My state rep. is on the front page of the local paper saying the kicker money should go into a reserve fund. It doesn't take a vote of the people or a supermajority for everyone reading this to contact their state legislators and ask where they stand on the subject in an election year. There is no excuse for legislators not making their stand on the kicker public in an election year.

The kicker law comes from a 1979 legislative referral which was on the 1980 ballot (contrary to hype, it has not "always" been in Oregon law).

All you folks who say that something passed in the 1970s is now overdue for review (meaning land use planning from the McCall era) --here is a challenge.

Does the 1979 kicker law deserve as much public debate as has happened with land use? And should debate on the corporate kicker (where money is sent out of state in many cases) be separated from discussion of the individual kicker?

Is it also time to debate the relative tax burden of businesses and individuals? Should some of the balance of previous decades be restored? Or are those with knowledge of the state budget who call the current tax system "risky" or "unbalanced" or "stupid and insane" some kind of radicals because the tax system is just fine in the eyes of some people?

Whatever you view on public services, taxes or the kicker the fact that at least some of the kicker isn't used for a rainly day fund is just nuts. Would any business seriously consider operating without a reserve fund to cover periods of lower sales? Of course not, so why should the Oregon government run in such a wreckless manner. I belive there may be the political will to implement a rainy day fund. As LT said, contact your representatives.

BlueOregon says...."Almost no one disagrees that this is abysmal public policy. Yet legislators have made no serious effort to reform the law--and Governor Kulongoski, Peter Courtney, and Karen Minnis all agree that they won't call a special session to deal with the issue"

Here's where you're emperically wrong. Obviously many many people don't think the kicker is abysmal public policy, or at lesat its not as bad as the alternative, otherwise Courtney, Kulngowski et al would in fact change it.

It may be true that there should be a minority of support for the kicker when explained in some rational way, but at the very least a significant, motivated minority of our fellow citizens are able to muster a majority of voters to defeat its repeal.

So don't ask for total repeal. Amend it. Make it "better". You could start with establishing a rainy day fund equal to some percent of total state spending. All of corporate kicker and half of personal kicker goes into it until full. Then the full kicker resume the full kicker

But I think if you really want to make any meaningful change, you're going to have to do something else, something BIG to make those voters who are suspicious of all government spending buy into any significant change of the kicker.

Here I'm going to suggest something big and unpopular. Terminate PERS, switch to an IRA, and bond off the current debt and accrued benefits, use any future "kicker" to accelerate payment on the bonds, and review all public employee salaries to make sure that with retirement curtailed that they are getting market salaries. THis may mean some increases in take home pay.

That may not actually save any money. It could however blunt the no nothingism of the anti government industry, who will say any reduction in the kicker will just go to public employee benefits, and allow Oregonians to debate real issues. Like what public benefits do we as a society want to provide to the needy and to our children. Not what public benefits do we want to provide to the DMV clerk that made us wait in line last week.

Just a quick history lesson. The "kicker" was enacted into law as a sop to prevent a California-type Prop 13 initiative from getting to the ballot and being voted in. It worked - for awhile - until Measure 5 passed. Once Measure 5 passed, the "kicker" became superfluous and should have been jettisoned back in 1990. Legislators then didn't have the cajones to try to force the matter, and few since have even wanted to try. Maybe now, someone will finally buy a clue and realize that this is the worst piece of public policy to ever come out of Oregon.

What makes the "kicker" so sinister is that IF the forecast exceeds 2% of the amount actually budgeted for the biennium (based on a forecast), the ENTIRE surplus is "kicked back", not merely the excess over 2%. DUMB and DUMBER. We now expect our state economists to be more accurate than the Federal Reserve.

I note that no one is addressing the elephant in the room: Why is there going to be a kicker next year, if the economy has been destroyed by the President? All we hear from the left on the economy is that it's in terrible shape, people are unemployed, wages are down, blah blah Bush sucks blah. Now we hear that income is way up, vastly exceeding projections. Guess that must be Bush's fault too.

I am tired of hearing about "the left". It sounds like there are 2 teams--right and left--and no Oregonians who think for themselves, have friends across the political spectrum, and a "one from column A, 2 from column B" philosophy because everything is black and white.

