Should the corporate kicker become a rainy day fund?

By Rep. Greg Macpherson (D-Lake Oswego & SW Portland). Previously, Greg contributed "Killing Good Ideas in Secret."

When I was first elected in 2002, just four years ago, a recession gripped Oregon. As economic activity slowed, the income of individuals and corporations dropped. Because it depends heavily on income taxes, the state lost a quarter of its general fund revenue.

This loss of revenue forced the Legislature to make deep cuts in 2002 and 2003. Sick people were dropped from the Oregon Health Plan. State police were laid off. Schools closed early for the year.

Since then Oregon’s economy has rebounded. Unemployment is down. Wages and profits are up. The taxes collected on this income are flowing into the state’s general fund.

This changed situation raises the question – what should the state do with the unexpected revenue? Advocates for various state services are pressing for an increase in funding.

One reality of legislative service is that unmet needs run well beyond the state’s available resources, even in good times. We could spend every nickel of the new revenue on current services and still not accomplish everything that arguably should be done.

But those of us who remember the hard times of 2002-03 see another need – to set resources aside for the next economic downturn. Like a roller coaster, state revenue rises to a peak and then plunges into the next valley. Unless we save at the top, the next drop is bound to produce another round of stomach-churning cuts.

But Oregon’s unusual “kicker” law makes it harder to save. In May of each odd-numbered year, state economists must predict how much income tax will be collected in the next two years. If the actual amount collected exceeds the prediction by more than 2 percent, all the excess must be paid out rather than saved or spent on public services.

The kicker includes a separate calculation for individuals and for corporations. According to a recent update by state economists, the kicker payments for the 2-year period ending next June will total over $1 billion to individuals and $275 million to corporations.

Most of the corporate kicker will go to companies headquartered outside Oregon. There is little reason to believe that these corporations were expecting kicker payments when they invested in Oregon operations.

Last spring I asked readers of The Mac Report about the corporate kicker. By a wide margin, they favored placing it in a “rainy day” fund to maintain public services when revenues drop in the future. [Editor's note: The Mac Report is Macpherson's legislative newsletter.]

The current corporate kicker can be suspended by a 2/3rds vote of the legislature. Because the kicker was amended into the Oregon Constitution several years ago, committing future corporate kickers to savings would require a vote of the people. The 2007 legislature should vote on whether to place the current corporate kicker into savings and refer to the people a proposal to do the same with future corporate kickers.

The personal kicker presents different issues because nearly all of it goes to Oregon residents and some of them may be counting on it. Whether to suspend the personal kicker and to commit it to savings deserves a separate debate.

I would like to hear from readers about what should be done about the kicker law.

Comments

  • Scott in Damascus (unverified)
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    With corporations paying less than 9% of the total state tax burden, the corporate kicker must be eliminated and replaced with an increase in the corporate tax rate.

    And don't argue that it would drive away businesses. Oregon is already rated 50th (that's dead last) in corporate tax burden. And if it's so low already, why haven't Microsoft and Amazon.com packed-up and moved from Washington which has a much higher tax rate? Because a low corporate tax rate, by itself, does not attract or retain companies.

  • DAN GRADY (unverified)
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    These laws that prescribe formulas of conduct relating to taxation, and cost of governance is little more than intellectual masturbation! An excuse not to legislate, an excuse not to trust the process of elections and politicians making policy and laws!

    We need to grow-up and stop making convoluted arguments around not leading! Oregon as well as America need to start making policy decisions and begin the time honored version of democratic lawmaking, and the open debate of policy matters facing our futures, the education of our children, and the preservation of our natural resource for the future Oregonians!

    Let's try a roll back to things like a budget from the House & Senate with a consensus for a better Oregon, and America. I’m not saying anything that isn't on the minds of men and women whom saw our government before Nixon, and the Republican whiplash of Reagan/Bush, and Statewide insurgence of Republican influence on tax issues, and educational issues.

    We allow rich menaces to make constitutional amendments without any check against a well financed measure winning like TABOR in Colorado. There should be a step included in these public amendments that include the elected politicians veto or at least correction of measures that serve no other purpose but to weaken government.

