Growth buoys Oregon coffers; ‘kicker’ tax credits likely

SALEM, Ore. (AP) – A new forecast from Oregon’s state economist predicts strong economic growth and low unemployment will drive roughly $752 million more to state coffers than 2017 estimates predicted, triggering automatic kickbacks to taxpayers and schools.

The taxpayer give-back, called the “kicker,” is an automatic provision that causes Oregon taxpayers to get a credit when forecasts are revised upward by more than 2 percent, effectively transferring some of the money back to residents.

If the forecast proves correct, a total of about $555 million will go to taxpayers as credits on their 2019 taxes. A similar provision will funnel the remaining $152 million to school budgets.

The forecast, released Wednesday, is the latest of several to be revised upward as markets around the country continue growing after the 2008 recession.

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Statement from Gov. Kate Brown:

“My job is to appropriately manage government spending and to continue to grow the economy, which is why I just held a special session to lower taxes for small businesses. Through both executive action and legislation, we have saved over $400 million in taxpayer dollars since 2015. When state government lives within its means and the economy grows, hardworking Oregonians benefit in the form of kicker tax credits. While the economy is experiencing record growth, we must look to the future while addressing our challenges in education, healthcare, transportation, and housing affordability.”

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Statement from House Republican Leader Mike McLane (R-Powell Butte):

“In their haste to pass SB 1528 earlier this year, Governor Brown and legislative Democrats apparently failed to recognize that by requiring small business to pay $245 million more in state income taxes, their actions could trigger the income tax kicker. That scenario now appears more likely than not. If current projections hold, Oregonians are in line to receive $555 million of their money back from their state government. The irony escapes no one.

“Of course, credit for our state government having record revenues goes to those who work hard every day in Oregon businesses. Thank you! Credit for the positive economic activity also goes to the federal Tax Cuts and Jobs Act, which is expected to contribute to an increase in tax receipts in the current and future budget cycles. That’s great news for our state government.”

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Statement from Senate Majority Leader Ginny Burdick (D-Portland):

“Our state’s economic growth is creating opportunities, but it’s also a reminder that we have work to do. The forecast this morning would erase the projected deficit for next biennium, allowing us to make groundbreaking investments to reform our education and child welfare systems. It also will allow us to put funds away for a rainy day. That said, this is emblematic of an unstable boom and bust revenue cycle. We are experiencing a boom now, but another bust is inevitable. Now is the time to focus on real revenue reform that will be fairer for everyday Oregonians and small businesses, while providing stable funding for public services.”

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Statement from House Majority Leader Jennifer Williamson (D-Portland):

“Oregon’s economy is strong and relatively stable. In recent years, Democrats have made strategic investments and passed responsible reforms to reduce costs, and Oregon businesses and families are seeing the positive results.

“During this time of growth, we have a prime opportunity to make the reforms that will allow the game-changing investments in the things Oregonians care about – and to protect those investments from the next downturn. Right now, the Joint Committee on Student Success is touring Oregon and laying the groundwork for the reforms and investments we need to give every child in our state a real shot at success.

“We are fortunate to be on the good side of Oregon’s boom and bust system today, but without structural reform, the good times will not last forever. It is more important than ever for us to work toward stabilizing our state budget so that we can make those much-needed and long overdue investments in public schools, health care, public safety, and other critical services Oregonians depend on.”