One thing I really enjoyed about my years as an Indep/NAV was having someone say to me "what you Democrats believe is..." and I'd say "Sorry, wrong person--the I in Independent means I think for myself".

All we hear from the left on the economy is that it's in terrible shape, people are unemployed, wages are down, blah blah

Are all those who have been unemployed part/all of the last few years, or only had temporary positions, or worked one or more part time jobs because there wasn't enough full time work available are part of "the left"?

And about the whole "anti-government", "the voters have spoken" stuff:

not only is mr.fearless correct, but here is another piece of history.

If you turn 18 this year and have the chance to register and vote for the first time, you were 12 when Measure 86 put the kicker into the Constitution. But last time I checked, the vote of someone voting for the first time counts just as much as the votes of people who were casting ballots in 2000 or way back in 1980 when the legislative referral of the kicker was on the ballot.

So let's debate this out in the open without labels.

Once there was a proposal that if the kicker went into effect, only the amount above 2% be sent back to the taxpayers, and the amount up to 1.99999% be put into a rainy day fund. Does the political will exist to either debate that or point out that in (for instance) Section 4(a)of the law (in other words, the citation and the actual wording) prevents that without a vote of the people?

After maybe an hour of online research last night, incl. reading some of the language of the kicker law (enough to make one's eyes glaze over) it sure seems to me that it wouldn't require a new constitutional ammendment or other vote of the people to stop the current process of mailing kicker checks out in the fall rather than some kind of tax refund procedure like income tax refunds. As I recall, mailing them out in the fall was a PR gesture by the 1995 session--the same session which gave us the Tax Expenditure Report which lists all the tax breaks. Those tax breaks certain legislators don't want debated publicly.

I suspect it is political will rather than law which keeps legislators from discussing all this publicly. But with my Republican state rep. on the front page of the local paper saying there should be some kind of rainy day fund mechanism, that should no longer be an excuse.

This is an election year, folks. Elected officials are supposed to explain to us what they did last year and what they propose in the future. That doesn't require a vote of the legislature or a ballot measure, that is part of their job description. And if enough people say to incumbents "either you satisfy the public discussion part of your job description or I'll vote for someone who will", that should be enough motivation.

Remember, the House majority last time was 33, but the number of House elections decided by less than 1,000 votes was 7. Not exactly a landslide.

Oh no Brett, now you've done it! The perpetual bad news crowd is going to have to explain where all that money comes from.

As far as the kicker itself my position is that I don't especially need the $200 I'll get back but that doesn't mean I'll vote to repeal it. I won't agree to repeal it until PERS is eliminated and until the labor union choke hold on the schools is released. Because until those two things are fixed it just feels like I'm wasting my tax money.

So AF, public employee union members are second class citizens, we should repeal PERS, end public employee collective bargaining and then you will vote to end the kicker? You have a few days to file as a candidate for the legislature. You could run on just that platform. We could see how successful those ideas are with voters.

But last time I checked, public employees have the right to vote. Or are you saying they don't deserve that either?

I love this focked up state!

One day the biggest city in the state closes down dozens of schools and lays off hundreds of teachers.

The next day the state finds 2/3 of a BILLION dollars in the bank... so what will we do... send the money back to the people to buy SUV's that only get five-soldiers-per-gallon!!!

It's the Amerikkkan way.

A quick response to Mr. Harris' apparent view that he has a lock on what the emperically verifiable truth might be. It is at least possible, and, given the political players, even probable that these elected officials could view the kicker as bad public policy but be so controlled by the corporate interests that stand to reap this windfall that they will once again abandon ordinary Oregonians for their moneyed masters.

Doretta, Great mention of Richard Farina's book. I was living on the Monterey Peninsula when he died (car accident) and it is too bad he and his wife Mimi seem to have been forgotten.

His sister in law (do you remember who that was?) was a great activist and singer.

The reserve fund is an excellent idea which we should demand be discussed this election year. If someone doesn't want to change the kicker, they should explain why they think the status quo is working. Too bad this issue is not as clear cut and easy to write folk songs about as some things were when Richard Farina was alive.