    Happy Thoughts;

    Dan Grady

  • Peter Graven (unverified)
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    Setting up an actuarially fair rainy-day fund is one of the best things this legislature could accomplish. It's great to see legislators have learned from past negligence about providing stable funding.

    Politically, converting the corporate income tax kicker to the rainy-day fund has a ton of support. The only question is, is it enough? I mean, think of the irony. If the only way we are able to save money is by our economists being wrong, doesn't that put us into a catch 22.

  • Zak J. (unverified)
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    "The Kicker" has got to be the dumbest feel-good measure ever passed. Don't stop with just getting rid of the corporate kicker; throw out the whole thing.

    I think most people would much rather have dependable law enforcement, safe bridges & roads, and a school system that produces an educated workforce than an extra couple hundred bucks a year in their pockets that gets eaten up by the costs of paying for robberies & assaults (or private alarms & security guards), increased prices for goods and services delivered via a collapsing infrastructure, and the high costs of remedial training for under-par employees.

  • Christy (unverified)
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    The corporate kicker should be suspended, absolutely. A rainy day fund is a nice way to deal with that money, too. Otherwise, everyone is going to clamor for the cash.

    I like the idea of streamlined state services. Lean times remind us to cut the fat. By staying lean, I think that we improve people's opinions of government. I think we need to set and stick to our priorities, spend wisely, save wisely, and show Oregonians that the Democrats are the new fiscal conservatives.

    PS: Keep our lovely new Democratic legislature away the personal kicker. Far, far away.

  • JHL (unverified)
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    Aye, the kicker -- both personal and corporate -- was the stupidest idea the Oregon Democrats ever came up with.

    Yes! Let's do away with both of those and roll them both into a lockboxed rainy day fund... and once that band-aid is on the horrible, mangled bloody mess of a revenue system, can we talk about actual tax reform now that we have a Democratic capitol? I'm so afraid that the Dems will get skittish and refuse to address anything larger than the corporate kicker.

  • djk (unverified)
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    Yes, absolutely, the corporate kicker law should go to feed a rainy day fund.

    So should the personal kicker.

    The personal kicker presents different issues because nearly all of it goes to Oregon residents and some of them may be counting on it. Whether to suspend the personal kicker and to commit it to savings deserves a separate debate.

    By all means, send back the personal kicker money this year. But let it be the last budget cycle where the state is dragged down by this idiocy. The kicker is a stupid law that needs to be eliminated.

    Ask the people to vote (separately) to eliminate both the personal and corporate kickers, and replace them both with detailed guidance on intelligent banking and investment of surpluses.

    (Say, one half to a "rainy day fund" until it's "full", and the remainder to permanent endowment funds for higher education, parks, habitat restoration, Oregon Cultural Trust, and so forth. The point is, we enforce fiscal discipline by investing or banking surplus revenues for the benefit of the public, not just giving it back.)

    Wandering a bit off-topic: Do we need the corporate income tax at all? Washington has a "business & occupations tax" (essentially, a tax on gross business receipts) which, I understand, makes up something like half the state's revenues. Last I heard, businesses weren't fleeing Washington in droves; clearly, the B&O tax isn't harming the business environment.

    Why not get rid of the corporate income tax completely, and give Oregon an B&O tax similar to Washington's, with all revenues dedicated to support K-12 education? Politically, I expect it would be much easier to sell than a sales tax.

  • Butweneedmoremoney (unverified)
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    I too would like to see the end of the corporate kicker.

    I also note that the decades of budget cuts in Oregon, starting heavy in 1981 during the timber recession, compounded due to Measure 5 in the early 1990's, and never fully made up for during the "good" times at the end of the 1990's; should get some priority. Perhaps a 50/50 formula with the corporate kicker - half to the general fund, half to a rainy day fund would make more sense.

    And about that billion of individual kicker money - perhaps half back to the people, half to a rainy day fund to preserve services during lean times. (Anyone ever read that old Roman tale of the ant and the grasshopper?)

