New forecast means short-term stability, but not progress

Our long term revenue problems will never be solved unless we start to find ways to invest in all Oregonians, & the kicker just set us back.

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The new revenue forecast is good news for schools and services: $267 million more dollars in General Fund revenues for 2017-19 means more funds for K-12, higher education, and family services. With legislators committed to directing 40% of any increased projection to schools, we can expect to see another $107 million in education funding alone on top of the $7.255 billion already allocated.

This is good! Some school districts were facing cuts due to long suffering budget shortfalls.

But, this is no pot of gold at the end of the rainbow. There are no easy solutions here.

Even though revenue is expected to be up, it still isn’t close enough to address the longer term problems that our schools and families face.

To have the schools our kids need, Oregon’s Quality Education Model shows we need another $2.6 billion. Only with that major investment could we reduce class sizes, hire back the 5,000 school employees we’ve laid off in the last 10 years, and start to have the schools we’ve dreamt of for so long.

And why are our schools suffering so badly? Mostly, it’s the over ten billion dollars in cuts we’ve made in the last 20 years, combined with really bad laws like the kicker.

Simply put, the kicker is an insane law. With this new revenue forecast, the kicker will be even bigger than previously thought, and the state will be forced to forego $473 million in personal income taxes. Not because it’s more than we need. No, it’s simply because a projection  we made 2 years ago was off by more than 2%. All this at a time when our legislators are desperately trying to find funding for crumbling education, infrastructure, and critical services.

With the kicker, Oregonians are essentially gambling against a stacked deck, with hundreds of millions of dollars on the accuracy of a two-year-old revenue forecast that happens to have a terrible track record. Things could be worse — we could still have the corporate kicker, too. Fortunately for school kids, in 2012, voters decided to discontinue the corporate kicker and instead direct unanticipated corporate income tax revenues to those who really need it: K-12 schools. If not for this policy change, the State Economist estimates that large corporations would get $92 million in taxes back. And of those refunds, the great majority of them — 85% — would go to corporations headquartered outside the state. These corporations are already paying the lowest business taxes in the country, and certainly don’t need the funds as much as Oregon’s schools do.

Voters fixed the corporate kicker, but we’re still stuck with the personal income kicker, and it sure is a raw deal for Oregon. We’re sending $473 million back to taxpayers while our classrooms are overcrowded and thousands of families wait on lists for housing and child care assistance. What’s worse, a large share of the kicker will go to the people who need it the least: We expect one-fifth of the kicker will go to the top 1% of Oregon’s taxpayers, whose kicker rebate will average nearly $5,400. As for the rest of us? Most Oregon families will get a rebate of $144 or less.

Our long term revenue problems will never be solved unless we start to find ways to invest in all Oregonians, and the kicker just set us back, again.


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