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It's official: Oregonians can expect to receive the largest-ever kicker tax refund next year

By Dirk VanderHart

OPB reporter

It's official: Oregonians will see the largest-ever kicker tax refund next year.

With all tax receipts for the just-ended biennium counted, state economists say more than $1.57 billion will flow back to personal income taxpayers in 2020, when they file their 2019 taxes. That compares to a kicker refund of a little more than $1.4 billion projected in May, when officials last forecast overall revenues.

The final tally, delivered to lawmakers in a hearing Aug. 28, continued a consistent trend over the past two years as state tax revenues consistently outpaced economists' expectations.

When all was said and done, money flowing into the state's general and lottery funds came in at $2.6 billion above what officials expected in 2017, at the outset of the biennium. That's created a situation where Oregon reserve funds are at an all-time high — more than $3.7 billion — even as economists warn of an economic slowdown on the horizon.

But Oregon's unique refund policy also means the state can't use all of the unexpected money. Under state law, a kicker is triggered whenever actual personal income tax receipts come in at least 2 percent higher than initial projections. In such cases, any money collected above initial forecasts must be returned to taxpayers in the form of tax credits.

In 2017-2019, tax receipts came in at more than 9 percent above projections, meaning the largest refund, by dollar amount, ever issued. As a percentage of tax liability, next year's kicker will be the third-largest in Oregon history.

In actual numbers, the top 1 percent of taxpayers can expect refunds of $15,214, while the median refund will be $346. The average payout to all taxpayers is expected to be $739.

The unprecedented revenues have roots in a number of factors, including federal tax changes that led businesses to put off paying taxes until this year, ratcheting up corporate tax receipts by around 50 percent. Economists say those impacts are likely short term.

"Even without a recession, we're expecting that it's going to be hard to match the revenue we saw in the last biennium," state economist Mark McMullen told lawmakers on the House and Senate revenue committees.

Another factor that could dampen the size of future kickers: A new corporate activities tax that lawmakers passed this year. That tax is expected to raise roughly $1 billion a year to pay for schools, but it also could raise prices for consumers after lawmakers reduced personal income tax rates.

McMullen explained this shift will reduce income tax money flowing into the general fund, even though overall revenues won't be impacted. And that means fewer possible dollars flowing back in the form of kicker payments.

"Thank you for that facet of the law," McMullen told legislators.

State economists have missed the mark on state revenue projections in each of the last three bienniums, each time triggering a kicker. In the 2011-2013 budget cycle, they hit the "sweet spot" where revenues came in above projections but not by enough to trigger a refund.

Lawmakers, who appeared in good spirits when hearing of the record revenues, alluded to that fact last week.

"My takeaway, in spite of the future and the possible headwinds, is that Oregon's economy is really strong," state Sen. Mark Hass (D-Beaverton) told economists. "You missed the sweet spot by about a billion and a half, but you had some obstacles out there."

Business briefs

Dealer gets special status to better serve area farmers

Newberg Dodge announced recently that it has completed the requirements to become an official Ram Agriculture Dealership, which according to a press release, helps the Portland Road dealership better understand the vehicles area farmers and ranchers need for their operations.

The designation, according to the release, allows Newberg Dodge to offer a special "AgPack" to farmers and ranchers that provides a return on their investment.

"The AgPack partner offerings are worth thousands of dollars to farm customers and lets the nearly 11,000 farm families in Oregon know the dealership understands the uniqueness of agriculture."

The package includes a $2,500 rebate on any Titan or Goodyear farm tire; 25 percent off MSRP on Rhino Ag Products, plus a gift card valued at $100 to $200; a $1,000 seed corn or $250 soybean seed rebate from NK Seed; a one-year subscription to AgriEdge software; a $1,000 credit toward AgroLiquid Crop Nutrition; $1,000 toward a new Reinke Irrignation system or $500 toward parts on any existing Reinke system; discounts on many Gallagher Livestock Products; up to $1,000 in rebates on EBY trailers, stock equipment or grain; a $250 rebate on a Knaphide "upfit" to a new Ram truck and special financing from AgDirect.

To earn the designation as a Ram Agriculture Dealership, Newberg Dodge was required to select a minimum of three team members to complete an agricultural curriculum endorsed by the National Agriculture in the Classroom Organization. Newberg Dodge's agricultural specialists are Alex Roosevelt, Shawn Tracy, Austin Bohatch, Junioir Martinez, Ed Dotter and Mark Doby.

The group will continue their agricultural education "by pro-actively anticipating and meeting the changing demands of its ranch/farm customers," the release said.

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