One provision that would make a rainy day fund more palatable to the kicker fans would be if the rainy day fund could only be used when revenues failed to meet projections. Otherwise, the rainy day fund will be spent while the sun is shining.

Alan W is correct. Which is why asking elected officials about the kicker and what they plan to do is so important this year. Someone could have all the money in the world and have hired the best consultant ever. But if they encounter a voter at an event or even in the grocery store and don't answer that question to the voter's satisfaction, word of mouth discussion of this can trump all the money in the world.

It is the old customer service idea that wise sales people and others in customer service know about and sometimes talk about ---if someone leaves a place of business saying "I'll never go there again!" that is a lost customer and potentially several lost customers who hear the person's complaint.

And no amount of money can ever change that--like someone who tells all their friends why they chose (or left) a phone company or an Internet provider.

Along the same line, politicians/ staffers may never know about comments like "I told you Mom never votes for him" or "She can be very friendly and she can also yell at people from across a room, and many people have both stories about her". But in a close election they could change enough votes to change the outcome.

I still love telling a story from many years ago as an example of campaign stupidity. Candidate at an advertised campaign stop with 2 staffers. Voter walks up and says to the candidate "Your staffer I talked with says you oppose that --- bill sponsored by Wyden, and I would like to know why". Before the candidate can speak, the staffers shout "stop raining on our parade". A wise candidate would have said "Please excuse my overexuberant staff. The reason I oppose the bill is...". This was not a wise candidate, he lost, and has not been politically active since then.

Torrid Joe,

You demonstrated my point precisely:

"Next 2% can go to increased budgets Send the rest back Corporations NEVER get a kicker when individuals do not Rainy day fund only useable in revenue shortfall situations..."

If the rainy day fund can only be used in revenue shortfall situations, how can 2% go for increased budgets?

Your idea of only allowing half the rainy day fund to be used in any one biennium is a good one.

In a state that has the lowest percentage of its income tax paid by corporations there is no good reason to ever refund money to out of state corporations.

Here's my idea for kicker reform:

1) Eliminate the kicker for out-of-state corporations. The money would be used to make up for budget shortfalls during the previous years.

2) Divert a share (50%?) of the remaining kicker to an education trust fund that would be used to cover school funding shortfalls during the lean years (kind of a Social Security Trust Fund for Education).

One little discussed aspect of the estimate portion of the kicker law is the question whether this policy might not be inherently corrupting. There may be a huge incentive or disincentive for the estimators to, well, guess wrong in order to influence the size of the kicker down the road.

The size of this years kicker is not necessary a measure of a greatly improved Oregon economy. It may just be a measure of how bad Oregon's economists are at predicting where the economy will be in one year.

Nice solution Chris. I like it. I agree with Fearless and Pat that the criteria we use to determine if and in what amount to issue the kicker is irrational and would reform that as well. Pete Sorenson is the only Gubernatorial candidate with a published position on the kicker. http://www.petesorenson.com/Articles/KickerFunds_May01.htm

To Alan Wood: I think its probably true that almost all politically astute people think the kicker is abysmal public policy. Probably all or most of the ones mentioned in the article believe so. But it has plenty of public support. So the empirical data seems to prove that the statement "almost no one disagrees that (its) abysmal public policy" is in fact untrue, unless the writer was only referring to the politicians listed. But perhaps I should have said "the empirical data suggests otherwise"

I believe the kicker is abysmal public policy. But your chances for change diminish unless you acknowledge that many many voters believe otherwise, find out why they beleive otherwise, and address their issues. If you want to fix a problem you shouldn't start from a false premise or insult people who you will need for your cause.

torridjoe writes:

I agree that setting a minimum annual investment return of 8% was a bad idea, born of those heady times when we all thought the stock market would never fail again. That has been changed (sadly for me just before I entered the system, but that's OK).

