Revenue Forecast May Trigger "Kicker" Credits

Alan DeBoer

Hello Friends,

Oregon’s most recent revenue forecast was released on Wednesday, August 23 during a joint meeting of the House and Senate interim revenue committees.

According to the economists who gave the presentation, the state’s revenue collections are projected to remain stable and largely unchanged from the figures that we used to craft the budget for the 2017-19 biennium that began July 1.

A summary of the forecast presentation states that personal income tax collections were up $117 million from the previous forecast in May and corporate income tax collections were up nearly $20 million from that same time period.

Overall, the state’s economy is still expanding, with employment, wages and salaries continuing to grow. That improvement in employment is even picking up in Oregon’s rural areas, which typically lag behind the larger metropolitan parts of the state.

Because revenues coming into state coffers are higher than first predicted, it is now anticipated that Oregon taxpayers may be receiving a “kicker” of around $463.5 million. Additionally, $110.5 million of corporate tax revenue is projected to be dedicated to K-12 school spending for the next two years. This is because voters passed a ballot measure in the November 2012 general election that dedicated the corporate kicker to education.

The kicker was originally put into place by voters in the November 2000 election through the passage of a statewide ballot measure. It has remained popular with many voters, who enjoy receiving some of their tax dollars back from the state when revenues exceed projections. Taxpayers used to receive a check for their kicker, but subsequent legislation has changed that to take the form of a credit to be applied to the next year’s taxes.

Several feel that the kicker acts as a limitation on state government spending that would not otherwise exist. But there are also many who question the wisdom of such a policy, and feel that it adds to the volatility of the state’s tax system.

I proposed a bill during the 2017 session that would have referred the kicker to voters to decide whether they want to keep it. If voters approved of it, those dollars would instead go towards bolstering our education funding.

That bill was introduced late in the session and did not advance through the process by the time we adjourned in early July. However, most of the bills that are introduced every session do not pass. Some have to be reintroduced many times before they do.

In this case, I was hoping to start a conversation to be included as part of ongoing discussions about the ways in which Oregon’s tax structure can be improved.

An official document from the Legislative Revenue Office shows the distribution of the state’s last personal income tax kicker. Much of it goes to the highest income earners. The average kicker amount going to persons in that income group was just over $4,000. By contrast, the people in the lowest income group received an average of $8.

Those trends will continue for the current projected kicker, as Oregonians who earn over $389,400 should receive an average credit of around $4902. The average kicker credit, by contrast, will be for around $227.

It is my hope that this kind of information will help guide future discussions on the kicker, and enable us to craft tax policy that works best for businesses and individuals while providing adequate funding for the public services we all rely on.

To watch footage of the revenue forecast, click here. The next forecast is scheduled for November 29.

Yours Truly,

Sen. Alan DeBoer

Senate District 3

Capitol Phone: 503-986-1703
Capitol Address: 900 Court St. NE, S-421, Salem, Oregon 97301