Kicking the Kicker?

AIR DATE: Monday, February 1st 2010
POSTED BY: ALLISON FROST

February marks the start of the Oregon Legislature's month-long special session. Lawmakers begin meeting on the heels of a statewide vote on a pair of tax measures Democrats said were needed to balance the state's budget. Governor Kulongoski has stated his top priority for February is reforming the income tax refund known as "the kicker."

We discussed possible changes to the kicker last year, when lawmakers were considering it. A year later, Kulongoski seems to think that statewide approval of the tax measures means Oregonians are ready for the stability a (kicker-fed) rainy day fund would bring. But some political observers — and legislative leaders — appear to be less than convinced.

Did you vote for or against the income and business tax proposals on January 26th? Do you support changing the kicker law? If so, what change would you support?

Do you count on your income tax kicker refund? What do you do with it? How does the financial instability of the state affect you, your neighborhood or your community?

GUESTS:

Note: Emily Harris will be hosting the show from the Capitol building in Salem; Dave Miller will be in our Portland studio.

Tagged as: kicker · legislature · special session

Photo credit: Darragh Sherwin / Creative Commons

I could see changing or eliminating the Kicker if the want-wits is Salem could get their collective heads out of their collective butts and LOWER the income tax rates imposed against the working class who do most of the living and working and dying in this state.

I don't really expect that, as no one in Salem gives a fig about us, except when they are trying to get (or avoid LOSING) our vote come election day.

Our state government (both the legislature and the executive) is so screwed up that they even deny unemployment to those who are trying to better themselves by going back to school, which in turn would likely place the newly-trained graduates into a higher tax bracket than we would be in as burger-flippers (an honest job, worthy of respect).

Penny From Eugene —

As I understand the "kicker" any money collected above a figure of two percent above the projected budget is refunded to voters and business.  In the time the "kicker" has been in effect what percentage above the projections have the collections actually been? 

I would recommend having 30% of the "kicker" refunded to the taxpayers and the rest kept by the state with a fixed percentage put in a rainy day fund.  Another formula could be designed for business taxes based on size of business of corporate structure. 

raymondovich —

Legislators want to “fix” the kicker because it results in taxpayers getting their own money back.  Once legislators get their hands on it they just can’t let it go.
 
If you want a “rainy” day fund just make a new budget item and set aside set aside some of the revenue that comes in. When is there NOT a crisis for funding for schools, fireman, police, and PERS?

Of course you need to put some very clear restrictions on when the money can be used -- what constitutes an emergency?

I guarantee it will rain in Oregon.

thx1138 —

My understanding of the Kicker is that the State Economist must project revenue for the next budget cycle. If revenue exceeds the projection by a certain percentage, some revenue is returned to the taxpayers. If revenue falls below the projection, no additional revenue is garnered from the taxpayers.

As a small business manager, I have pondered how I would run a business under the same revenue system. It would be very difficult! Let's consider how a business operates - if revenue exceeds projection, the excess is invested, or held to cover times of lower revenue.

Thus, if we were convinced the legislature could "hold" excess funds for a "rainy day", modifying the kicker should have the support of the business community. Let's push this special session to craft a well written reform of the Kicker!

(Intersting that PERS reform should follow the same logic - reduce payout in good times to cover the inevitable bad times)

lesjoel —

Any business owner or head of family could run the government 10 times more common sensibly. But that's just not what it's about.

No matter how much more money the State spends, it is never enough. The State is organized around two central principles:
1) Government is too small.
2) Your taxes need to go up to pay for more programs.

If the bureaucrats had their way, we would direct-deposit our paychecks into the State Treasury, and we would get everything back in in-kind services, AFTER they take their cut for bureaucracy and PERS.

You and I can better manage OUR money 100 time better than State can, even on a sunny day. Don ever forget it's OUR money not the State's money. 

thx1138 —

Fixing the kicker's a good idea, but let's not stop there.

We need a state bank. North Dakota has had one for 90 years. A state bank can float its own bond measures. It would take deposits and issue loans. Most importantly, the interest would go into the state treasury.

A state bank would save us a lot of money.

cascadian —

"A single state bank, the biggest of the big, with branches in every rural district, in every factory, will constitute as much as nine-tenths of the socialist apparatus. This will be country-wide book-keeping, country-wide accounting of the production and distribution of goods, this will be, so to speak, something in the nature of the skeleton of socialist society."
Lenin, Collected Works, Vol.26 page 106.

thx1138 —

Thank you, thx1138 for a beautiful illustration of the fallacy of irrelevance.