For the record, there is no "minimum annual investment return of 8%". The statutes refer to an "actuarially assumed rate of return", which becomes the "guarantee" to Tier 1 PERS members. The law, supported by the Supreme Court, only says that PERS must pay members "no less than the actuarially assumed rate of return". It doesn't say 8%. The 8% comes from the actuary and is used not only to determine Tier 1 rate guarantees, but all the actuarial tables used to determine Tier 1 retiree benefits, AND the employer normal contribution rates. There is an inverse (by practice and design) relationship between the actuarially assumed interest rate and the employer contribution rate. The PERS Board is completely within its statutory mandate to increase or decrease the actuarially assumed interest rate, but whatever they do has many implications. If you want to lower the rate to a more sensible 6% that would be fine, but you won't want to be anywhere near any of the public employers who'd discover their current high contribution rates increasing significantly.

A clear compromise concerning the kicker and the $700 million budget surplus our state government now projects is a 33% Solution--approximately 33% of the surplus to go to plug the budget gaps in Human Services and education, 33% to go to a true rainy day fund, and 33% be returned to taxpayers via the kicker. I believe this is an approach that is workable for all sides and makes sense for Oregon. It's an immediate solution that might be able to get a 2/3 majority vote in a special session, and would allow us to bring the kicker and our overall approach to revenue into disucssion for 2007 and beyond.

Rep. Peter Buckley (D-Ashland)

Good idea, Peter. Like the sound of it. Hope you can get support for it.

Paul--

Stay in Oregon. We need all hands to get our state moving in the direction it needs to go in! We have incredible potential here. We have a great foundation and incredibly creative and passionate people in our state--we just need to break through our current political logjam and let it all roll.

I am sorry for saying this but: I want my money back like every other Oregonian.

If you want to take it from out-of-state corporations, great, but I don't think that taking the kicker is good PR for Ds and it is only short term policy.

If the tax system needs to reformed, then fine, but why take money from average Oregonians?

You can want more money for programs, but then raise taxes in a straight-up debate, but diverting the kicker is a band-aid that happens every once in a while.

It is not a solution, and it pisses everyone off.

It proves the righties' point that we all want the money no matter where it comes from, and we don't care about good public policy.

Bob--

Thanks for the post. We've tried to raise taxes in a straight up debate (Measures 28 and 30). I'll use my next door neighbor as an example here. He is a great guy, would give the shirt off his back to help my kids or any other kids you brought his way, but voted against 28 and 30 because he is so pinched financially he felt he just couldn't take any additional hit. But if I tell him he is getting a $50 check back from the state, and $50 is going into a rainy day fund that will keep the state from looking for more revenue from him any time soon, and $50 is going towards addressing a part of the health care and education crisis we're facing, he's a very happy guy. He wants Oregon to succeed, is willing to pay his share, but just can't pay more than what he's paying right now.

It's good public policy to pay your bills as you go, to save for a rainy day, and to return money when you can to your investors. What do you think? Can you help me sell this proposal?

I don't want the money no matter where it comes from and I do care about good public policy.

I'm very excited that I will receive my $10 kicker this year. I can perhaps go buy a new pen for school - oh wait! Those cost $12. Maybe I can buy a hamgburger - oh wait! I can't afford a drink to go with it.

hmm...

glad they will close all the schools so the little kiddies can join gangs, buy machine guns, and run drugs up from Mexico! So excited to know that I will be moving to Germany or Canada or Columbia (where its safer) once I get a passport!

After all, we should just pass another tax instead of collecting on the ones already on the books...

Jeff wrote:

As to Brett's point, it's actually an inadvertently astute one. The economy is seriously damaged by Bush's policies, and it will hamper the state for decades to come (which is why the governors were, Dems and Republicans all, beating him up at their recent conference). The kicker doesn't help the state manage shortfalls--it actually makes them far more damaging.

Umm.. How is the economy "seriously damaged" if we have $666 million more in tax revenue than was estimated? Seems like the economy is in good shape. I'd like to hear Democrats say that with a straight face. Then, when we are living in the "reality-based community," we can talk about what to do with the surplus, and whether to repeal the kicker. As long as the Democratic position is: "The economy is in terrible shape thanks to Bush. Now what do we do with all this extra tax money?", they have zero credibility with people who understand logic.

