A4
East Oregonian
Tuesday, May 21, 2019
CHRISTOPHER RUSH
Publisher
KATHRYN B. BROWN
Owner
ANDREW CUTLER
Editor
WYATT HAUPT JR.
News Editor
JADE McDOWELL
Hermiston Editor
Founded October 16, 1875
OUR VIEW
Legislators should keep their hands off the kicker
O
regon’s unique tax “kicker”
law is working exactly as
intended, potentially sending
more than $1.4 billion — yes, billion
— back to taxpayers next year.
Top Democrats in the Oregon Capi-
tol should respect the law’s intent: pre-
vent excessive government spending.
Instead, those Democrats want to do
the opposite: spend your kicker refund
for you.
This is despite legislative Demo-
crats passing a new and historic $1
billion-a-year tax on businesses, while
also having about $2.1 billion more
to spend during the current two-year
budget period than expected when the
biennium began on July 1, 2017.
This is despite Democrats already
having employed fiscal sleight-of-hand
only a few weeks ago to reduce the
potential kicker by $108 million.
And this is despite the Legislature
taking only meager steps to control
spending in any meaningful way.
And this is despite Democrats still
wanting to pass other tax increases.
And this is despite the supermajor-
ity Democrats already being so heavy-
handed in the Legislature that Senate
Republicans walked out for several
days and House Republicans have
intentionally slowed action by requir-
ing that bills be read aloud word-for-
word on the House floor.
For any politicians who require a
refresher on the kicker, here it is: The
Oregon Legislature created it 40 years
ago in hopes of quelling the tax revolt
spreading north from California. A
brainchild of the legislative revenue
officer, the kicker was a way to guar-
antee lawmakers could not spend large
windfalls. Instead, that money would
go back to the taxpayers. Isn’t that the
Oregon Capital Bureau photo
After unprecedented tax collections during the tax filing season, Oregon’s revenue outlook
for the current biennium is far, far stronger than anyone expected.
way it should be?
The details are that a kicker occurs
when state tax revenues from corpo-
rations or from individuals and other
sources come in at least 2 percent
higher than projected at the start of
the biennium. The entire surplus then
is returned to taxpayers as a credit
on the next year’s income taxes. It’s
called the “kicker” because the refund
kicks in when the 2 percent threshold
is reached.
Corporations already have lost their
kicker. Voters in 2012 approved a bal-
lot measure diverting the corporate
kicker to the State School Fund.
Unless the 2019 Legislature inter-
feres, personal income tax payers will
get the credit on this year’s taxes when
they file their returns next year.
After the record-size kicker was
announced last week, Democrats
immediately decried it as excessive,
unreasonable and unnecessary. Those
Democrats lacked a sense of propor-
tion. “Oregon’s economy is much
larger than it used to be, so the kicker
is still expected to be smaller than
some as a share of biennial collec-
tions,” state economists Mark McMul-
len and Josh Lehner said in their quar-
terly revenue forecast last week.
The final amounts won’t be known
until the next forecast on Aug. 28,
but currently the average filer would
receive a $691 credit. Spent locally,
that money would be a boon for econ-
omies throughout the state — and help
Oregonians shoulder the increased
costs coming out of the Legislature.
Under the Oregon Constitution, leg-
islators can reduce or eliminate the
personal income tax kicker if two-
thirds of representatives and two-
thirds of senators give their approval.
That would require several Republi-
cans to join Democrats.
Democrats will offer carrots, such
as directing some of the kicker money
toward rural housing, foster care,
higher education or the massive PERS
liabilities. Those are worthy projects
— and a fine use for the extra money
the Legislature already has.
But leave the kicker itself alone.
No to Gov. Kate Brown’s well-inten-
tioned-but-bad idea of reducing each
taxpayer’s kicker by $100 to help pay
for PERS.
No to House Speaker Tina Kotek’s
enigmatic idea of taking half the
kicker for rebuilding a bridge on I-205
and supporting green-energy trans-
portation projects — even though
reducing Portland-area gridlock would
benefit freight traffic from throughout
the state.
And no to any other idea for taking
Oregonians’ kicker this year.
In a constituent newsletter last
week, Rep. Lynn Findley, R-Vale, cap-
sulized the situation: “Constitution-
ally, the kicker is a check on excessive
taxation. The Oregon Constitution
mandates that the excess revenue be
returned to Oregonians; unfortunately,
that is not the opinion shared by some
of my colleagues in the Legislature.
However, I believe that every penny
should go back to the hard-working
Oregonians who contributed to our
economic success.”
Everyday Oregonians deserve their
money. Hands off it, legislators.
YOUR VIEW
Illegal aliens are not
Oregonians
I oppose granting driver’s licenses to
“undocumented residents.” Government
documents given to illegal aliens tend to
legitimize their presence. We absolutely
should not encourage, let alone allow,
them to stay.
This country belongs to its citizens
only. No alien has the right to come here
and take a share of our limited resources.
No alien has the right to “break in” to
our country, any more than they have the
right to break into our homes.
In April 2013, Senate Bill 833 passed;
it would have offered driver’s licenses to
illegal aliens. A referendum referred the
bill to the ballot as Measure 88. Oregon
voters rejected illegal-immigrant licenses
by a margin of 2-1.