See, what you did there is make the argument that something is wrong because Lenin said it instead of actually providing a coherent argument for why a state bank is wrong.  As you may have noticed, the original poster gave reasons why a state bank can be helpful.  It is usually customary to counter those arguments with your own arguments instead of a quote from someone you think is evil.

I have to give you some credit, though.  Most people would have gone to Hitler instead (hence the term Reductio ad Hilterum) since Deutsche Bank became the financial arm of the Third Reich during the Hitler years.

Good work keeping up the hyperbole and absolutism of modern politics!

slakr007 —

thx1138,

Your comment also illustrates 'poisoning the well', another label perhaps for the same logical falicy mentioned by slakr007.

dirtguy —

With the passage of measures 66 & 67, it seems like perhaps Oregonians are facing the reality that the state's budget money needs to come from somewhere. I would like to see the idea of a limited (excludes food and others necessities) sales tax put back on the table. I would much prefer this as I would feel it was more of a personal choice--rather than having no choice with the state keeping my kicker (if I'm understanding the kicker issue correctly). Additionally, a sales tax would provide a tool that could gather money from everyone who comes through Oregon on vacations or business travel, thereby spreading the tax "burden" to more than just the many financially strapped Oregonians.

clossner —

I voted for measures 66 & 67 to hold higher income people and corporations more financially accountable, effectively redistributing responsibility progressively. As a lower middle-class worker, I need the kicker check. Many of my lower-income friends need it more than I do. Ability to pay should be a criteria for taxation. My personal opinion: Leave the kicker alone.

bigusricus —

Here are our choices:  either reform the kicker to use its funds for a robust rainy day fund, with strict limits on the circumstances and manner of its use, or face yet another attempt at shifting the tax burden down the income scale by instituting a sales tax, which Oregonians have wisely and resoundingly rejected a number of times.

@thx1138 -- talk about being dramatic, right down to your handle.  Taxes are the price we pay for civilization.  Look at the countries in the world that don't have an effective tax collection system and see what hellholes they are to live in.  I'll take Denmark or the like anytime.  At least in a country like that you can't go bankrupt due to a freak medical condition caused by bad luck in the genetic lottery-- that happens every day in our country, which is a freaking disgrace.

Papageno —

I am a staunch Democrat and voted yes for the new taxes but I really dislike the govenor trying to twist my vote into anything doing with the kicker.  If he wants to create a rainy day fund find another way to do it.  Shouldn't we review our tax structure and make the necessary changes to make it stable.

elliott423 —

Of course the kicker needs reform. For the sake of fiscal responsibility and stability it is absolutely necessary to reform the kicker. As someone who considers themselves to be a fiscal conservative, I feel the state budget needs to be run how we run our own personal, family budgets... For our family, we need a rainy day fund (savings) for when when our income is short- or expenses run higher than anticipated. The fact of the matter is that projections are just that, PROJECTIONS, and we can't pay with funds that were projected but did not materialize.

JC —

I'm a fiscal conservative but I believe we need adequately funded gov't services (schools!).

I'm self employed, so my income varies quite a bit. When our income exceeds my expenses, we put it away for lean months. (Two of our cars blew up in December and we could write a check for repairs).

Why not save some kicker for the years that revenue does not exceed expenses? It makes sense for our family.

PeterC —

I HAVE NEVER HEARD HOW MUCH IT COSTS THE STATE TO RETURN THESE CHECKS TO THE TAXPAYERS. 

Small businesses and charitable groups consider those expenses carefully. Those checks are usually not big, individually, but collectively could some real good. I'M FOR A RAINY DAY FUND.

Please pass along my thanks the people we have elected to do the difficult work required to run our state government. 

T.J.

richtommye —

I'm all for re-directing the kicker into some kind of rainy day fund.  

At least until we fix the tax system in this state  -  since we rely so heavily on the income tax, we are guaranteed to suffer whenever unemployment rises.  If only we had a mix of taxes  -  sales, income and property, we wouldn't have to rely so much on such an unstable source...

Oregon Bill —

Our tax structure is badly broken.

So ........

