SALEM — Gov. Kate Brown announced a plan Thursday to limit Oregon’s unique tax rebate known as the kicker, saying she wants to divert $500 million in tax credits away from the state’s top income earners to pay down pension costs and invest in rural housing.
“It’s fiscally responsible and makes common sense,” the Democrat told reporters. “Most Oregonians would get their full kicker back.”
Excess revenue is automatically returned to taxpayers in the form of a tax rebate whenever the state takes in more revenue than what state economists forecast. Oregon’s facing a historic year for state revenue, and the so-called “kicker” rebate is expected to be the highest in state history at $1.4 billion.
The governor is proposing to limit refunds at $1,000, which would reduce expected payments for approximately 20% of all taxpayers. Brown said it’s a way to provide most Oregonians their full refunds while retaining $500 million in extra revenue for the state.
Some Democrats have long criticized kicker payments for disproportionally favoring the wealthy. Under this year’s historic kicker, the median taxpayer would be expected to receive $330 dollars while the top 1% of income earners could enjoy rebates up to 40 times higher than that--nearly $14,000.
Under Brown’s plan at least $250 million of the kicker funds would go to help pay down the state’s pension debt. The rest would be dedicated to rural housing and beefing up broadband infrastructure in more remote areas of the state.
There’s still no formal legislation for the proposal, and Brown said she’s open to changes. She also said she’s met with Republican leaders but didn’t specify if they supported the move.
Republicans have recoiled at any attempt to cut the kicker, saying the rebate is meant to be a safeguard against rampant government spending.
“Our state income tax revenue is at an all-time high,” said House Majority Leader Carl Wilson, of Grants Pass. “This is no time to begin skimming off money that hard-working Oregonians have earned.”
Brown admitted that diverting any amount of the kicker is politically difficult, as it requires a two-thirds vote from the House and Senate.
House Speaker Tina Kotek previously said that there weren’t enough votes to support using kicker funds to pay down pension debt. Kotek introduced her own measure to divert half the kicker toward transportation upgrades in Portland, which was met with skepticism from even the governor who said she wanted any kicker funds to be used to benefit the entire state.
The governor’s proposal is meant to be a one-time investment, and she said that she wanted to publicly release a plan to “stimulate conversation” among lawmakers and the public.