By State Representative Rob Nosse
As this column hits the newsstands, the Legislature either will have wrapped up the 2026 legislative session or we will only be a few days away from finishing up. Last session I made a few predictions for how I thought the 2025 legislative session would end and it did not go well. My predictions were wrong. In that light I am going to avoid making predictions or even offering an update as to how things are going.
Instead, I am going to address one of the third rails of Oregon politics—“the kicker”—and talk about a bill I sponsored that I hope will pass, saving a session recap for the April edition.
I have been talking about the need to reform or even abolish the kicker basically since I moved to OR. Certainly I’ve talked about it over all my terms in office.
The “Two Percent Kicker” law was passed in 1979 as a way to control state spending. The law requires the state to compare its revenue estimate (forecast) for each biennium (the two-year period starting on July 1 of each odd-numbered year) to the amount actually received during that biennium. After the biennium ends, if actual revenues exceed the forecasted amount by more than two percent, the surplus is refunded to taxpayers. The folklore around this was that Democrats were trying to get ahead of the tax revolt that started in the state of CA with the passage of Proposition 13.
When the kicker first started, it was credited to taxpayers as a percentage of their taxes after all credits on their return for the kicker year. In the mid-1990s, this refund mechanism was changed to an actual check that was mailed out in December.
In 1999, when the kicker was in danger of being repealed, a bill was passed that would add the kicker law to the Constitution of OR. Ballot Measure 86 was approved by voters in 2000. During the 2011 session the Legislature changed the kicker refund mechanism back to a tax credit, rather than a physical check. This change, enacted to save administrative costs, went into effect for the 2012 tax year and continues to be the method for returning surplus revenue to taxpayers.
I think by now most of you know I am a traditional tax and spend, progressive/liberal Democrat. I have rarely seen a government program I did not want to fund better. I hate the kicker because it reduces the funds that government needs to operate programs and services. I think a lot of you agree. Whether it is at town halls, meetings or emails, I have consistently heard from many who don’t care about getting a kicker; instead, you care about funding schools, social services and public safety.
This chorus got really loud a few years ago. During the 2021- 2023 biennium we had a kicker that was over $5.6 billion, the largest ever. We were just coming out of the pandemic with tremendous challenges. Imagine what we could have done with those additional resources to address our transportation and housing challenges with “one-time” funds, not to mention investments that I believe are needed in education, health care and in preventing homelessness.
The estimated kicker for the biennium we are in currently is $1.4 billion which if it was “saved,” would be more than enough to mitigate the budget challenge created by H.R.1 “the One Big Beautiful Bill” and help us do a better job of funding schools.
Over the years, plenty of ideas have been tossed around to get rid of or change the kicker, but House Bill (HB) 4125 seems to be the idea with the most momentum. Introduced by State Representative Mark Gamba, HB 4125 doesn’t actually modify the kicker (which would have to be done by ballot measure) but instead tackles how the kicker itself is calculated and how it is used. The proposal is simple: when the Office of Economic Analysis publishes their forecast, they have to make recommendations based on the lower end of projected results. If for instance our state is predicted to collect between $31 billion and $35 billion, the report would incorporate data closer to the lower end of the projection.
If the more optimistic revenue forecast ends up being the more accurate one, and we end up having a kicker, HB 4125 would require that the surplus, the kicker, be deposited into The One-Time Emergencies and Finance Fund. The money in the fund could be used to reduce the unfunded actuarial liability of the Public Employees Retirement System, pay for capital projects for which the state would otherwise have to issue revenue bonds, make payment on debt service or pay for expenses related to emergencies like wildfires. There would be no more tax credits on your income taxes.
What an excellent idea—using one-time money you could not accurately predict for one-time unplanned expenditures or debt. I signed on to be a chief sponsor with Rep Gamba.
I am not sure if this is going to pass. Republicans are uniformly opposed to this idea, and more moderate Democrats are equally skeptical of reforming the kicker. If you combine those two groups, then anyone who’s left in the legislature wanting to reform the kicker might be outnumbered. We will see. I promise to update you in April.
