Reagan, I have one correction and one longer comment.
First the correction. You write: "it gives an equal amount of funds back to Oregonians, regardless of income." Not so, it returns tax funds in the (unequal) proportions in which they were paid. Those who paid more taxes get more back. One can argue the fairness of that. But if the kicker were revised to give equal amounts to all taxpayers, regardless of the amount of taxes they paid, there would be a lot more support from progressives. One can argue the fairness of that, as well. But I thought this warranted clarification.
As to the merits of the kicker: I agree that segregating unanticipated surplus revenues in a given budget period restrains spending and can contribute to sustainable budgeting in the long term. That's because, in a given biennium's spending plans, such surpluses are one time money. From one perspective, then, the issue that raises is whether one time funds are better spent on compelling one time purposes (e.g. completing the seismic retrofitting of school buildings) than on refunds to taxpayers, But, from another perspective, since the economy and revenues do not grow uniformly from biennium to biennium, but rather with unexpected dips and bumps, those one time funds can smooth out the vagaries on the revenue side in order to stabilize the provision of services on the spending side. So the issue becomes the extent to which kicker funds should be saved to smooth out those effects.
You are right to look at the kicker in the context of the state's overall reserves, which I wrote about in an earlier post. The case for preserving the kicker in some form does relate to the sufficiency of reserves, although I would also argue that there is still a great need to apply one time funds to compelling one time purposes, e.g. my retrofitting schools example. I have also written about how a sustainable budget on the services side is subject to more than economic vagaries, but to the effects of climate-driven extreme weather events, including drought and wildfire, and the probability of seismic disruptions. These are known unknowns we should be planning for if we take a long term view of sustainability. Which has led me to think that we need a resiliency fund, not just a Rainy day fund, to improve our budgeting.
I'd suggest a mend-it-not-end-it approach to the kicker, with reforms that limit its refund mechanism to amounts over and above what is needed to sustain budgets and would allow the legislature to prioritize compelling one time investments over one time refunds based on agreed upon ROI criteria. I'd also support a redistribution of the kicker to limit the amounts refunded to high income taxpayers and/or convert it to flat dollar amounts. But that's a secondary issue.
Finally, there is one modest reform that would simply limit the occurrence of kickers: Change our budgets to annual ones, in which the revenue projections are more likely to be on the mark. But that amounts to limiting the kicker if we can't improve it.
You are correct. In my final editing pass I failed to notice my error. You are correct the kicker returns proportional to taxes paid.
Your suggestions are worth exploring. I am not sure Oregonians have that much trust in Oregon's legislature at this point (which I think continues to drive the popularity of the kicker and other limits on taxes). That kind of trust can be built now and can give lawmakers flexibility to explore new policy without such painful repercussions in elections.
Reagan, I have one correction and one longer comment.
First the correction. You write: "it gives an equal amount of funds back to Oregonians, regardless of income." Not so, it returns tax funds in the (unequal) proportions in which they were paid. Those who paid more taxes get more back. One can argue the fairness of that. But if the kicker were revised to give equal amounts to all taxpayers, regardless of the amount of taxes they paid, there would be a lot more support from progressives. One can argue the fairness of that, as well. But I thought this warranted clarification.
As to the merits of the kicker: I agree that segregating unanticipated surplus revenues in a given budget period restrains spending and can contribute to sustainable budgeting in the long term. That's because, in a given biennium's spending plans, such surpluses are one time money. From one perspective, then, the issue that raises is whether one time funds are better spent on compelling one time purposes (e.g. completing the seismic retrofitting of school buildings) than on refunds to taxpayers, But, from another perspective, since the economy and revenues do not grow uniformly from biennium to biennium, but rather with unexpected dips and bumps, those one time funds can smooth out the vagaries on the revenue side in order to stabilize the provision of services on the spending side. So the issue becomes the extent to which kicker funds should be saved to smooth out those effects.
You are right to look at the kicker in the context of the state's overall reserves, which I wrote about in an earlier post. The case for preserving the kicker in some form does relate to the sufficiency of reserves, although I would also argue that there is still a great need to apply one time funds to compelling one time purposes, e.g. my retrofitting schools example. I have also written about how a sustainable budget on the services side is subject to more than economic vagaries, but to the effects of climate-driven extreme weather events, including drought and wildfire, and the probability of seismic disruptions. These are known unknowns we should be planning for if we take a long term view of sustainability. Which has led me to think that we need a resiliency fund, not just a Rainy day fund, to improve our budgeting.
I'd suggest a mend-it-not-end-it approach to the kicker, with reforms that limit its refund mechanism to amounts over and above what is needed to sustain budgets and would allow the legislature to prioritize compelling one time investments over one time refunds based on agreed upon ROI criteria. I'd also support a redistribution of the kicker to limit the amounts refunded to high income taxpayers and/or convert it to flat dollar amounts. But that's a secondary issue.
Finally, there is one modest reform that would simply limit the occurrence of kickers: Change our budgets to annual ones, in which the revenue projections are more likely to be on the mark. But that amounts to limiting the kicker if we can't improve it.
Tim Nesbitt
Hi Tim,
You are correct. In my final editing pass I failed to notice my error. You are correct the kicker returns proportional to taxes paid.
Your suggestions are worth exploring. I am not sure Oregonians have that much trust in Oregon's legislature at this point (which I think continues to drive the popularity of the kicker and other limits on taxes). That kind of trust can be built now and can give lawmakers flexibility to explore new policy without such painful repercussions in elections.
Thanks for reading!