    What we really need is for the Democrats to do what we hired them to do - The Democrats have the House, the Senate, and the Governor at this time so they can DO THINGS! I don't really care what exactly they do so long as they work to get us some sort of systemic reform that will put our government on a better financial footing for the long haul. Does that mean comprehensive tax reform? Maybe. Does that mean a new mix of taxes? Maybe. We hired the Democrats to lead, now lead!

  • Benjamin Cota (unverified)
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    As a teacher and thinking person, I am very worried about the likelihood of a major recession in 2007.
    Because of the nationwide housing bust, the Sacramento County treasurer was quoted last week as predicting the biggest loss in government revenue in 40 years. This bodes poorly for Oregon. The ISM index, GDP, etc. are turning down now. The economy is slowing dramatically. And the housing business is slowing down, housing prices are dropping. Lumber mills are already reporting reduced schedules. Just how bad this will hit Oregon is an open question... but other states are starting to plan for a downturn. But if you ask me, it's too late to fix the kicker, rationally. People won't pay any attention until we are in full-blown recession. All I can say, is at least we don't have TABOR...

  • John Napolitano (unverified)
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    The personal kicker presents different issues because nearly all of it goes to Oregon residents and some of them may be counting on it.

    Why can't the people of Oregon decide if they would like to put the personal kicker into a "rainy day fund"? Let's put the personal kicker on the ballot in the May 2007 election, and specify that if passed, the funds will go to a stabilization fund to be used only if the revenue drops in a future biennium. For me, Oregon's financial stability is worth more than the $100 that my family will likely get as a kicker refund. I am confident that many other Oregonians will feel the same way, if they are given a chance to voice their opinion by voting on it.

  • Peter Graven (unverified)
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    JHL is right. The democrats need to spearhead tax reform as well. The benefits, of course, are if you have a "balanced" tax system in your state you don't have to pander to companies (strategic investment program, tax breaks, etc. ), pander to individuals (kickers, crazy property tax ballot measures, etc.), or try to forecast volatile tax streams.

    It is possible to have confidence in your tax system so it is not taken advantage of. Fixing it by ballot measure will never work. Legislators please step up!

  • Peter Graven (unverified)
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    JHL is right. The democrats need to spearhead tax reform as well. The benefits, of course, are if you have a "balanced" tax system in your state you don't have to pander to companies (strategic investment program, tax breaks, etc. ), pander to individuals (kickers, crazy property tax ballot measures, etc.), or try to forecast volatile tax streams.

    It is possible to have confidence in your tax system so it is not taken advantage of. Fixing it by ballot measure will never work. Legislators please step up!

  • BlueNote (unverified)
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    This seems like kind of a "chicken shit" way of approaching tax reform. Corporations who are doing business in Oregon need to pay more tax. Talking about the "kicker" seems to be avoiding the real issue. How about a gross receipts tax (aka "B&O")tax for all businesses in Oregon?. Washington has one, and I don't see Boeing or Microsoft running away.

  • Tom Civiletti (unverified)
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    Turning the corporate kicker into a rainy day fund would be a good first step in tax reform, but it would not be sufficient.

    The corporate tax rate should be higher. Non-functional tax credits should be abolished. The lowest personal income tax rate should be reduced and higher rate tiers should be added for high income levels. the Legislature must allow local SDCs for all needed public infrastructure, especially schools.

    Shall I go on?

  • (Show?)

    Eliminate the corporate kicker. Create a rainy day fund pegged at a percentage of the budget, then redirect the remainder going forward to restoring the cuts that we had to endure under the Bush II recession. As noted above, Oregon is ranked last in corporate taxation so the deafening chorus of fraudulent claims that this will hurt business is pure bullshit, and must be called that, in no uncertain terms by every honest person in the state, including elected reps. in the media.

    But then that would require leadership, so part of me (the optimist) is hopeful the Democrats finally get their stones on this... and the realist (the cynic) also will not be holding my breath for real leadership and people actually screaming bullshit when the "it will hurt business" GOP f-tards begin to screech.

