Oregon’s Governor Wants to Cap Tax Rebates to Boost Internet

Gov. Kate Brown has proposed capping taxpayer rebates — or kickers — at $1,000 to free up roughly $500 million for public pension costs, rural housing and improvements to rural broadband.

by Hillary Borrud, The Oregonian / May 31, 2019
Oregon Gov. Kate Brown giving her acceptance speech after winning the election. Shutterstock

(TNS) — Gov. Kate Brown on Thursday laid out a detailed plan for how she would like to divert more than one-third of the state’s projected record $1.4 billion “kicker” tax rebate.

Brown has previously said she would like to cap taxpayers’ kickers at $1,000 and use the roughly $500 million that would be saved to reduce the impact of public pension costs on government budgets.

Under that plan, the majority of Oregon taxpayers would still receive their full kicker rebate next year.

In a briefing with reporters Thursday, Brown said she would like to use $250 million of the money to help with public pension costs to K-12 schools, $220 million for rural housing and $29 million to improve rural broadband.

“I put this proposal out to stimulate conversation,” Brown said. “I think it’s fiscally responsible and makes common sense.”

Oregon’s unique “kicker” rebate law dictates that any time the state collects 2 percent more revenue than forecast at the start of the budget cycle, it must return all the extra income tax to taxpayers.

Oregon’s ‘kicker’ tax rebate could grow to record $1.4 billion

With economists predicting a recession on the horizon in 2020, Oregon taxpayers might not receive that kicker tax rebate in 2020. Democrats in the Legislature appear interested in diverting it to the state's rainy day fund.

Brown said she has presented her proposal to leaders in both parties in the Legislature, where Democrats hold a supermajority in each chamber. The governor did not indicate she had lined up the two-thirds majorities necessary to divert part of the kicker, which would require at least two Republicans in each chamber.

“We know it would require a super-duper majority,” Brown said.

Convincing even lawmakers from her own party to hold back some of the sizable income tax rebates that would otherwise be headed to taxpayers in 2020 could prove challenging. Senate President Peter Courtney, D-Salem, did not offer to line up the 18 Democratic and two Republican votes necessary in the chamber. “Give me 20 votes” was Courtney’s response to Brown’s proposal, according to his spokeswoman Carol Currie.

So far this session, lawmakers have failed to dedicate any substantial cash to make a dent in the long-term pension deficit. For example, three-quarters of the savings in a pension bill the House passed on Thursday come from extending the minimum payment schedule on the deficit by another eight years. That bill does redirect 0.75 to 2.5 percent of public employees’ current contributions to a 401(k) style savings plan to the pension fund, to which they do not currently contribute.

Brown’s proposal would not pay down the $27 billion deficit in the pension fund. Rather, she wants to put the money into a “side account” to help K-12 schools cover their escalating mandatory contribution rates to the pension fund, spokeswoman Kate Kondayen said. She said the governor is open to other approaches. The governor did not say how much her plan would help schools.

House Speaker Tina Kotek, D-Portland, was busy Thursday wrangling the votes to pass the controversial package of pension changes, including the employee contributions. She did not have time to review the governor’s proposal and wasn’t able to take a position on it, her spokesman Danny Moran said.

The governor’s appeal to Republicans who represent much of rural Oregon also did not appear to have won them over.

Senate Republican Leader Herman Baertschiger Jr. of Grants Pass said voters — rather than lawmakers — should decide whether to redirect a portion of the tax rebates to the priorities Brown outlined.

“For the legislature to claw back kicker money, we need the blessings of Oregonians,” Baertschiger said. “Given previous polling we’ve looked at, I think Oregonians want their kicker money.”

House Republican Leader Carl Wilson, also of Grants Pass, expressed skepticism in a press release. “Our state income tax revenue is at an all-time high,” Wilson said. “This is no time to begin skimming off money that hard-working Oregonians have earned. Invariably, when we return to our districts our constituents tell us they don’t want Salem politicians to mess with their kicker.”

Asked where else leaders might come up with the significant cash needed to pay down the pension deficit, Baertschiger did not offer other ideas. “I just haven’t heard of a viable system to deal with the (pension unfunded liability),” he said.

©2019 The Oregonian (Portland, Ore.). Distributed by Tribune Content Agency, LLC.

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