Brown weighs plan to squeeze 'kicker' rebate
SALEM — Oregon Gov. Kate Brown wants to limit the money that Oregonians could get back through a popular tax rebate next year.
Oregon is expected to hand about $1.4 billion back to taxpayers in 2020 through what's known as the "kicker."
Created by the Legislature in 1979 and ratified by Oregon voters the next year, the kicker was introduced as a control on state spending. The unusual policy comes into play when state tax revenue ends up being more than 2 percent higher than what economists predict.
In 2000, 62 percent of Oregon voters approved a ballot measure baking that law into the state's constitution, making it harder to roll back. Brown wants to cap next year's rebate to $1,000 per taxpayer, which could reduce the amount that higher-income earners receive. The median taxpayer, though, who is expected to get $338 back, would not be affected.
Since the kicker rebate is calculated as a percentage of your tax bill before credits, people who make more money and pay more taxes get bigger kicker refunds.
Oregon taxpayers whose adjusted gross income in 2018 was less than $55,000 would not see lower kickers, according to the governor's office.
But about 331,000 Oregonians would get back less money than they expect.
The governor wants to put the money state would keep under her plan — about $500 million — toward rural infrastructure and housing projects and to pay down schools' pension debt.
"I think it's fiscally responsible and makes common sense," Brown told reporters Thursday, May 30.
Brown's proposal appears to be a gesture to lawmakers representing rural areas of the state — for the most part, Republicans whose approval is needed if the proposal is to have any legs.
The idea would need to get approval by two-thirds of members in each chamber of the Legislature. But asked whether she had the political support to get the idea to pass, Brown hedged, saying the proposal could "stimulate the conversation" among lawmakers. "We are still having a dialogue," Brown said. "I think this is still a very tough road to hoe."
House Republican Leader Carl Wilson, of Grants Pass, was skeptical. "I don't think it's a good idea," Wilson said. "Once again, people look at that as their money, and they want that back."
Republicans have long railed against soaring debts in the state's pension system, which pose a threat to public budgets around the state. Brown's plan would send $250 million that would otherwise go back to taxpayers to schools to help them pay increasing bills toward pension payments for public workers.
An increasing share of local government budgets goes toward paying employees' retirement costs.
Oregon owes about $26 billion to retirees that it is currently unable to cover.
Brown's is not the first idea to withhold some of the personal income kicker, which lawmakers last did in 1991.
Sen. Kathleen Taylor, D-Milwaukie, and Rep. Karin Power, D-Milwaukie, proposed using the money that would otherwise go back to taxpayers to pay down a portion of the debt. That bill has not received a public hearing or a vote.
Two weeks ago, House Speaker Tina Kotek, D-Portland, proposed keeping half of the $1.4 billion kicker for transportation projects.
Brown describes her idea as a measure to stimulate rural Oregon's economy and add jobs. She says those communities haven't fully recovered from the Great Recession.
"We have the opportunity to make these one-time investments in rural Oregon that will really ensure that their communities can continue to thrive," Brown said. "This will help ensure resilience should the economy change."
Wilson said he met with Brown and other caucus leaders Thursday. During the meeting, Brown explained the proposal and said she was going to release it publicly.
Wilson said that the kicker was "sacrosanct" among the 22 Republicans in the House. "I think everybody's a little bit concerned about it," Wilson said of his meeting with the governor and caucus leaders. "It sounds nice. The goals seem good. But I think it doesn't matter, whether you're from up north or down south, people still want their kickers."