used his 2007 kicker to help start the foundation.
- Ginny Burdick: Democratic State Senator representing District 18 (Southwest Portland) and Chair, Senate Finance and Revenue Committee.
- Bruce Hanna: House Minority Leader and Republican Representative from District 7 (parts of Lane and Douglas Counties.)
- Mark Henkels: Professor of Political Science/Public Policy and Administration at Western Oregon University. Co-editor of Oregon Politics and Government, published in 2005.
Tagged as: budget · kicker · tax
Photo credit: Tostie14 Flickr / Creative Commons
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I put my 2007 kicker into investments. Is it possible to turn the Rainy Day and Educational Stability funds into an Oregon Endowment of several hundred billion dollars? According to the following link the current funds aren't adequate for the situation we're experiencing today.
http://www.ocpp.org/cgi-bin/display.cgi?page=071017rainyday
Oregon could use an endowment's annual interest to pay for fiscal shortfalls, to offset big-ticket projects, and to cover economic downturns. We could smooth economic highs and lows, maybe provide free education and health care for Oregon's citizens, and we would stop living paycheck to paycheck.
Grow the endowment large enough and we could stop paying taxes in Oregon. Let's call Warren Buffett and see if he can help us set up the Oregon Endowment.
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So...who are we trying to fool here. Since when, when the gov't got the opportunity to control the purse strings, have they not found somewhere to spend it.
I agree that we are in dire steights here but the predicted amounts shoould be real, not presumed. As soon as they start playing with presumed numbers it just opens the door to gradual freedoms that are not regulated.
These funds are, by definition, an exess and belong to the people. The legislators need to be accountable for funds received and need to live within the stated budget as it is passed.
Bruce Sickles-Falls City, Oregon
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When we moved back to Oregon in 1993 and learned about the kicker law, we couldn't believe that Oregonians had passed such a ridiculous piece of legislation - and added it to the state constitution, to boot.
The basic premise of the kicker is flawed: taxpayer refunds are given if the state takes in more in taxes than the state economist predicted. In other words, refunds are based upon a GUESS, an educated guess, but still a guess.
This means that the state can never adequately plan ahead, because we cannot accumulate reserves in good years. This year, we are learning (?) once again that the state should have a rainy day fund. If we can't get rid of this ridiculous kicker law, the least we can do is modify its numbers so that the wiggle room is a lot greater than 2%.
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The budget is the process of planning ahead. That is their job..In a day when we, the people, are in dire straights and are required to get by wihtoout a rainy day fund because our resources have been spent compensating for economic downturns why shoould our regulators (that means the people who are charged with regulating) be given a way to live outside their projected budget.
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The kicker is one of the stupidest ideas Oregon ever came up with. It is not based on the present or future needs of the state, only on a forecast. If you get more income as a family than you planned on, do you give away all the extra, or do you save it for a time when the income is short?
We don't want the economists to be too optimistic and predict revenue that won't happen. But when they are conservative, we think we should punish everyone by sending the money away. I believe the last kicker was the largest in history, and look where we are now. This is no way to run a state!
As for the people who feel that the kicker is their money: by that argument, so is all the money you pay in taxes. If you don't believe that we should pay any taxes, I guess your kicker "belongs" to you, but I certainly don't want to live in the kind of state you would have.
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Wait a minute. These are not guesses, they are based on what we need. these are projected budgets. I have worked in the capacity of manager and budgeting is what we all do. Budgets are based on the needs that are projected into the next year. This is not some random number thrown into the mix.
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They are guesses. The kicker is not based on the budget, it's based on projected revenues, which then drive the budget. But if the prediction of revenues is wrong, which it almost always is, there is no way to pay for WHAT WE NEED in this state. There is no reason to live like paupers the way we do. We could have a magnificent state which great education. This system makes us live in mediocrity.
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bsickles -- the expenditures in the budget are not guesses.... But the total amount of revenue that the budget is based on is a guess! They have to budget within the projected revenue - and are always playing 'catch up' - to try and rebuild programs that were cut in prior years. In tight years, they can't budget for what is really needed - because the revenue is just not there.
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At a time of such great economic difficulty, how insensitive is it for a bunch of well compensated politicians to ask us to give up something that is ours by law? My wife and I are worried about being able to pay rent on our humble apartment and to buy food. We need that money. We made less than $35,000 last year due to unemployment. If we'd made $250,000, it probably wouldn't be that big of a deal.
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Do you have any idea how little your legislators make to do this incredible service. They make under $20 k a year; I bet you make more than that. Get your facts straight before you make accusations.
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Accountability. Part of the reason people support the kicker is because they lack a sense of control or visibility over how tax funds are managed. The kicker maintains a level of visibility over the state's revenue stream. People are uneasy that our legislators will manage the kicker money foolishly, and in effect, raid the rainy day fund with pork style spending or worse.
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The kicker should be used for a rainy day fund. We should not penalize the government for estimating income conservatively. I would much rather use a rainy day fund than raiding the Cultural Trust, for example.