1. Use the kicker funds ONLY for a very strictly controlled rainy-day fund.  Not just a drizzle or heavy mist, but a true downpour fund.  A healthy reserve fund is good management.

2. Institute a sales tax and concurrently reduce income tax so we have some balance in the system.  Visitors to the state can then contribute to management of our resources that they are using and we Oregonians do not pay the entire bill.  People who buy a lot pay their share and people who buy less pay less - and that is a choice that individuals make for themselves.

3. We need to be realistic in maintaining our state government income in a stable situation that allows for better forward planning. 

4. This is a wonderful state and we need to be prudent in how we maintain our infrastructure so that it continues to be a place we love and are comfortable living in.

Andrew Clark, Pendleton

andrewclark —

I'm curious: are there folks out there who voted AGAINST measures 66/67 but would vote FOR kicker reform? Why?

David Miller —

The volatility of our economy [two years ago most would never have predicted the nation's current economic difficulties] combined with the requirement that states balance budgets every year make the kicker an outdated strategy. Repeal the kicker and keep the money for difficult times.

I am even more in support of this after Measures 66/67 passed since I think we've now made an adjustment - albeit slight - in that the tax burden is now more balanced in terms of individuals/businesses and lower/higher income individuals. 

DonnaL —

 Oregon's unique kicker law is possible one of the least understood and under explained laws ever to be ingrained into the Oregon Constitution.   

I conducted an informal survey among everyday people in my life including young as well as seasoned voters, students, parents, workers and retires.  Not one person with I spoke could explain the law correctly.

   The most common misconception went something like this:  The state makes its revenue forecast.  If the collected revenue exceeds the predicted amount by two percent, he state has to refund anything over that amount, i.e. anything over 102%.

   The truth of the matter is that oncer the predictions are exceeded by two or more percent, the state must give back not only any amount over 102%, but the entire amount over 100% of a two year forecast.  The state does NOT keep the two % overage.  It is included in the tax refund, effectively forcing an exact prediction two years out in a state with volatile tax base.  (Try this at home with your own finances!  Good Luck!)

   Oregon could refashion the law so that the state keeps the two percent overage for a rainy day fund and refunds anything over that amount.  This would offer a  sufficient savings and stability while at the same time sending the taxpayers their "feel good" check.  (Sending a physical check is a ridiculous waste of money, exclusively for show, but that's for another conversation).

     If people understood the law better, they would be more likely to amend it to better serve the needs of the state.

bminde —

Salem needs more money.
Salem always needs more money!
Rather then expand government to the unnecessary size that could be supported by a booming economy; let us shrink our government to the point where it can provide world class services in the inevitable bust economy, such as we have today!

Desolation —

This discussion is not about raising taxes at all. It's about budgeting so that when there is a shortfall on projections- there would be a "savings account" or referred to as a "rainy day fund" to make up for a short fall. The consensus seems to be that if the kicker law had been reformed years ago. measures 66 and 67 would not have been neccessary at all.

JC —

This conversation is about taxes and spending, nothing more, nothing less. My statement addresses both simply because you can not address one and not the other.

Desolation —

all this local-tax-law fussing and tinkering misses the big picture - the market in financial investments pays virtually zero taxes - solution: a Tobin Tax - tax every investment capital transaction - seems only the Global Finance Oligarchy gets a free ride in the Capitalist Paradise 

blogdog —

I could see changing or eliminating the Kicker if the want-wits is Salem could get their collective heads out of their collective butts and not only eliminate the CORPORATE KICKER (since it is essentially corporate welfare) and LOWER the income tax rates imposed against the working class who do most of the living and working and dying in this state.

I don't really expect that, as no one in Salem gives a fig about us, except when they are trying to get (or avoid LOSING) our vote come election day.

Our state government (both the legislature and the executive) is so screwed up that they even deny unemployment to those who are trying to better themselves by going back to school, which in turn would likely place the newly-trained graduates into a higher tax bracket than we would be in as burger-flippers (an honest job, worthy of respect).

Penny From Eugene —

I could see changing or eliminating the Kicker if the want-wits is Salem could get their collective heads out of their collective butts and not only eliminate the corporate kicker (which looks like corporate welfare to us working class), but also LOWER the income tax rates imposed against the working class who do most of the living and working and dying in this state.

