Something to kick around

Once again, Oregon faces a daunting budget situation. And once again, some lawmakers are talking about reforming the state's one-of-a-kind "kicker" law that sends refunds to taxpayers when the state's economist underestimates the amount of revenue the government will collect.

The difference this time around is that the voices calling for change are coming from both sides of the aisle. That doesn't mean real reform will actually happen, but it increases the chances.

Viewed from a purely financial standpoint, the kicker law makes no sense. Every year, the state economist forecasts how much tax revenue the state will take in. It's an educated guess, but it's still a guess. And sometimes it's wrong.

When the actual revenue exceeds the estimate by more than 2 percent, the kicker law requires that all the money in excess of the estimate be refunded to individual and corporate taxpayers. This is not because anyone's taxes increased. It's not "extra" money. It simply means the official forecast was a little off.

Those who are fond of saying government should be run like a business might look at the logic this way: If your employer had an unexpectedly good year and decided to share the company's success by handing out bonuses, would you say, "No thanks," and give it back?

If you're prudent, you might put the money in the bank or invest it, knowing that next year might not bring another bonus.

That's what reformers would like to do with kicker money — sock all or some of it away in the state's Rainy Day Fund for the next time the economy turns sour and tax revenues drop. That's prudent in a state that relies on the income tax, which rises and falls with the economy.

The issue is being raised now because the corporate kicker is expected to trigger $23.6 million in refunds to businesses this year, while the state faces a $3.5 billion shortfall. The personal kicker likely will not be activated.

Although the kicker makes little financial sense, it has a certain political logic. Voters too often have seen the Legislature take unanticipated tax revenue and use it to fund new and expanded programs, making government larger and creating pressure to maintain those programs when times get tough.

Voters understandably didn't trust lawmakers to do the right thing, so they voted to have the money returned to them, and they put the law in the state Constitution, where it can't be changed without another public vote. Lawmakers can't overrule the kicker unless they can muster a two-thirds vote of the Legislature.

Reforming the kicker won't by itself fix the state's budget problem. But it would put the state on a more solid footing going forward, saving money in good times to help it weather downturns.

Various proposals are being discussed, including diverting the corporate kicker to higher education and putting any personal kicker money in the Rainy Day Fund until it reaches a prescribed level, then resuming refunds to taxpayers.

It's a bad idea to dedicate money to a specific function, because it limits flexibility. And any change in the kicker formula would require a vote of the people, who might reject it.

None of these steps alone will solve the state's budget woes. But each could be part of a larger solution that helps end Oregon's boom-and-bust budget cycles.

The only unacceptable course is to do nothing.

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