By Representative Rob Nosse
I had hoped to write a legislative update about how session was going (or how it ended as we are “officially” done on June 25) and what things looked like as we approached the finish line. As you may have read in the June edition of this column, a Republican walkout prevented us from doing any legislating.
At the time I am writing this column, I can report that the Senate Republicans have come back to work. Hopefully they don’t walk off again. Many things could happen in the next couple of weeks. With that in mind, I will hold off on those predictions or observations for now and instead do a full session recap in the August edition of this column. In the meantime, I want to talk about something else in our state government that has long frustrated me–the kicker.
First, a brief history lesson. I moved to Oregon in 1992 to work as a “professional” student activist. Before taking that job, I ran the Ohio Student Association and worked as a cook at night to pay my bills. In both jobs I was fighting for funding to keep tuition low, as well as for more financial aid.
When I got to Oregon to head up the Oregon Student Association, Measure 5 had passed two years prior, in 1990. This measure imposed limitations on local school district property tax revenues and transformed our public-school funding systems. In brief, it made our school system funding primarily dependent on state general revenues rather than local property taxes, severely limited local funding for schools and skewed our property tax system. Can you tell I didn’t like it? It ruined higher education funding.
Then Measure 50 passed in 1997, which further reduced local revenues by $41 billion. It capped property tax increases to three percent based on the assessed value at that moment. Measure 50 was also a measure I did not like for a lot of reasons that are hard to go into in a column that I need to keep short. That measure also squeezed other parts of the state budget, like higher education, whose share of state funds declined from 14 to seven percent.
The kicker was also part of this era in Oregon politics which is sometimes called the “Oregon Tax Revolt” era. Another key component of this era was a constitutional change that tax increases require a three-fifths majority in the legislature to pass.
The kicker emerged from a 1980 ballot measure. That measure said that any tax revenue that came into state coffers above 102 percent of what we predicted in the May forecast should be returned to taxpayers. Put another way, when we have unexpectedly high revenue, we keep what we budgeted, plus two percent above that, and return the rest. This is the kicker.
The kicker was voted into the Oregon Constitution in 2000 to ensure lawmakers wouldn’t suspend it without a two-thirds vote in both chambers.
There used to be a corporate tax kicker, as well, but it was suspended and dedicated to K-12 public education in 2012, also by ballot measure.
When I first ran for office, I wanted to serve on the Revenue Committee to fix all these ballot measures and better fund K-12 schools and higher education. Needless to say, there are other legislators interested in this topic and lots of feelings about property taxes, but no political consensus about how to fix them.
I believe the easiest one to tackle is to repeal or modify the kicker. Take for example this year’s kicker. A kicker of $5.5 billion will be credited to taxpayers when taxes are filed in 2024. $5.5 billion is a lot of money. We could do a lot of things with that money. We could stand up massive amounts of new residential treatment beds. We could build exponentially more new affordable housing units. We could drastically lower tuition at our public universities and make a lot of other needed investments.
Some would argue we have enough money in our current budget, maybe so. If we must return the kicker, maybe we could make it less regressive, as my old friend and former city commissioner Steve Novick has suggested. Right now, the more an Oregonian earns, the larger their kicker payout. The richest among us will get huge rebates, while low- and moderate-income Oregonians get little or nothing.
Maybe we should send the kicker out in equal amounts to all tax filers. Under the current kicker, the typical Oregonian–the Oregonian in the middle–would get an estimated $1,000. But if all tax filers received the same amount, that same Oregonian would receive about $2,450. For the lowest-income Oregonians, their kicker would rise from an estimated average of $70 to $2,450.
There are a lot of ways to reform our tax system and while I am mainly in the healthcare space these days, I still care deeply about those changes and continue to work on them. Ok, that is enough tax policy. Hopefully, by the time this comes out you are reading that the session concluded with no further drama.
Opening the kicker discussion could open challenging process, but one that may be good for the legislature to tackle. For example, could the kicker be revised (for future, of course), to provide greater flexibility and benefits, such as, say, kick the first 1% of overage back to taxpayers along a progressive scale. Then earmark the next .5% for the state emergency fund, and .5% directed to key, urgent services at the time (such as firefighting, or health and mental health services, or climate responses, or education, etc.).
Such a fraught, complex topic obviously can’t be resolved in a “comments” section. I’d encourage our state legislative committees to think seriously and creatively though, about two things, not just one: taxpayers’ pocketbooks AND our collective future as a state.