Income taxes paid by individuals and corporations continue to surprise economists in anticipation of the May forecast. Economists increased general fund and lottery revenues by $696 million to roughly $31.5 billion to spend. Far short of the $116.5 billion budget request on Governor Tina Kotek's wish list.

The Oregon’s personal income kicker rebate is estimated to return nearly $4 billion back to taxpayers in 2024, doubled from $1.9 million received in 2022. The corporate tax kicker is projected at $1.5 billion for schools.

The projected forecast for the 2023-25 biennium is a decrease of 10.8% in personal income and a decrease of 28.8% in corporate revenue. That could mean no income tax kicker will be triggered. But they are optimistic that the following biennium will gain back the loss.

It may be called a corporate tax kicker, but corporate earns their money from purchases we make. In 2012 Oregon voters were convinced to pass Measure 85 and forego pricing stability by diverting the corporate kicker revenue into a fund for K-12 public schools instead of rebating the money to companies. When it was passed, the corporate refunds typically averaged about $120 million every two years. In 2019 the corporate kicker sent $616 million to schools, and in 2021 it sent $420 million.

The 1979 legislative session started a wave of restrained spending and passed a surplus kicker statute along with a spending limit and a major tax relief plan. Voters approved the package and in 1999 it was referred to the voters as a Constitutional Amendment. Voters approved that when the actual General Fund revenues exceed the forecast amount by more than two percent, it would be returned to taxpayers who paid it. The mythology was accountability putting the public in control against a runaway budget.

A D V E R T I S E M E N T

A D V E R T I S E M E N T

But, Democrats think they have a loophole to confiscate part of the personal income kicker. In a slight of hand, when they find out how much the kicker will be, they make up a reason to go back and recalculate the prior budget so the calculation for the kicker return is less. This underhanded play is in the works again. The forecasted personal income kicker is estimated for an average annual wage to be $5,200 income tax refund in 2024.

Two different bills have been introduced to grab your Kicker Income Tax Refund. Senator Lew Frederick (D-Portland) and Senator Kayse Jama (D_Portland) sponsored an amendment to the Oregon Constitution to eliminate the kicker in SJR 26 and the companion bill SB 774. They removes all references to the individual income tax kicker and leaves the corporate kicker as funding schools. These bills remove all constraints to passing new projects and programs in high revenue years that can’t be sustained in down years. That is why there is a budget shortage going into the next biennium, because federal help throughout the pandemic ended up creating new programs that now need taxpayer funding.

Even though there isn’t a direct line in Governor Kotek’s budget request, Republican legislators are saying not so fast. By setting her budget goal so high, the governor is pressuring legislators to come up with the extra funds to pay for it. Senator Tim Knopp (R-Bend) introduced SB 990 as part of the Senate Republican Caucus’s Equitable Oregon agenda. This bill will return the next kicker in the form of a check instead of a credit. Senator Knopp stated, “While Oregonians still face high costs of food, fuel, child care, and rent – all of which are necessary to live, work, and raise a family – the state continues to bring in record revenue. Thanks to the Personal Kicker, Oregon taxpayers will get some of their taxes back and with it, a well-deserved break from the persisting burden of inflation and high costs.”

If Governor Kotek doesn’t get the 26 percent growth in her budget, it will set up an epic fight and behind closed-door deals and arm twisting. It is more than losing some of the kicker tax refund, but it will set a new high budget level - 26 percent higher - that won’t be sustainable in a down year forecasted for next biennium.


--Donna Bleiler

Post Date: 2023-02-23 10:54:25

Last Update: 2023-02-23 15:11:18