Baked into the Oregon state Constitution is a provision for a “Kicker” income tax refund. This refundable tax credit is activated automatically whenever revenue collections exceed 2% of the government’s initial forecast, upon which the state is constitutionally obligated to refund the full amount of excess revenue.
Oregon’s constitutionally mandated tax refund is unique among the 50 states, preventing wasteful spending by default and ensuring fiscal restraint. Other blue states that are prone to excessive budgetary growth stand in stark contrast. California, whose taxpayers do not enjoy the protections of Oregon’s Kicker, now faces a $22.5 billion deficit after squandering last year’s historic $100 billion surplus.
Unfortunately for Oregonian taxpayers, Governor Tina Kotek is considering revoking their right to this year’s Kicker refund. Coming in at $3.94 billion, projected overcollections in FY 2024 are set to smash last year’s record $1.9 billion Kicker. That historic figure translates to an average income tax credit of $5,200 per taxpayer, which would go a long way to helping struggling workers and families cope with high inflation and economic uncertainty.
“I trust you to spend your money more than your government, because you know your priority better than your government,” said Senate Republican Leader Tim Knopp, who is making the preservation of the Kicker refund a top goal of the 2023 legislative session.
Gov. Kotek’s proposed budget is 26% higher than last year’s, thanks to a wealth of unaffordable new programs and spending hikes, including a 36% increase in healthcare funding and an extra $1 billion for education despite a decline in enrollment. In response to her excessive spending proposals, state legislatures are forced to find new funding, which leaves the status of the 2024 Kicker in a precarious position. Without raising taxes, the only way to fund Kotek’s spending hikes is for 2/3 of the legislature to vote to suspend the Kicker law. Assuming all Democrats support the suspension, such an effort would require the support of just 5 Republicans in the House and 2 in the Senate.
This is not the first time Kotek has taken aim at the Kicker rebate to fund her pet projects. As House Speaker in 2019, Kotek introduced a bill to redirect half of Oregon’s $1.4 billion Kicker into government coffers, largely to fund a $245 million “Clean Diesel Engine Fund” and another $245 million subsidy package for electric vehicles. Although that bill quickly died under skepticism from then-Governor Kate Brown, Kotek’s demonstrated distaste for the Kicker refund continues to influence her policy from the governor’s mansion.
To make matters worse, state Rep. Ben Bowman recently introduced HJR 21, which would change the allocation of the Kicker refund from being based on the proportion that someone paid into the fund to being equal payments per person, regardless of taxes paid. Since the Kicker is a refundable tax credit, under Rep. Bowman’s bill, an Oregon resident who paid taxes on salary from a full-time job would receive exactly the same amount as someone who worked just a few weeks, so long as they filed a personal income tax return.
Amid a prolonged period of economic uncertainty and high inflation, revoking Oregon taxpayers’ right to the Kicker refund would take more dollars out of their wallets at a time when they need it most. Hopefully, Gov. Kotek will reduce her spending plans to more reasonable levels or find other ways to fund her pet projects without looting the paychecks of the people she serves.