Oregon taxpayers can expect $1.6 billion in state “kicker” refunds next year – the largest there has ever been. A taxpayer making $27,500 will get a $373 refund, those making $49,700 get a $679 refund, and the top 1 percent of taxpayers will see an average refund of $15,214.
The state received $2.6 billion more than anticipated in general and lottery funds at the beginning of the 2017 biennium, and the state now has $3.7 billion in reserves. In many states, those funds would be saved for the sort of revenue downturns that Oregon is anticipating for next year – the dollars would become a rainy day fund.
However, Oregon law requires that such unanticipated revenue windfalls are kicked back to taxpayers, hence the term, kicker. The kicker is triggered when revenues are 2 percent more than anticipated.
In 2017-19, tax receipts came in more than 9% above projections.
Why State Revenues May Decrease Next Year
Many economists believe there may be some level of national recession next year, but that’s not the whole reason revenues may decrease next year.
Most tax experts believe it’s likely that changes in federal tax law motivated businesses to put off paying taxes until this year. It’s thought that this may have ballooned corporate tax receipts by as much as 50 percent, and it is also unlikely that’s going to happen again.
“Even without a recession, we’re expecting that it’s going to be hard to match the revenue we saw in the last biennium,” state economist Mark McMullen told lawmakers on the House and Senate revenue committees.
One New Law May Stabilize Budgeting, a Little
Earlier this year, lawmakers reduced personal income tax rates, while putting in place a new corporate activities tax that goes into education funding. This will likely do two things: Help stabilize education funding a little more than the prior structure had, and lessen the dollar amounts of future kickers.
By Andy Thompson