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Posts published in “Day: September 2, 2022”

An Idaho kicker?


The Idaho legislature has convened with the idea of returning some of the unexpectedly large state revenue surplus, which has accrued once again this year, to the taxpayers.

Here’s a tax idea conservatives should like that comes from no less a blue state than Oregon: institutionalize the rebates, make them automatic, whenever the tax revenues come in much higher than expected.

In Oregon, they call it - somehow derived I suppose from the word “kickback” - as the Kicker. And it’s popular. Oregon politicians mess with it at their peril.

The Kicker (formally, the Tax Surplus Credit, though no one calls it that) was set up first in 1980 after Oregon voters approved a legislative-backed package, and was incorporated into the state constitution in 2000. The law provides that whenever tax revenue comes in more than two percent higher than state economists projected (you’ll note this puts a lot of clout in the hands of state economists), the excess has to be given back to the taxpayers. The first such rebate triggered in 1985, and has since roughly one year out of four. It applies basically to the state income tax, the state’s main source of revenue (no general sales tax in Oregon, remember). If there’s no revenue surplus, then no Kicker.

Oregonians watch the size of state revenues because they are directly affected. This year, the Kicker could be significant. The latest revenue forecast released this week indicates a rebate to taxpayers of about $3.5 billion, which might come as a refund or a credit on their taxes when they file next spring.

As you may expect, not everyone is a fan of the Kicker, and efforts occur from time to time to at least tinker with it. The counter argument is that much of the money goes to the wealthiest taxpayers, and that Oregon should build more of a backup fund to help in times of recession or other problems; in 2003, for example, Oregon was hard hit by a revenue shortfall and many services were cut. And the Kicker has been adjusted over the years, as in 2012 when Oregon voters decided (by a big margin) to cut back on the corporate kicker (much of which, critics said, benefited out of state corporations) and dedicate the money to public schools.

In the main, though, the system has persisted for four decades and shows no sign of being reversed any time soon.

This sounds like something Idaho might do. It hasn’t.

In Idaho, if an unexpectedly large amount of money comes into state coffers, it sits there awaiting a decision by the legislature, which decides what to do with it (which of course it eventually does). That has happened lately three years in a row. Tax cuts have routinely been a part of the picture (as they have recently in a majority of states).

The legislature can decide to spend some of it on various state needs and services, and has in fact done that with parts of the surpluses. House Minority Leader Ilana Rubel, D-Boise, said, “There is a bottomless list of what we could have done with that money that would have materially helped the people of Idaho and the children of Idaho.”

On one level, you can easily imagine many Idaho legislators content with the idea that this might be a question they wouldn’t have to deal with: If they had an Oregon-style Kicker, the question of what to do with the surplus is rendered moot. You raise enough money for what you think you need, and if more comes in, it goes back where it came from. It’s not hard to imagine even the Idaho Freedom Foundation supporting it.

On the other hand, Idaho’s way allows state officials to set up a big pageant about how they’re cutting taxes and doing wonderful things. And when that can happen only weeks before election day, so much the better.

Two different approaches to surplus. Which sounds like a direction that would seem to more closely fit Idaho’s perspective?