One of the major goals of the 2011 legislative session, from the Governor to the Legislature to interest groups, was kicker reform that built up, as Kitz always calls is, a “robust” rainy day fund. Senate President Peter Courtney formed a special committee on Finance and Revenue with two Dems and 2 Rs — true bipartisanship, as it were — to spearhead the effort. The effort received support from groups as diverse as AOI and public sector unions, and appeared to be sailing along. The committee sent their proposal to the Senate with a recommendation it be passed.
And President Courtney immediately buried the bill in the Senate Rules Committee.
What the hell happened to this critical priority?
The problem is not the kicker reform, although that is problematic and would require a strong campaign to get voters to adopt it in 2012. The rainy day fund isn’t the problem; everyone knows the state desperately needs a reserve fund that can get us through extended economic downturns like the one we are still working our way out of. Diverting a portion of the kicker into a rainy day fund is smart policy and possibly winnable politics
But it’s not the culprit.
The Senate Finance and Revenue Committee made a strategic calculation as it worked its way to a final decision on how to structure these reforms: to get the support of Republicans and the business community, in addition to kicker reform they would also propose a capital gains cut.
A permanent, extensive capital gains cut.
At an amount nearly equal to what the rainy day fund would hold.
Guess what kind of support that got from Democrats? House Dems Leader Dave Hunt said, on the morning before the committee took its vote, that he opposed their proposal. That apparently was enough for Courtney to move the process off the mainline and on to a sidetrack.
Where it resides today.
The video is an interview I did with Jodie Wiser of Tax Fairness Oregon after the Finance & Revenue Committee voted to move their package — kicker reform and capital gains cuts — to the Senate floor. She explains the objections to including capital gains cuts in this “deal”. And she raises a good question with her final point: Why? (You gotta listen to know the “what” of that “why”.)
Bottom line: I can understand Senators Morse and Telfer pushing capital gains cuts; belief in the magic of these cuts is unchallenged GOP and corporate doctrine. But for Co-chair Ginny Burdick and fellow Dem Mark Hass to go along — as I stated above, this was clearly a strategic assessment on their part. A very bad assessment. While the proposal would undoubtedly pass the Senate easily, it was a non-starter in the House. A capital gains cut of this magnitude, and locked to the rainy day fund, was never something House Dems would support. Unfortunately, this was a reality Burdick, Hass and Courtney did not appear to accept until it was too late.
And now one of the most important tasks of the 2011 Legislature, establishment of a real Rainy Day Fund, may be dead.
Breaking! after the jump.
Peter Wong of the StatesmanJournal reports on a new development:
House Democrats proposed alternatives to "kicker" reform Thursday that still would result in rebates of excess income-tax collections to individuals and small businesses. But their proposals, subject to voter approval, would cap the amounts returned to individuals — and businesses would be treated differently.
Reps Phil Barnhart and Jules Bailey, Co-chair and Co-vice chair of the House Revenue Committee, have proposed HJRs 47 & 48; these would cap the kicker and set up the Rainy Day Fund. Voter approval, of course, would be required. Wong notes that, like the Senate proposal, these are unlikely to make it through this session and are more likely to be a part of the 2012 session.
This report and video are the work of T.A. Barnhart as part of "The Action TAB" project, which is providing an on-going video report of the 2011 Legislature. "The Action TAB" was funded by progressives via Kickstarter.com. More video reports can be found at TheActionTAB.net and The Action TAB's Facebook page.