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Oregonians will get final 'kicker' figure Wednesday

Individuals to get credit for taxes, rather than check

When lawmakers hear the first quarterly revenue forecast of the new two-year state budget cycle this week, they also will learn the amount that Oregon taxpayers will get back in excess personal income tax collections next spring.

The presentation is scheduled before a joint meeting of the House and Senate revenue committees at 8:30 a.m. Aug. 26, in Hearing Room A of the Capitol.

In the most recent revenue forecast issued May 14, the projected excess from the 2013-15 cycle — known as the “kicker” — was $473 million. According to Paul Warner, the Legislature’s chief tax analyst, that amount would result in a reduced tax liability of 6.5 percent on 2015 tax returns due in April 2016.

The final figure, however, awaited the close of the two-year budget cycle on June 30 — and that figure will be presented to lawmakers as part of the latest quarterly economic and revenue forecast.

After the May forecast, Rep. Tobias Read, D-Beaverton, introduced a bill (HB 3555) to allow lawmakers to keep the kicker amount, half of it for education and the other half for a budget reserve. But the bill would have required two-thirds majorities for passage, and it never got a hearing in committee.

Based on 2013 tax liability, Oregon taxpayers with a median adjusted gross income of between $30,000 and $35,000 — half above that range and half below — would get a rebate of $144 against their 2015 tax bills due in 2016.

Under a 1979 law, which Oregon voters wrote into the state Constitution in 2000, actual tax collections that exceed budget projections by 2 percent are “kicked” back to taxpayers.

But taxpayers will not get checks, as was the practice between 1995 and 2001, and again in 2007. Lawmakers in 2011 changed the law to revert to the state’s previous practice of granting a credit against a taxpayer’s liability the following year.

It cost nearly $1 million to process and mail checks.

The most recent “kicker” rebate was in 2007, when taxpayers received a record $1.1 billion amounting to 18.6 percent of tax liability. The rebate occurred weeks before the start of the economic downturn.

Since the 1979 law took effect, the “kicker” for personal income taxes has been activated in nine of 18 cycles — excluding the 2013-15 cycle — but was suspended in 1991.

Before 2007, there were four “kickers” in a row from 1995 to 2001, ranging from 4.6 percent to 14.4 percent of tax liability. There were none in the following two cycles.

Oregon also has a kicker for corporate income taxes, and it has been activated eight times since 1979, although lawmakers suspended it twice. The most recent payment was in 2005, although businesses always took it as a credit against taxes owed and never got checks from the state.

Although excess collections are projected for corporate taxes from the 2013-15 cycle, Oregon voters changed the Constitution in 2012 so that excess amounts go directly into the state school fund. Corporations no longer get lower taxes as a result of the kicker.