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How shameful that decades of anti-tax attacks by Conservatives have reduced our elementary school children to begging for charity to get an education!
Just absolutely shameful!
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Yes!!! music should be the gift we give to all children, not just the ones at Abernathy.
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The kicker is just a straw man to divert the fact that the Corporate tax rate is a travesty. Other states seem to so just fine maintaining jobs with much higher corporate tax rates. Oregon tries to piecemeal its' budgets with individual & property taxes. I made 60,000$ last year & was in the 35% tax bracket. I would love to have only paid 10$ like so many Oregon corporations.
Conrad, SW portland
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Compromise and a graduated scale often work best with tax matters. Why not return to the taxpayer the first $2000 of the kicker "owed", then half of the next $2000, then the state would keep anything above $4000. What the state retained would go to the rainy day fund.
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Three words: regressive sales tax-- we Oregonians want to avoid a sales tax, right? The only way to assure that we'll have the state revenue stability we'll need to avoid it is kicker reform or repeal (and putting the extra money into a beefy rainy day fund).
Otherwise we'll keep having feast or famine state revenues until a regressive sales tax slips through.
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As a public school teacher, I see a need for more funding which seems to mean more taxes. Obviously, I am not afraid of higher taxes. Since the topic today is the Kicker, let me say that all of what money might be returned to taxpayers should be "socked away" in a savings account for future needs. Along with that, let's detail how the money might be used in the future.
Callers have mentioned waste in government, and since this is often mentioned, there needs to be transparency so that what waste there may be, is seen and stopped. Even though I don't object to taxes, I don't want money wasted. When people say that they see "so much waste," I wish that they would describe the "waste" and not so freely use the term.
Thanks.
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I am repeaedly suprised to see that everyone who supports "socking these funds away" also are saying that we need to spend more money. Do we really think that if the money is there that it won't be spent.
This will not lead to a rainy day fund.
Schools need to budget ahead like eveyone else. I have to live within my income level. If the school needs more money, then budget for more money.
This kicker is money beyond the projected budget so, make sure the budget is correct to begin with.
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The kicker happens so rarely that we are fooling ourselves to think diverting it will build a rainy-day fund. A longstanding principle of prudent financial planning is to save first before spending. The state should put money into the rainy-day fund every year, in good times and bad, before spending one dime of taxpayer money. If we did this, our budget problems would be gone in ten or fifteen years, for good.
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Two comments,
Is the budget forcast 2 years out because legislators only meet every two years? Would we have a more acurate budget projection if they met yearly?
I hear your guests say that the rainy day fund will only be used when several indicators happen. As you discussed in an earlier show, the arts endowment license plate fund is currently being raided for the general budget shortfalls. Obviously, the arts fund money being spent for something other than its intended purpose. SO, other than indicators, What's really going to stop the government from doing the same thing to the rainy day fund?
IMO, Get rid of the corporate kicker, and keep the individual kickers coming.
Here's an idea, why not start a education endowment license plate fund.
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Nathan Dahlin said his kicker check was for $130, and that he was a student at PSU. PSU is a public university, and as such, it is ABLE to charge less tuition - making higher education more affordable to lower income families and individuals - precisely BECAUSE the state has made an investment in public education with state revenues. If the state had NOT provided that money to help keep tuition low and affordable, Nathan would have had to pay much more. The ACTUAL COST of his education at PSU, without any state investment, would be more like a private college - somewhere between $12,000 and $30,000 a year.
Why would anyone want $130 in "loose change" from the kicker, in exchange for slashing our investment in K-12 education, road repair, parks, open space, and PSU? If it weren't for the investment of tax dollars in education, he would be paying THOUSANDS MORE in tuition - well BEYOND the mere $130 he gets in a kicker.
Tax revenue is an investment in the future, enabling education to be accessable to all. I could never afford to go to the community college without it - and neither could thousands of other Oregonians who are unemployed (like I am) and desperately NEED that access to AFFORDABLE education and retraining.
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Personally I'd prefer to have the kicker money put into a well-managed and regulated rainy day fund. The current kicker process doesn't seem to be the effective control on government spending it was touted as being. Seems like there's a lot of time/money spent on calculating amounts and then sending out checks. Of course I, like everyone else love getting an unexpected check in the mail, but then I also grumble a lot when I have to pay taxes on that amount a second time the following year.
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2 comments:
WE are set up for the main flaw in the kicker: If the economy recovers better than we expect in the next biennium, we will have a kicker which will not allow the state to save immediately following a period when budgets could not fund basic services. We need to save.
I disagree that people always know better how to spend the money. Look at the people susceptible to scams and buying junk which no one needs.
My last kicker went to our school's educational trust and to several other charities.
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Having been an elected official (City of Bend) I would like to offer my opinion that to keep it simple is the best policy, that math formulas I am hearing make my head spin. It was my money, give it back! Budget for the hard times like a responsible body should..
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My understanding is that a 10% limit on the rainy day fund would be about 1.5 billion dollars. Is that enough? The current deficite in our revenue is about $3 billion.
