Press Release, March 4, 2009
Reject transferring billions of dollars from the private to the public sector: What’s wrong with SJR 29
As a member of the Task Force on Comprehensive Revenue Restructuring representing taxpayers, I must express reservations about Senate Joint Resolution 29 which seeks to amend the Oregon Constitution to, among other things, direct income tax kicker money into the Rainy Day Fund.
I agree with the Task Force consensus that establishing more reliable forecasting and more prudent budgeting is a worthy goal. I do not agree, however, that the state is the best repository for ending balances under the new forecasting method. That money rightfully belongs to the individuals and corporations who earned it.
The Resolution requires the Governor to develop a point estimate for corporate income tax revenue and all other General Fund revenue and a range for both estimates. This does seem like an improvement over the current point estimate approach, which is almost always wrong.
The problem lies in the Resolution’s requirement that only revenue above the top of the forecast range be returned to taxpayers in the form of a kicker. This will have the practical effect of eliminating most kicker refunds that Oregonians have come to expect when state revenue exceeds estimates by more than two percent.
The Resolution also requires that revenue above the point estimate but below the top of the forecast range be placed in the Rainy Day Fund. The intent is to grow a more substantial Rainy Day Fund than the state has previously built.
The fallacy, however, is that the kicker has somehow prevented the state from building a substantial Rainy Day Fund, when in reality there has been no prohibition against lawmakers budgeting for less spending than the point estimate forecasts would allow.
Locking these provisions into the Constitution will simply make it that much easier for the state to avoid exercising the kind of fiscal discipline that Oregonians should expect. The effect would be to permanently transfer billions of dollars from the private to the public sector into the foreseeable future.
My recommendation is:
Yes, improve state budget forecasting.
No, reject transferring billions of dollars from the private to the public sector through limiting the kicker law.
Steve Buckstein is founder and senior policy analyst at Cascade Policy Institute, Oregon’s free market public policy research center.