  • JB Eads (unverified)
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    I applaud Rep. Macpherson for engaging in this important conversation about the budgetary oddity that is Oregon's kicker law. It is my strong belief that the corporate kicker needs to be suspended this year, and Oregon voters should have the opportunity to make the smart move of modernizing our tax structure by permanently getting rid of the self-inflicted wound of Oregon's corporate kicker.

    Not only is a rainy day fund vital to our state's economic health, it's important that we seize the momentum now to make these changes. During bad economic times, this conversation become much more difficult.

    Some here have talked about larger tax reform. That's an important conversation, but there's no reason not to first address important public policy changes around which there's general consensus. We have that consensus with the corporate kicker, and an opportunity to make our state's budget more stable and rational.

    Beyond just the merits of this debate, one of the biggest misstakes the next Legislature could do is to let the perfect be the enemy of good on issue after issue. Improving the kicker law will strengthen our state's financial footing, and that's what's ultimately important.

  • Robert Harris (unverified)
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    I to would like to see a more comprehensive tax reform, including modification of the kicker law. Just taking the lower hanging fruit does seem tempting, but when you package the easy popular stuff with the more difficult changes, the package, as a whole is more palatable.

    My list would include, but not be limited to....

    For businesses: get rid of corporate kicker, impose gross receipts tax on business and get rid of corporate income tax. Adjust so that overall corporate tax burden is similar to other states.

    On Personal income tax changes, raise standard deduction, make rates more progressive.

  • (Show?)

    state economists must predict how much income tax will be collected in the next two years. If the actual amount collected exceeds the prediction by more than 2 percent, all the excess must be paid out rather than saved or spent on public services.

    Maybe we need better state economists?

  • Steve (unverified)
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    Here's a crazy idea - With revenues up 20% and the Governor wanting to spend all 20%, instead of that, why not take half the upside (10%) and put it in a rainy day fund?

    The whole idea of establishing a rainy day fund is risible based on the actions of both parties in the legisalture and the governor. Especially when the governor acts like all of Oregon's problems are gone and will never come back. Any excess that comes into state coffer's gets spent.

  • rep. Peter Buckley (unverified)
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    Greg is one of the most talented and thoughtful legislators we have in the House, and his pushing forward on the kicker issue is no surprise to me. I'm fully supportive of the idea of putting the corporate kicker directly into a rainy day fund, and referring to the voters the proposal to make this our state policy.

    For the individual kicker, my proposal is simple: 1/3 should go back to taxpayers, 1/3 to the rainy day fund and 1/3 to community colleges and higher ed. This would give us the absolute most bang for our bucks while still planning for the next economic downturn. I welcome any feedback on this idea--I think it could pave the way to an even brighter future than we see in front of us right now.

  • JHL (unverified)
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    "there's no reason not to first address important public policy changes around which there's general consensus"

    Eads is right: There's a part-way solution to be had soon on this issue, and we can implement it in the near future. But one of two things may come from that quick solution:

    1. The victory whets the appetite of the legislators for further, more lasting reforms and lights a fire under them to become true leaders in the larger scenario of comprehensive tax reform... or

    2. Feeling that they've done enough to secure their electoral fortunes, the legislative leaders try to convince Oregonians that this measure of reform is itself, in fact, the big picture solution. No need to rock the boat any further; let's hoist up that "Mission Accomplished" sign!

    I guess we'll see... Come on, Dems! I'm rooting for you.

  • LT (unverified)
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    For the individual kicker, my proposal is simple: 1/3 should go back to taxpayers, 1/3 to the rainy day fund and 1/3 to community colleges and higher ed. This would give us the absolute most bang for our bucks while still planning for the next economic downturn. I welcome any feedback on this idea--I think it could pave the way to an even brighter future than we see in front of us right now.

    Peter, it would be refreshing just to have open public debate on this and all other tax breaks.

    I do think if the kicker were sent back to voters to decide if they want to toss out what I think was Measure 86 of 2000, that the corporate kicker be a sep. measure from indiv. And maybe the indiv. measure written as you describe.

  • Ramon (unverified)
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    Didn't we just reject a Rainy Day Fund? Bringing it back up again so soon will just alienate voters.