I don't really expect that, as no one in Salem gives a fig about us, except when they are trying to get (or avoid LOSING) our vote come election day.

Our state government (both the legislature and the executive) is so screwed up that they even deny unemployment to those who are trying to better themselves by going back to school, which in turn would likely place the newly-trained graduates into a higher tax bracket than we would be in as burger-flippers (an honest job, worthy of respect).

Penny From Eugene —

From what I remember of the last kicker, it cost a tremendous amount of money to actually send out the checks to every Oregon taxpayer (according to the Oregon Center for Public Policy, this cost about one million dollars to do http://www.ocpp.org/cgi-bin/display.cgi?page=iss071026kicker).

The cost to refund alone is enough to reconsider the kicker in its current form. Along with others on this blog, I also feel the kicker system is shortsighted. I would like to see other, smarter options for revenue excesses such as a system (perhaps a state bank that cascadian mentioned) that would set aside money for loans to small enterprise, grants, public projects, preventive health measures, etc. so that we can take that million + and help create innovative projects for our state.

Clearly the last kicker in 2007 could have helped us out in our current downturn... I resent that those who pushed for a constitutional kicker are now the ones saying the government is inept at budgeting, even though everyone should know that budgeting in a recession is next to impossible. Lets think more long-sighted than short for once.

portland2173 —

Emily just hit it on the head: this ISN'T the State's money, it IS OUR money. That's part of the problem with this State's legislature.

echolynch —

It concerns me that we the people still think of "the state" as different from us. The state IS us. We can argue about and work towards better efficiencies (frankly in ALL large organizations in my experience, public or private), but I find it disconcerting to set up this discussion as us versus the state.

And... I think I get a pretty good deal for my taxes. I sure don't want have to pay a toll every 10 miles I drive or pay in the moment I call for the police or pay individually for fumigation when a health disease breaks out or... on and on.

And, one more thing... is anyone going to mention the cost of returning our kicker checks to us?! Keep my money and spend it well.

We all need to keep working together on that last issue - spend our money well - but I say keep my money!

jpratt —

We are the people of the state, with expectations of services that need to paid for.

JC —

echolynch, the more I think about your comment, the more I am struck at how shockingly selfish it sounds.

JC —

JC - no it's not. The truth is that we all pay way too much in taxes for what we get because Government, be it state or federal, instead of using economies of scale, and leverage their universal buying power is exceedingly wasteful, corrupt and our current crisis is due to over dependency on income tax. But try and bring up a sales tax and the "us" in this conversation freak out and become truly selfish. 

JPratt, No, the State is NOT us. It isn't even representative anymore. When was the last time you spoke with your state representative? I would bet a large percentage of Oregonians don't even know WHO their representative is. They are not working for the people, as representatives.  State government has become a miniature Federal government, complete with partisan bickering to the level of ineptitude and incompetence.  We are NOT PERS, we are NOT taking vacations in Mexico and Hawaii on lobbyists’ dime (granted after decades of abuse when they got caught they had to pass new laws). If the State WAS us, wouldn’t you want US to do a better job with OUR money?

If we are ALL the state, and this line of thought is “selfish” then how about you all direct deposit your paycheck into one account, for the entire state as someone else suggested? The state takes the necessary amount for services and you can have what is left?

Don’t get me wrong, the current method of prediction of the revenue is ridiculous, but any attempt to fix that will also come with the price tag of giving back even more of the people’s money back to the inept legislature.

echolynch —

It is true that our democracy is a participatory system. If you don't vote, your opinion can't be counted. If you don't utilize your voice, you certainly will not be heard. We agree that it's important to participate- have a dialogue with your representatives. It is vital.

I think the state and federal governments, and all of us individually as well, could be more efficient with our dollars. No doubt.

It's a never-ending argument: "we all pay way too much in taxes". It's a non-starter for a discussion because you will always want to keep your money. But of course, it's not being selfish- you just don't want to fund your government. It's always the same crew that fights any taxes and true fiscal responsibilty while simultaneously wrapping themselves in conservatism and our flag.

To be a fiscal conservative means to want a balanced budget. If you don't like the budget, get involved and try to change it. But we need to cover our costs this year and looking forward. Proposing kicker reform aims to balance our budget in perpetuity and I have difficulty understanding how anyone could oppose this.

