SALEM, Ore. (AP) — Oregon legislators raised taxes in September by nicking the wealthy and corporations, but they learned Thursday that new money may be offset by kicker tax rebates in 2015 that would go to all individual taxpayers.
In fact, it was those tax increases that have made the kicker rebates more likely, state economists told the House and Senate revenue committees.
The latest revenue estimates are halfway to the threshold that would trigger the kicker rebates.
"It's very worrisome to think that just as we're getting some level of stability in our education system we could have a major blow to that in the future because of the kicker," said Sen. Ginny Burdick, a Portland Democrat who leads the Senate Finance and Revenue Committee and has long championed eliminating or altering the kicker.
Without the tax changes, economists would be projecting a slight downtick in revenue, state economist Mark McMullen said.
McMullen cautioned that the numbers are preliminary and might change once the tax increases are fully implemented.
Under a law intended as a check on government spending, kicker rebates are triggered when the total amount of money collected during a two-year budget cycle exceeds projections from the beginning of the budget cycle by at least 2 percent. Because the tax increases were approved in a special session, after the initial projections were published, any additional revenue they generate pushes the state closer to the kicker threshold.
To generate a kicker, the state would need to earn about $145 million in unexpected revenue in addition to the tax increases from any sources other than corporate income taxes. That would most likely happen if the economy improves faster than expected and fuels a rise in personal income tax payments.
Lawmakers were not focused on the impact on the kicker when they negotiated the tax-increases, Burdick said.
McMullen told lawmakers that Oregon's economic recovery is starting to reach rural areas and more industries.
"Oregon's economic expansion is clearly getting stronger," McMullen said.
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