The Bipartisan Kicker Bill: Good Enough?

Jeff Alworth

You can say this: big deficits produce big action. Among the meatiest we're likely to see this session is a bipartisan effort to reform the bete noir of progressive politics, the hated kicker. But it comes at huge cost:

The plan, pushed by Albany Republican Sen. Frank Morse, with backing from Portland Democratic Sen. Ginny Burdick, goes well beyond the state's quirky -- and hotly defended -- requirement to send checks back to taxpayers when state revenues beat projections. It also would set, for the first time in state history, a spending limit based on population growth and inflation....

In addition:

If ever there was a half-a-loaf bill, this is it. The bill would substantially neutralize some of the most destructive (and loopy) elements of the personal kicker. It would also eliminate the naked welfare of the corporate kicker. On the other hand, we'd make a massive concession: agreeing to a ceiling on spending--which is sort of like driving a twisty mountain road in the dark without headlights. Conservatives would get to control state spending--irrespective of circumstances--but would have to give up the kicker.

We have arrived at a profound moment in Oregon history. If the proposal becomes law, it will have more than an insignificant effect on government. The question I put to you: would the positive effects outweigh the negative? Do you support the bill?

Do tell.

Comments

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    I have no idea why my first bullet point isn't formatting properly, but be gracious and pretend it is.

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    Why in the world do legislators have the idea that more silly budget gimmicks are the answer to the last batch of silly budget gimmicks?

    As much as I dislike a sales tax, given a choice of two really bad ideas, I'd take the ST over the budget lock-down any day.

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    There seems to be a pattern here. A problem exists, i.e., the kicker, that most reasonable people agree needs to be addressed/reformed. In exchange for addressing the problem, conservatives demand something destructive to the state, i.e., restrict the state’s ability to provide the essential services for the citizenry by capping spending. Another recent example would be the tax cuts for the rich “deal” Obama and the Dems made.

    My instinct tells me NOT to capitulate. The facts are on our side relating to the kicker reform. We should push hard for it w/ no strings attached. Kicker reform is clearly warranted. If conservatives want to cap spending let a bill live or die on it’s own. If we can’t get kicker reform w/ the current legislature, hold conservatives responsible for blocking reform in an economic crisis. When the pendulum swings back and we have a blue majority we reform the kicker.

    I would really like to see Chuck’s take on this. Would this type of legislation be similar to TABOR?

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    Well, in the first round of committee hearings, it was hilarious to hear corporate lobbyists argue that in order to support it, they want something in return: a big capital gains tax cut.

    That's utter nonsense. I'll tell 'em what they're getting in return: A state government that's solvent. One that is able to fund core services. And a reserve fund for higher ed - something that nearly every corporate leader supports.

    Folks can argue the merits and demerits of a capital gains tax cut, but to suggest that that's the sweetener that's required to get the rest of the package done, well, that's just dumping a bag of sugar on top of the ice cream sundae. (I was going to go with "cherry on top", but that metaphor isn't quite right. It's too much, and it's out of place.)

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    "[Business leaders] have figured out that no business would survive if it were run like the TABOR faithful say Colorado should be run — with withering tax support for college and universities, underfunded public schools and a future of crumbling roads and bridges." — Neil Westergaard, Editor of the Denver Business Journal

    Great summary of what happened in Colorado with TABOR HERE

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    As I now understand the proposal, I'd vote no. I do not like the limit on the spending growth in state government, nor the dedication of funds to the university system, nor putting this much detail into the state constitution. If this is the political price, I'd vote to keep the kicker.

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      The "too much detail in the state constitution" horse left the barn when they added seismic retrofitting - among other things.

      The kicker doesn't belong in the Constitution either (thank you, Gordon Smith), but to fix that, you have to amend the Constitution.

      Personally, I'd be in favor of scrapping the whole thing and rewriting it as a clean document, devoid of ideological and partisan nonsense, devoted entirely to protecting basic civil rights and setting up the rules of our democracy. Everything else should be a legislative matter.

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        I'd be fine with a statute creating a permanent commission similar to Multnomah County's charter review committee. I envision a body made up of a volunteer bipartisan panel of legal scholars, retired public officials, and public policy experts, drawing on experience in and out of government. They could meet between legislative sessions and make recommendations for constitutional revisions to the legislature. The legislature could then hold an up-or-down to refer the recommendations to the voters. The recommendations would be both "housekeeping" measures that remove obsolete provisions, and substantive measures to help state government work better.

        It might be hard to get rid of ideological and partisan nonsense, but at least we could clear out a LOT of crap that's cluttered up the state constitution over the years.

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    I am guessing that this would be a constitutional amendment (or more than one, probably), so it would have to be approved by the voters. It would need someone to campaign strongly in favor of its passage in order to have any chance of winning, and I don't see that happening with this compromise proposal. There is something for everyone to dislike here.

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    For what it's worth, I'd also be a "no" on this--even though I generally support half-a-loaf compromises. It seems like if you're a Republican, you're getting three-quarters of a loaf: a spending cap and half the personal kicker. In fact, the cynic in me thinks the kicker part of this law is pretty much politically inevitable; the GOP sees that and looks to wring a massive compromise out of Dems before it happens.

    Back to the drawing board, I say.

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    I'm not sure, Jeff. I think we have to weigh the damage that the kicker causes against the damage that a spending cap would cause.

    I do not agree with the metaphor about a mountain road without lights. It's more like driving a mountain road in a VW van. You know just about how much power that thing has, and it's not going faster than 40 on the way to Govy (can you tell I hate being behind these things?) even if you need a burst of speed.