    People really want the Legislature to crack down on corporate polluters: here's an idea whose time has come.

  • Mister Tee (unverified)
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    Governments at every level -- Federal, State, County, and City -- take a larger component of my income, and then complain about not having enough. Government will never be satisfied, and (as the Bush Administration has shown) even Republican have lost their way on fiscal prudence.

    I pay more than $5k in property taxes, but my neighborhood school is on the short list slated for closures. Our local roads won't be paved (or even maintained) without an LID. Bridges and highways are crumbling, the drug addicted wander the streets of Portland like a Gus Van Sant version of The Day of the Dead (zombie movie).

    Our Bureaucrats (at all levels) have health insurance and pension benefits which are much more generous than virtually all taxpayers. Best yet, they frequently retire at a younger age, and then go back to work for another governmental entity (while continuing to draw their first pension).

    Our political class are so busy getting reelected or lobbied in far away places; it's amazing that an honest pragmatist like Macpherson has any chance at all.

    I am beginning to think the Libertarians are right: there is no freedom without limited government.

  • mrfearless47 (unverified)
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    I agree with the writer who stated that the "kicker" (both corporate and personal) was the dumbest idea ever to come directly from Salem. I know that its intent was to stave off a Prop 13-like rebellion, but despite that, the rebellion occurred anyway, so now taxpayers (and corporations) have it both ways. Their property taxes are less than they should be and they get unnecessary tax refunds whenever the dismal science of economics can't quite forecast to within 2% of actual revenues nearly two years ahead of time.

    Econometrics is getting better with each passing year, but in the meantime, the Legislature has to get together the votes to suspend the kicker for the current cycle while there are adequate funds to kick start an exceptional rainy day fund. And they have to put together a package of tax reforms and revenue measures that would fund services at decent levels and keep a lock-box type rainy day fund that can be drawn upon only under limited circumstances.

    I think that now is the time to do this, while the Republicans have less support than ever before and people have looked into the abyss of repeated shortfalls in school and DHS budgets. Carpe Diem.

  • DAN GRADY (unverified)
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    Our Bureaucrats (at all levels) have health insurance and pension benefits which are much more generous than virtually all taxpayers. Best yet, they frequently retire at a younger age, and then go back to work for another governmental entity (while continuing to draw their first pension). // Mister Tee // I take it that having a rewarding carreer available to a competitive work force to insure quality of personel is a concept your opposed to. I would like to see a higher standard, and more accountablilty in the government, but that can only be accomplished with a highly competant bureaucracy! // Dan Grady

    Our political class are so busy getting reelected or lobbied in far away places; it's amazing that an honest pragmatist like Macpherson has any chance at all. // Mister Tee // I would agree with this sentiment and would encouraged with the election model of public financing that is in effect in Arizona. The candidate that chooses to opted out of the program is obviously obligated to the financial support to their campaign, as the candidate that participates with the plan can afford an unfettered opinion and this point is impossible to hide from the voter.// Dan Grady

    I am beginning to think the Libertarians are right: there is no freedom without limited government. // We have had over a decade of the “anti-government” government and the results have reflected the conflicted priorities that eneviably dissolve into corruption, premeditated incompetance, and demoralization of government services that results in a brain drain leaving the worst kind of bureaucrats behind, and the cronies alone to do what they do, corrupt and dismantle government.// Dan Grady

  • Patty Wentz (unverified)
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    Ramon writes,

    "Didn't we reject a rainy day fund?"

    We did not. We rejected a state spending cap - Measure 48. It was defeated 71-29. The propoonents called it a rainy day fund, but the measure actually did nothing to create one. They might as well called it the "free chocolate for everyone," measure or the "lose weight without even trying," measure.

    We have not rejected a rainy day fund.

    Ovegonians have, however, overwhelmingly elected a governor who was upfront with the voters during the campaign said he was going to increase cigarette taxes to pay for kids health care, car insurance to pay for state troopers, increase the corporate minimum and look at putting the kicker into a rainy day fund. So it seems we knew what TK had in mind and supported it. The House Republicans are already rattling their swords against the budget but before they strike they should keep in mind that not only did voters reject their failed fiscal policies and turn the house over to the Ds, the governor has a pretty clear mandate on his budget policies.

