Josh Lehner for State Economist

Mark McMullen, Oregon’s State Economist for the past twelve years, has resigned. He is moving on to the Common Sense Institute, a think tank.

His Office of Economic Analysis is a real gem in Oregon’s archipelago of state agencies. They produce quality research on a variety of topics for the local economy.

The Oregon Office of Economic Research also produces a very politically sensitive forecast: tax revenue. That forecast is used for the Oregon Legislature’s budget process. When Oregon’s tax receipts exceed that official forecast by 2%, Oregon taxpayers get a refund, popularly called “the Kicker.”

In case you missed it, this year’s kicker was huge. Of course, that means Oregon taxpayers were overbilled, but in Salem, the Kicker is seen as a loss of money for state government. No doubt there is some plotting to make the Kicker go away.

It’s somewhat amazing we even get these Kicker refunds. Oregon Democrats have wanted to eliminate it for a long time. To protect this policy, it was enshrined into Oregon’s state constitution in 2000. However, there is a non-legislative means of eliminating the Kicker: rosy revenue forecasts. If the Oregon Office of Economic Analysis always overestimated revenue, on purpose, that would guarantee no Kicker payout. We’d always have a revenue shortfall.

Honest economic analysis has prevented the emergence of this administrative means of eliminating the Kicker. You can thank McMullen’s predecessor for that. Tom Potiowsky, who previously held the job from 1999 to 2006 and was asked to return a year later, created a culture of integrity. McMullen maintained that culture. Will his successor?

One way to preserve the quality of work at OEA is for the Governor to appoint an experienced Potiowsky protege. OEA’s senior economist, Josh Lehner, is currently the acting State Economist. He was hired by Potiowsky and fits that bill.

The ultimate choice for Oregon’s new State Economist should be carefully considered. Given such a clear and obvious top candidate for replacing McMullen, any alternatives to appointing Lehner should be scrutinized carefully. The political temptation to appoint someone who will abuse the revenue forecast to effectively eliminate the Kicker will be great.

Eric Shierman lives in Salem and is the author of We were winning when I was there.