    Similarly, I find Josh's argument insufficient. Conservatives will argue that 'essential' is a value laden term, and why can't you fit 'essential' within the fiscal constraints of a capped spending package?

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      Paul:

      Why restrict the states ability to provide state services? We elect officials and vote on ballot measures to decide how we spend our money. Regardless of what conservatives believe are or aren’t necessary services, we have no idea what the future holds. There is no good reason to tie our hands behind our backs based on speculative numbers tied to population and inflation. If Oregonians want to set spending limits we can do it separately. Don’t allow them to hold kicker reform hostage. It’s legislative terrorism.

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        Josh, I don't mean to pick because I agree with you in principle, however:

        Previously you said "essential state services" and now you say "state services." Obviously there is a difference, and it's important if you're going to argue that a cap would be harmful.

        Second, population growth and inflation numbers aren't "speculative." You are conflating the current kicker rules, which specify that refunds are tied to budgetary projections (and which apparently is still part of the proposal) from the spending limits which are based on Treasury and Census numbers.

        I know this seems picky, but the proponents of this bill are going to be a lot smarter than I am in finding rhetorical flaws in our arguments.

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    I think we have to weigh the damage that the kicker causes against the damage that a spending cap would cause.

    Aside from the critique of my metaphor, do you care to do some weighing there, professor? Show your work!

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    The last thing this state needs is another spending limitation. We do not have a substantial Rainy Day Fund. The downsizing of education K-20 is the major cause for businesses choosing other states. We cannot attract highly educated workers to a state that does not provide basic education. Basic means equals foreign language, art, music, PE and a full-time librarian at the elementary level.

    The schools these workers would be leaving have all of those plus a full time nurse in every school and instrumental music and strings.

    Parents lined up to give public comment at 4 district meetings in the Medford School District. One speaker who recently moved from Connecticut stated, "Shame on you Medford. How dare you compare yourselves to other districts in Oregon, look at Connecticut where my children had....." Then a parent recently moved from Wisconsin asked why there were not Pre-K programs five days a week and full-day K like in the district she just left. A recent move in from the state of New York stood up and said, "I feel your pain."

    The most courageous thing our legislators and governor can do is to stop the bleeding in public education.

    Facing reality means that that the next biennium and the next are going to be even worse for our students.

    The worst ideas are from the Cascade Policy Institute supporting population-plus-inflation spending limits suggesting it would would lead to surpluses.

    The Kicker only exists because of inaccurate estimates of revenue!

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    The detail that I never see discussed is what is the base starting point for growth; now or before the recession? We will be going on 4 years without any growth in the operating budget. Is the starting point four years ago? Also which inflation index are they proposing? There are many different ones and what is relevant for Oregon government expenditures may not be the U.S. consumer index we are used to.

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    It's too bad that in years when we had a budget surplus that more money wasn't put into a rainy day fund. I think it's possible that the kicker law wouldn't have been enacted if this were the case.

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    Things change. This bill would constrain adaptation to change. In the natural world, that eventually leads to extinction. But then, Republicans reject the science of evolution, so they likely cannot appreciate the problem.

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    There is nothing natural about economics.

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    It's worth reading the bill and staying engaged in this debate. I want to correct two things:

    (1) There isn't a spending limit in the bill. The pop+inf formula is a trigger to mandate 3% savings in good years. The state could still spend any dollars it takes in once we've saved 3%.

    (2) The pop+inf formula is up for debate (as are many of the specifics in the bill). If you have an alternative proposal for the point at which we should save during good years, share it!

    I commend the bi-partisan leaders on this issue for putting together a real first draft as a starting point for a real conversation about how to FINALLY address instable funding of critical services and our illogical kicker policy.

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    The last thing this state needs is another spending limitation.

    For Pete's sake! Oregon's spending went up 50% in two biennia, from $40 billion in 2005-07 to $60 billion in 2009-11.

    WHAT spending limitation?

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    Rob, two points:

    (1) Correct me if I'm wrong, but the figures you quote include increased funding from the federal government passing through the state budget to help the needy during a recession and to help stimulate economic activity to get us out of a recession. We needed more, not less.

    (2) Does this proposed bill include such pass through federal funding in its calculations and limitations? That would be a problem.

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      I'd add a #3: Rob is carefully picking the start and end points -- the 2005 biennial budget was unusually low. The 2007 budget was higher, in order to add back cuts made against the 2001 and 2003 budgets.

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    No Kari, there is nothing special about my endpoints. Pick any you want. The all funds budget is up 100% in the last five biennia. You choose the endpoints - it has gone up fast.

    Dave Porter: yes, the all funds budget includes all federal funds, but that doesn't account for even most of the increase in state spending. Between 2005-07 and 2209-11, fed funds increase accounted for $8 billion of the $20 billion increase in state spending. The other $12 billion was almost entirely "Other funds."

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    Dana is correct. SJR 26 envisions a "forced savings plan" rather than an explicit spending limitation. It says when the state has a projected increase in the general fund (does not include federal funds)that is GREATER than the combination of inflation and population growth,the first 3% of that projected growth will go into the rainy day fund. Anything over that "popflation" plus 3% total is available for the Legislature to spend. So it is NOT anything like the Colorado TABOR spending limit. It just says that in good times the Legislature will have to put some money away and can then spend the rest. This is one mechanism to fund the rainy day fund. The diversion of half the personal kicker and all of the corporate kicker is a separate way to put money into the fund. And once the fund grows to a certain level, the personal kicker returns. I know it's complicated, but hope this helps.

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