You are saying that at some point in the future, the economy may worsen. That is a necessarily true statement. What I want to hear a Democrat admit is that right now, the economy is in good shape. I haven't heard that yet, and I doubt I will. So much for reality-based.

Brett observes:

"What I want to hear a Democrat admit is that right now, the economy is in good shape. I haven't heard that yet, and I doubt I will. So much for reality-based."

I'm an Indy, not a Democrat. Oregon's economy as a state is in the toilet. But, in the Portland metro area, the economy is quite good as anyone who drives anywhere in the metro area can attest to. Housing developments are raping the landscapes of every hillside within the urban growth boundary. As someone in the market for a new home, I can tell you that they ain't building "affordable housing". Paradoxically, most of the economic boom in the state is attributable to the Portland metro area, as it probably would be in any case, but it is the Portland public schools that have suffered more than any other district because the revenue generated by workers in Portland area do NOT come in the same proportion it is earned.

There, you've got a half-Dem admit that the economy is pretty decent in the Portland area. It ain't Kulongoski who deserves credit for this. It ain't Portland's astute planners in City Hall. It is just the general state of the US economy that is most definitely rebounding. Do we credit Bush with that. I doubt it. I think that a trained chimpanzee could have claimed credit for this rebound. It's all part and parcel of the "business cycle". But the gravy train has departed and is about to derail again when all the various bad policy choices made here and elsewhere finally collide.

And just think how much better the economy could be if we weren't spending all that money in Iraq. Of course, there is the old argument that nothing is better for the economy than a war. :-(

Okay, this I don't understand:

If I pay my taxes at the rate of X%, then why - if the economy is doing really good - do I get some of that money back? The whole point of the tax rate is to tax you at a certain rate so the government gets the money to pay for the services & infrastructure of the state!

What seems to be going on is with the cyclical nature of capitalistic society - boom & bust every 4 years - is that when the economy goes down the drain, the government needs to [drastically] cut back its spending to match the taxes being brought in from the wildly fluctuating income tax.

Once the economy improves slightly - well, since the economists are predicting what - 2 years in advance - of how much they will need to spend, of course they are going to lowball it! No economist in the world can predict a recovery 2 years in advance!

The worst part of it is during these recoveries, we have housing booms, massive population shifts, etc (which is part of the reason for the recovery in the first place), so there is thus a need for expanded government services! That is precisely when the government is probably funding their services at the lowest level in the boom/bust economic cycle, and then voila! They give it all back.

Makes perfect sense. Can we stop giving important government & economic decisions to half-assed idiotic morons (voters, government) and instead to scientists who can use emprical evidence to figure out the complex cause & effect relationships between public policy and what it causes? This is exactly the kind of thing that makes me want to replace the income tax with a sales tax - something that is logical and constant. And I'm a native.

Hi Folks, to me the kicker just seems like a nice little scrap to fight about.

Oregon's income tax is pretty much a flat tax and probably downright regressive because of loopholes.

In the 80s and 90s the idea of devolution was salient in political discourse. The argument was that the the federal government's role should be reduced in favor of state/local problem solving. Relative to the 1970s FICA tax rates have decreased very substantially. FICA taxes were and are progressive, but Oregon taxes are not because most people are in the highest bracket. Shouldn't we be working to increase the progressivity of state taxes? That seems more worthwhile and fair than butting heads over the kicker every session.

I too favor a rainy day fund and see value in tying it to the unemployment rate and other indexes to prevent the fund from being raided. However, I think MORE progressive income taxes coupled some user and impact (e.g. pollution) fees are ways to acheive fairness, stability, and -- much as I hate repeating the nauseatingly overused word -- accountability.

Max, you have a point.

But so do Ben Westlund and Mark Hass in today's Steve Duin column in the Sunday Oregonian. One has left his political party, the other has decided not to run for re-election.

What this state needs is a top to bottom public debate about the whole tax system in this state. There are some who don't want that because their political consultant says such a debate is risky. It might be risky not to, given recent editorials in The Oregonian and Statesman Journal.

<h2>Unless someone has repealed the opening words of the Oregon Constitution, We The People are supposed to have the final word, not the consultants or the elected officials. So let's get some vigorous public debate about the tax system.</h2>