  • Garrett (unverified)
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    Just a quick statement. I noticed a few complaints about school closures. Has anyone ever really thought hard about that? Do it real quick. Young people with kids can't afford to buy a house in PDX. What is the median cost of a house in PDX? They sell anywhere from 430,000-725,000 in my neighborhood (just off Hawthorne and 39th). I rent. There isn't anyone with kids buying a house in my neighborhood. It makes sense they would close local schools when this kind of thing happens. There aren't the amount of students there were years ago. 25 years ago the houses in these areas were cheap and families moved in. Now the prices are ridiculous and families are moving to the burbs. Putting the corporate kicker in a rainy day fund is a good start but it isn't going to fix a common complaint like school closures.

  • mrfearless47 (unverified)
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    Dan Grady writes:

    "Our Bureaucrats (at all levels) have health insurance and pension benefits which are much more generous than virtually all taxpayers. Best yet, they frequently retire at a younger age, and then go back to work for another governmental entity (while continuing to draw their first pension). // Mister Tee // I take it that having a rewarding carreer available to a competitive work force to insure quality of personel is a concept your opposed to. I would like to see a higher standard, and more accountablilty in the government, but that can only be accomplished with a highly competant bureaucracy! // Dan Grady"

    I agree with you Dan on both counts. I would only add that Mister Tee continues the insulting canard that somehow a large number of "bureaucrats" retire on their PERS benefits and then go work for another governmental entity. I dare you to document where ANY retired PERS member goes to work full time for another governmental entity in OREGON. It doesn't and it can't happen. It can happen by moving to a different state or into one of those rare positions NOT covered by PERS, but there is an entire group of statutes that explicitly forbid PERS recipients from working more than 1039 hours for any PERS-covered employer. In most jobs, this is less than half-time per year. Yes, that can happen, but at those levels the worker is ineligible for benefits of any kind - retirement or health care. So, show us the evidence that we have any retired PERS member working full time for a PERS-covered agency anywhere in Oregon.

  • DAN GRADY (unverified)
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    SAVE DEMOCRACY, VOTE FOR A DEMOCRAT!

    Ovegonians have, however, overwhelmingly elected a governor who was upfront with the voters during the campaign said he was going to increase cigarette taxes to pay for kids health care, car insurance to pay for state troopers, increase the corporate minimum and look at putting the kicker into a rainy day fund. So it seems we knew what TK had in mind and supported it. The House Republicans are already rattling their swords against the budget but before they strike they should keep in mind that not only did voters reject their failed fiscal policies and turn the house over to the Ds, the governor has a pretty clear mandate on his budget policies. // Patty Wentz

    Amen! Amen! Amen! // Dan Grady

    Just a quick statement. I noticed a few complaints about school closures. Has anyone ever really thought hard about that? Do it real quick. Young people with kids can't afford to buy a house in PDX. What is the median cost of a house in PDX? They sell anywhere from 430,000-725,000 in my neighborhood (just off Hawthorne and 39th). I rent. There isn't anyone with kids buying a house in my neighborhood. It makes sense they would close local schools when this kind of thing happens. There aren't the amount of students there were years ago. 25 years ago the houses in these areas were cheap and families moved in. Now the prices are ridiculous and families are moving to the burbs. Putting the corporate kicker in a rainy day fund is a good start but it isn't going to fix a common complaint like school closures. // Garrett

    Amen! Amen! Amen! // Dan Grady

    Econometrics is getting better with each passing year, but in the meantime, the Legislature has to get together the votes to suspend the kicker for the current cycle while there are adequate funds to kick start an exceptional rainy day fund. And they have to put together a package of tax reforms and revenue measures that would fund services at decent levels and keep a lock-box type rainy day fund that can be drawn upon only under limited circumstances.

