SALEM, Ore. (AP) - State economists say the Oregon economy has been bustling this year, so much so that the state's 'kicker law' may give $408 million back to Oregonians next year, plus another $75 million to K-12 education for the next budget cycle.
The kicker is not certain yet, but it's likely, because the local economy continues to outpace growth projections for state revenue, which could reach a new record next biennium of about $21 billion.
But that won't do much to help the upcoming budget shortfall, economists said Tuesday. If the kicker does get triggered, it'll leave just $189 million in extra revenue for the 2017-19 budget - narrowing the deficit from $1.6 billion to $1.4 billion. Without the kicker, the shortfall would shrink to $1 billion.
Under Oregon's "kicker" law, if state revenues exceed forecasted revenues by 2 percent or more over the two-year budget cycle, the excess is returned to taxpayers through a credit.
Would you give up your "kicker" to help ease the budget crunch? That's our new KTVZ.COM Poll, halfway down the right side of our home page
Many weighed in on Tuesday's new state revenue forecast, here are some news releases we received:
First, from state Rep Knute Buehler, R-Bend:
Representative Knute Buehler issued the following statement in response to the revenue forecast released today:
"Record tax revenue has been generated by the hard working people of Oregon. The kicker dollars are the people's money, not the Salem politicians'. Every dime should be refunded to Oregon taxpayers in accordance with state law."
Gov. Kate Brown:
(Salem, OR) — Governor Kate Brown today released the following statement regarding the May revenue forecast:
"This is the good news: our economy is humming; unemployment is low; and state revenue is a higher than expected.
"Here's the bad news: this doesn't change the fact that Oregon still has a structural deficit. This means in the long term, whether the economy is good or bad, the state will struggle to pay for education, public safety, child welfare, and health care.
"We now have less than two months before the end of this legislative session. The stakes couldn't be higher. I will continue to hunt for every penny and rein in the costs of state government. But, without definitive action by the Legislature 350,000 Oregonians could lose health care, hundreds of teachers could lose their jobs, and college could become even more unaffordable.
"Every week I meet with business, labor, and legislative leaders across the state to stop this from happening.
"There has been a lot of careful analysis, good conversation, and thoughtful consideration by our state's leaders. But, now is the time to start making hard decisions and come to agreement. All sides need to give. All sides need to come together and do what’s right for Oregon."
Oregon House Speaker Tina Kotek:
“Today’s positive economic and revenue forecast cannot hide the fact that Oregon has a long-term, structural budget imbalance. Our unemployment rate is the lowest on record, wages are rising, and our economy has been counted among the strongest in the nation. Still, our state faces a $1.4 billion shortfall in the 2017-19 budget cycle – a shortfall that could bring painful cuts to schools, health care, and critical services even while the economy is booming.
“We need to chart a different path forward for our state. By reducing the cost of delivering services and reforming business taxes, we can stabilize Oregon’s budget, make strategic investments in education, and strengthen our economy in the long-term.”
House Republican Leader Mike McLane:
House Republican Leader Mike McLane (R-Powell Butte) released the following statement following the release of the quarterly revenue forecast:
“Thanks to hardworking Oregonians and the businesses that employ them, our budget gap is nearly $200 million smaller today than it was yesterday. Government revenues are now expected to top $21 billion in the next budget cycle, a record high for the state of Oregon.
“These circumstances might be inconvenient for Democratic leaders, who continue to push a narrative that suggests current revenue levels are inadequate. But for most Oregonians it is just more evidence of the fact that our government needs to tighten its belt and get serious about slowing the unsustainable rate of spending in Salem.”
Representative McLane also commented on the forecasted personal income tax kicker:
“Voters enshrined the personal income tax kicker in the Oregon Constitution as a means to protect against overspending by our state government. These dollars belong to Oregon taxpayers, not the government. House Republicans will not support any attempt by Democratic leadership to suspend the kicker law.”