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I moved here from Alaska a few years ago, so I have never recieved an Oregon Kicker. I want to talk about how Alaska deals with excess revenue. When we began to recieve lots of tax revenue from our new oil fields back in the late 70's and early 80's, Alaska legislators created the Alaska Permanent Fund. All the oil renenues were funneled into this fund which was in turn invested. The dividends from those investments have been distribted to Alaskans for over 25 years. The Permanent Fund Dividend varies from year to year, but they have never missed one yet. The principle of the fund is never touched, that's being saved for a really rainy day. Oregon could do the same thing in a small scale way, using that revenue overage, which would allow us to have our cake and eat it too.
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The kicker is crazy!! It's based on the state being able to accurately project the amount of revenue they will collect over the next 2 years. A difficult task. They aren't increasing our income tax - we're still paying the same amount.....the economy is just doing well when more is collected than was projected. So instead of being able to save the 'excess' for the inevitable hard times, it is given 'back' to the taxpayer.
However, when the economy takes a down turn and the projection is too high, there is no reciprocity. We don't all of a sudden have to send in MORE money in taxes to help balance the state budget, do we? Services are just cut to the bone. Wouldn't the logic follow that if money is sent back to us when they project too low, that we should sent money to the state when the projection is too high?? Of course not - so the whole thing is illogical and should be thrown out - or at least the reasonable proposal before the legislature currently should be adopted.
The kicker makes no sense at all if you truly understand how it works. We have not been 'over taxed' - the state just underestimated how strong the economy would be 2 years in the future.
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I got a kicker check in 2007 and it helped me through unemploymentThink of the kicker tax as going to the grocery store. You have a set price that includes things like taxes, transportation, profit, etc. You go to the check out counter and you are charged sixteen dollars. You pay with a twenty dollar bill. Then the cashier has to give you four dollars back in change. The kicker check is a much more complicated version of that same thing. The state has set a budget for two years. You are charged taxes that exceed what you should pay to help meet the state budget. If what you pay the government excedes what the government has acutally set up as a budget, the state needs to give the tax payer back its change, so to speak. If the indivual taxpayer has to set aside some of our budgets for hard times, the state needs to do the same thing. Don't deny the taxpayer their change.
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By the same logic behind the kicker, if the state underestimates the budget buy 2% or more, they should be able to raise taxes (for that cycle) to cover the gap. Would people who are pro-kicker be happy with that. It would be fair and after all, the bill incured by the sate goverment are really our bills and the money is spent for our benefit (roads, schools, police, fire, water, etc...). The real problem here is a lack of trust and a belief that the goverment does not have our interests (on the whole) in mind.
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Requiring the state to have only a 2% savings rate is bad public policy. The suggested reforms make sense for another reason too - - they recognize that 87% of the general fund comes from personal income tax and only 6% comes from corporate income tax, so sending a kicker back to individuals at 6% "overage" but 36% to corporates makes sense. As a taxpayer, I think it's irresponsible for my state government to limit itself to a deliberately inadequate savings account. Remember, this is a constitutional change, so the voters have to pass it. I'm voting for the reform! Margaret Campbell, Portland
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I gave my checks to Forward Oregon ( the Oregon House Democratic Election Committee ) or to individual Democratic Candidates such Nick Kahl and Rob Brading. My goal was to get a super majority in the state House of Rep. to repeal this stupid law. Got the majority – having the conversation – it will be repealed.
I am also a former Abernathy parent and am very proud of what we have done.
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Hi, thanks for following up on my email address. I did have a problem registering and logging in.
I did spend my last kicker check to pay a bill. I work at a school, and I have worked in government processing charges by employees, I have two grandchildren in school and their parents work for government agencies.
I personally want my kicker check! Until our money system can learn to get and follow a "real" budget, I want what ever is due me...when and if they can play fair, I would gladly return or donate the full amount back.
It is not about receiving the kicker check...it is about goverments careless spending "habits". Yes, I am very very upset about AIB, Merrill Lynch, etc. and think the money should ALL be returned.
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How do you feel about the state sending out kicker checks that are smaller than what it costs the state to process and mail them? That actually happened last time around.
Speaking about careless use of taxpayer money ... the kicker law ensures that is just what will happen!
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I agree with Mr. Radamacher. The kicker, or any surplus, should be set aside for a rainy day; for years when there is a shortfall. I don't even think I've ever received a kicker check even though I've worked full-time in Oregon since 1995!
In a similar vein, could someone explain to me how The Oregon State Lottery can claim a "profit" of 450 million dollars in 2007 while our schools are cutting days, activities, and teachers' pay; ddollars for social services for our most vulnerable populations are slashed to bare minimum ??? Isn't the Lottery run by the State? Doesn't that money belong to the State? If not, who does it belong to?
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I would like to see the kicker go back to a tax credit. It bothers me to see the state spend so much money sending it back.
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Comments are now closed.
In good times and bad... We all should be putting savings away for that rainy day. I think it is great when we have a surplus. But that should be saved to pay for things when the state is lacking, like right now.