    I think that now is the time to do this, while the Republicans have less support than ever before and people have looked into the abyss of repeated shortfalls in school and DHS budgets. Carpe Diem. // mrfearless47

    Amen! Amen! Amen! // Dan Grady

    This website is quite an education for a new Oregonian since '99, and a soul saving experience to know their are those out their of all types whom have the commonsense expectations of our government, and feel connected to each other enough to have such insightful opinions!

    Happy Thoughts;

    Dan Grady

  • (Show?)

    A number of people on this thread have pointed to the complexitity of the situation in terms of spending and saving, and suggested various solutions that combine both. Throw me in that camp. It's both irresponsible to continue at substandard funding levels and fly on our hinky two-legged stool of a tax structure without a rainy day fund.

  • Gordie (unverified)
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    So, we have all kinds of thoughts on a rainy day fund, but little on how that would actually work. I know many folks who conceptually approve of a rainy day fund, but can get all tied up trying to define the limits upon spending one--such as at the expected drop of a legislative hat versus a genuine economic downturn. How would a rainy day fund need to be limited to get it approved by the majority of voters?

  • djk (unverified)
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    For the individual kicker, my proposal is simple: 1/3 should go back to taxpayers, 1/3 to the rainy day fund and 1/3 to community colleges and higher ed. This would give us the absolute most bang for our bucks while still planning for the next economic downturn. I welcome any feedback on this idea--I think it could pave the way to an even brighter future than we see in front of us right now.

    As long as the 1/3 to "community colleges and higher ed" is invested in permanent endowments rather than used for operations, I'd support this idea. A portion of the surplus could go to create endowed academic chairs designed to attract and keep top teaching talent, capital funds, or permanent scholarship funds. $10 million surplus invested at 5% will produce $500,000 per year for scholarships every year, forever -- that's 100 students getting $5000 per year for college.

    Make sure you invest the surplus, and I'm right there with you.

    It's both irresponsible to continue at substandard funding levels and fly on our hinky two-legged stool of a tax structure without a rainy day fund.

    Try a three-legged stool:

    (1) Personal income tax for the general fund, with surpluses to rainy day/stabilization fund

    (2) Business & Occupations tax to fund education, with surpluses to an educaton endowment/stabilization fund

    (3) Property tax for local government operations

    can we talk about actual tax reform now that we have a Democratic capitol? I'm so afraid that the Dems will get skittish and refuse to address anything larger than the corporate kicker.

    Please! This state's tax system is a hopeless mess. Ideally, we should rebuild it from the ground up, but realistically, we're probably stuck tweaking the current system.

    So why not tweak the property tax limitation a bit and send it back to the voters? Accepting that the people want tax limitation in principle, the current McIntyre-Sizemore tax limitation scheme (1990 Measure 5 and 1996 Measure 47, rewritten into 1997 Measure 50) probably isn't best way to go about it. Could the legislature put their heads together and come up with something better? Say, a split-roll system so the property tax limits affect only residential real property. Or tax limits that apply only to property that produces no income for the owner. Or maybe replace the current tax rate limit with a substantial homestead exemption. Or perhaps restrict the Measure 50 assessment limits to owner-occupied homes.

    Both Measure 5 and Measure 47 passed by very narrow margins. Almost half the state opposed both sets of limits. That means the voters, as a group, are open to a sensible, reasonable counter-offer that preserves individual tax relief but improves local school funding. If legislature made the people a "better offer" on property tax limitation, and in the process remove that arbitrary 0.5% cap for local school funding, it would stand a good chance of passage.

  • Sid Leader (unverified)
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    Guess which countries have the strongest economies, healthiest citizens, best schools and lowest drug use?

    Scandanavia, the home of high taxes!

    Who'd have thunk it? Someone should read it to Little Larsy, his third wife and his husky red-headed stepchild some day.

    http://www.canada.com/topics/finance/story.html?id=b139275e-043b-4e65-a402-231de04e38c4&k=43336

  • Tom Civiletti (unverified)
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    Sid, Sid, Sid,

    <h2>You will get nowhere with facts. Remember that folks like Lars and his dittos ignore anything that happens outside our borders unless it's ample excuse for dropping bombs or organizing a coup.</h2>
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