House Majority Leader Jennifer Williamson:
“Today’s Economic and Revenue forecast reveals the extent to which our revenue system is completely broken and outdated. Because we depend so heavily on personal income taxes and have among the lowest corporate taxes in the nation, we’ve faced year after year of budget uncertainty and cuts to schools. Even with the economy outperforming the national average, we have far less than we need to pay for current services. Working families are shouldering the burden.
Now that we have a clear picture from the May forecast, it’s time to shift full gear into solving our state’s long term revenue and budget crisis. Without bold action, we’ll face many more years of cuts that will lead to more overcrowded classrooms, shorter school years, and cuts to health care and senior services. It’s time for all sides to come to the table to find strategies that enable us to invest in a more prosperous future.”
Senate Majority Leader Ginny Burdick:
Oregon Senate Majority Leader Ginny Burdick (D-Portland) released the following statement this morning regarding the May 2017 Revenue Forecast:
“Oregon’s economic growth is coming back down to earth, but we’re continuing to perform well. As we settle into a more sustainable growth pace, we must focus on our revenue system and cutting costs to continue offering the education, health care and public safety services Oregonians count on.
"Today’s forecast shows that we will have a slightly smaller shortfall for funding current service levels, but we still face a $1.4 billion gap. We are looking closely at both sides of the ledger – costs and income – to chart a more sustainable and stable path forward for providing vital education, public safety and health care services on which Oregonians depend.
"We can’t dig out of this hole with cuts alone. We need to reform and stabilize our revenue system, as well.”
Priority Oregon spokesperson John Davis released the following statement in response to the May Revenue Forecast presented today:
“Today’s revenue forecast highlights the fact that Oregon government is raking in more tax revenue than at any other time in history. Even after returning the kicker to Oregon taxpayers, Oregon will have $1 billion saved in reserve funds. In addition, lawmakers will have more than $1 billion in new revenue to spend on state services than in our last budget – which was so large it set a record. It’s time for lawmakers to stop demanding a new tax on Oregon sales. The solution to closing the budget gap is to prioritize and reform spending.”
Oregon Center for Public Policy:
Statement by Executive Director Chuck Sheketoff on the May Oregon Economic and Revenue Forecast
If Oregonians needed a reminder of how reckless the Oregon kicker law is, today we got it in the state economists’ latest economic and revenue forecast.
As the legislature explores ways to address a revenue deficit, as well as the long-term underfunding of Oregon’s schools and essential services and need for more stability, today we learned that Oregon is on course to trigger an unanticipated, automatic tax cut that could cost the state about $400 million.
If the kicker does kick, the typical Oregonian would owe $85 less in taxes next year, while the average member of the top 1 percent would owe $4,505 less on their taxes.
While we won’t know until September whether the kicker has kicked, and its final size, it’s not too early for lawmakers to avoid potentially digging a deeper hole with an unnecessary tax cut that primarily benefits the wealthy.
The kicker law adds instability to Oregon’s revenue system. It makes budgeting more uncertain and prevents our state from saving the unanticipated funds in our Rainy Day Fund.
Should the kicker come to kick, it will make the work of funding Oregon schools and essential services that much harder. Suspending the kicker — an action that the Oregon Constitution allows — should be part of the agenda of the legislature’s Joint Committee on Tax Reform.
A Better Oregon:
The revenue forecast released today gives Oregon's leaders a real opportunity: They can take action to invest in schools and family services and make a real difference for Oregon families.
With a smaller budget hole, new increases in corporate taxes will mean more school days, lower tuition, and more affordable health care. This forecast should give legislators renewed incentive to enact Speaker Kotek's investment proposal.
The status quo is a crisis, and we must address it now. Our graduation rates have tumbled to among the lowest in the country, our class sizes have ballooned to among the largest, and hundreds of thousands have struggled to access health care.
Now is our moment to end the cycle of cuts and disinvestment. Legislators face a choice this session: Either they raise Oregon's dead-last corporate taxes, or they accept an untenable status quo. We urge them to take action, invest, and build a better Oregon.