Now HB 2015 has been introduced in
defiance of the will of the voters. A state-
wide poll finds that Oregonians still over-
whelmingly oppose granting driver’s
licenses to illegal aliens.
Worse, an “emergency” clause has
been attached to HB 2015, which would
prevent opponents of the bill from block-
ing its implementation through another
citizen’s veto referendum, even though
they have the constitutional right to do
so.
The Legislature should represent and
honor the will of the citizens of Oregon
and defeat this measure. Legislators and
all state officials represent the citizens of
Oregon only, not the citizens of foreign
countries.
Those favoring granting drivers’
licenses to illegal aliens should neverthe-
less respect the will of the majority.
John S. Dearing
Corvallis
OTHER VIEWS
The five myths of PERS reform
R
bilities to the size of our incomes,
ecent education rallies
tax base or per capita. In fact,
raise important questions
studies show that per capita, we
about our K-12 education
system. Despite years of grow-
are worse off than debt-heavy
ing frustration, little progress
California. As the editor of the
has been made. This is
Bend Bulletin put it, “It’s
due, in large part, to the
like towing a yacht with
misinformation being
a Prius.”
spread, especially about
Myth No. 2: Our
PERS, that prevent con-
PERS problems were
structive solutions.
caused by a singular
There are five big myths
event — the financial
about PERS that Ore-
meltdown in 2008 — and
gon government employ-
are not a sign of struc-
K nute
tural flaws.
ees’ unions propagate
B uehler
Rates have been
because they do not want
COMMENT
increasing unsustain-
you to know the truth:
Myth No. 1: Oregon
ably for a decade and will
PERS is better funded than most
continue to rise until 2035. This
state pensions.
means the worst is yet to come.
Oregon is in better position
For an example, look at
than other states systems as mea-
Bend-La Pine School District.
sured by the percentage of pen-
Their net PERS contribution pla-
sion debt that is funded, but the
teaus in 2025 at nearly $60 mil-
lion but then spikes again in 2029
unfunded portion is still huge for
at over $80 million (increase
such a small state. We are one of
equivalent to 100 new teach-
the worst funded states when you
ers) due to expired investment
look at our ability to pay our debt
side accounts. It then steadily
— the ratio of our unfunded lia-
Unsigned editorials are the opinion of
the East Oregonian editorial board. Other
columns, letters and cartoons on this page
express the opinions of the authors and not
necessarily that of the East Oregonian.
increases until 2035. And keep in
mind, this assumes very optimis-
tic year after year returns of 7.2%,
which most actuaries believe is
unrealistic.
Myth No. 3: The Oregon State
Supreme Court has ruled, and
there is nothing more we can do to
lessen our PERS obligation.
In 2015, the Oregon Supreme
Court recognized its previous
misinterpretations of contract law
and overturned its position that
PERS obligations could not be
changed once employment was
initiated. In its new position, out-
lined in the case Moro v. State,
benefits and who pays for those
benefits can change until the time
of retirement.
This opens many more possi-
bilities for PERS reform such as
transitioning government employ-
ees to a 401(k)-type plan, requir-
ing all government employees to
contribute to PERS and eliminat-
ing pension spiking.
Myth No. 4: Most of the burden
is generated by PERS Tier 1 and 2
retirees, who have retired, so there
is nothing we can do.
Tier 1 and Tier 2 beneficia-
ries have generated most of the
unfunded liability. But Tier 1 and
2 members still comprise more
than 40% of payroll in the work-
force. A lot of costs to school dis-
tricts could be offset if current
employees would contribute (Tier
3 at a lower rate since they have
lower benefit structure) to the cost
of their PERS pension.
It is long past due, since we
have been the only state in the
nation where our government
employees have not contributed to
their pension fund. It’s true that
about 70% of the PERS debt is
attributable to those retired, and
there are limited ways to recover
these legacy costs. But one is the
work back/pay back proposal
where limits on post-retirement
work would be lifted in exchange
for former retired employees pay-
ing back 6% of their new salary
towards the PERS debt.
Myth No. 5: PERS reform
The East Oregonian welcomes original letters of 400 words or less on public issues and public policies
for publication in the newspaper and on our website. The newspaper reserves the right to withhold
letters that address concerns about individual services and products or letters that infringe on the rights
of private citizens. Letters must be signed by the author and include the city of residence and a daytime
phone number. The phone number will not be published. Unsigned letters will not be published.
“breaks the promise” made to
retired government employees.
PERS reform should not and
cannot, based on court decisions,
take away benefits from govern-
ment employees who have retired
and are counting on the earned
benefits. We owe these benefits,
both legally and morally, that have
been constitutionally promised.
However, some of the past con-
tracts have been excessive and
cannot continue without change
for those who have not yet retired.
A lack of PERS reform for current
employees will perpetuate a class-
room funding crisis in Oregon that
has gone on for much too long.
This issue is complex and has
vast implications for our kids and
our shared future as a state.
It deserves robust debate — but
it needs to be based on truth, not
information carefully crafted to
protect the status quo.
-----
Former state Rep. Knute Bue-
hler, R-Bend, was the Republican
candidate for governor in 2018.
Send letters to the editor to
editor@eastoregonian.com,
or via mail to Andrew Cutler,
211 S.E. Byers Ave., Pendleton,
OR 97801