State revenue forecast projects likely tax kicker

The potential for a kicker to Oregon taxpayers set the table Tuesday for a contentious budget debate.

The Office of Economic Analysis released its next-to-last Oregon revenue forecast for 2015-17, predicting income will exceed projections made in 2015 by 2.4 percent and the state will have to return to taxpayers $407.8 million.

“As April tax season winds down, it’s been apparent we’ve had a good year,” state economist Mark McMullen told the Senate and House revenue committees.

That “good” news, however, creates a bad overall effect for 2017-19 budget planners:. The February forecast had shown Oregon was collecting more than it had planned for 2015-17 while remaining under the kicker threshold, giving the state some extra spending money to roll into the next budget. If the kicker kicks, though, it takes back all the extra money over the 2015 budget projection.

The kicker is not certain yet. The final revenue forecast will be released Aug. 23, and state economists say there is a one-in-three chance that the final adjustments will drop Oregon back below the kicker threshold of 2 percent over budget.

The state budget forecast stands about $1.4 billion short of what is needed for current service levels as defined by the state. 

“The Legislature will have some tough choices to make given the recent forecast with the expected personal kicker,” said Lori Sattenspiel, OSBA interim director of legislative services. “Education needs to be a priority for the Legislature. No matter the final budget, they must make a minimum investment of $8.4 billion in K-12 education just to avoid losing ground.”

- Jake Arnold, OSBA
jarnold@osba.org