JC —

Just a reminder, the Cascade Policy Institute is a right wing extremist Conservative group that last year called President Lincoln a Communist, right here on TOL.

Tom D Ford —

The thing that this fellow who called from Bend doesn't get is that reforming the kicker and getting a real rainy day fund going would actually make it LESS likely that Salem would "go back to the well" during recessions like this one and the one in 2001 and 2002, because it would make revenues more stable.

Would you rather have to pay a sales tax on such "non-essential" items as toilet paper and basic clothing?  Because that is the other choice for revenue stability, and I for one hate that idea.  Kicker reform doesn't raise anyone's taxes at all.

Papageno —

#!)  If the commission's rainy day plan had been in effect in 2005,  How much would the average kicker per tax payer  have been reduced?

#2) What was the cost of the 66/67 election this year? 

Thanks

bendopbaddict —

When the question of our state's financial instability and its effects on our communities is posed, the voter registration, education, and turnout work conducted by students at public community colleges and universities in anticipation of January's election speaks for itself.

Students attending under-funded, over-capacity, public institutions of post-secondary education have already felt the effects of our state's instability.  These effects have come in the form of increased tuition, slashes to need-based aid, and enrollment spikes that schools don't have the capacity, professors, or chairs to accomodate. 

The Oregon Student Association-led Student Vote Coalition registered 14,721 students to vote and made almost 40,000 voter education and "Get out the Vote" contacts this fall and winter, demonstrating that students care about these negative effects AND getting engaged in the electoral and legislative process that can help curtail them.

Our community colleges and universities are the best investment the state can make right now. Regardless of one's opinion of kicker reform, students, and Oregon, need legislators to prioritize college access and affordability by allocating $19.7 million for the Oregon Opportunity Grant and making every effort possible to keep tuition low!   

StudentsVote —

I guess I will just say this for the record since I did not get a chance to participate today, but it always makes me laugh when people assume they can do a better job of managing money than the government and assert that the government should be run like a business (or, more laughably, that it is a family and should sit at the kitchen table and figure out how to tighten its belt).

All businesses have one goal: profit.

Our government has one goal: provide services.

Right off the bat, it should be obvious you cannot run one like the other.

But consider the deeper implications.  What services does our government provide?  A business decides: "I'm going to profit providing product X or service Y."  Our government has to deal with a constantly raging battle over what services it is going to provide based on the whims of election cycles.

Further, a business has a CEO that ultimately decides everything (mostly by hiring like-minded people below him).  Our government has different branches specifically designed to prevent that.  So, you have Democrats wanting money to go to A, B, or C; Republicans wanting money to go to X, Y, or Z; Libertarians fighting for no government; etc. etc. etc.

And, you would have be pretty naive to think a corporation of any substantial size is not immensely wasteful.  Now stop before you say: "Hey, at least they make a profit."  Remember that our government succeeds in providing damn good services, so they both meet their goals despite waste.

Anyway, go ahead keep dreaming that, if only you could be elected, you could walk right in to Salem or Washington with your "common sense" savvy and get everyone in line, make government more efficient, provide services without taxing anyone, and make it rain lollipops.

slakr007 —

...oh, and another thing, stop calling tax money OUR money.  You pay the government to provide services, it stops being your money when it leaves your wallet.

The only difference between paying government and paying Albertson's is that you change government by voting and you change Albertson's by taking your money to Safeway.

slakr007 —

I like Steve Buckstein's idea that our state legislature always save, always budget for saving.  If my family only saved during good times, we would never learn fiscal responsibility or accountability.

We have all seen how the term "Emergency Use" of funds gets over used.  Keeping the kicker is simply a way for Oregon State government to grow bigger.  If they keep the kicker, they will find a way to spend it, because the only thing that our Oregon State Government is truly good at, is spending our money.

Don't give the state more of the people's prosperity, they take more than enough already!

canby3267 —

We get a kicker when the state collects 2% more than they expected.

What happens when the state collect .5% 1% or 1.5% more that they anticipated? It isnt enough for a kicker so what do they do with it.

Spend obviousely I am all for a rainy day fund. Why douse the exces fron thte years that are not bigenough tto creat a kicker and use that for a rainy day fund?

We get OUR money back if it is over 2% still and the state get money for a rainy day fund.

Why does everythign always have to be one or the other. One or the other answers usually creat more problems.

frankj —

Comments are now closed.



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