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Might Oregon Kill 'Kicker Tax' Rebate to Help Education?

Momentum is building to end the only-in-Oregon approach of issuing tax rebates in order to build reserves for schools.

Posted: Dec. 5, 2018 10:50 AM

PORTLAND, Ore. (AP) — Momentum is building to end the only-in-Oregon approach of issuing tax rebates in order to build reserves for schools.

The Oregonian/OregonLive reports that if Oregon economists' predictions hold, taxpayers will receive up to $724 million worth of "kicker" rebates when they file their income taxes in 2020.

Right now, the median state resident with roughly $36,000 a year in adjusted gross income can expect a tax credit of about $175 in 2020.

But it's possible voters will decide to instead send the money to a rainy day fund for schools that the state could tap during economic downturns.

Business leaders who gathered in Portland on Monday said polling showed more than 60 percent of respondents would support such a change. Jeremy Rogers, vice president of the Oregon Business Council, told attendees at the Oregon Leadership Summit that lawmakers could refer the question to voters in the May 2019 election.

It was the latest sign that the idea is gaining momentum, six years after voters approved ending the kicker rebate on corporate taxes.

Under Oregon's Constitution, the unique kicker tax rebate is triggered when tax revenues for a two-year budget cycle come in more than 2 percent above economists' forecast from the start of the cycle.

One question heading into the legislative session is how high a priority it will be for Democrats to change the kicker, as they aim to pass major climate change legislation and raise billions in fees and taxes to fund Medicaid and education.

Sen. Mark Hass, D-Beaverton, is chair of the Oregon Senate Committee on Finance and Revenue. On Tuesday, he expressed support for the idea of ending the kicker.

"I would love to redirect it to the rainy-day fund," Hass said on Tuesday, noting that Oregon's dependence on income taxes exposes the state to wild fluctuations in revenue. "The next best thing to a major structural reform . is to have a strong rainy-day fund to cushion the inevitable downturns we have. It's poor public policy to begin with."

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