Candidate hopes to end corporate kicker.

Byline: Jack Moran The Register-Guard

Elimination of the state's corporate income tax kicker could solve the budget shortfalls facing Oregon community colleges, Democratic gubernatorial candidate Pete Sorenson said Tuesday.

Sorenson, a Lane County commissioner since 1997, outlined his plan to shore up funding for two-year colleges in a campaign speech at Lane Community College. Ending the income tax kicker for corporations could give the state $100 million per biennium for higher education, the Eugene resident said.

"This is a very doable answer," Sorenson said. "If I'm the governor, I'm going to get the votes (from legislators) to get this right."

Oregon is the only state in the country with a kicker law. Businesses get their rebate in the form of a tax credit when corporate income tax collections in a two-year budget cycle come in at least 2 percent above the Legislature's projections.

For households, the kicker is a refund check, mailed out just before the holidays. The state dishes it out when all other general fund revenues - primarily personal income taxes - exceed projections by 2 percent or more. Sorenson's proposal would leave the personal income tax kicker intact.

Under Sorenson's plan, revenue retained by the state through elimination of the corporate tax kicker would be used to increase the state's community college budget to $500 million per biennium. The current biennial budget for those 17 schools is $434 million - which is less than they received from the state five years ago.

Lane Community College faces a $3 million to $5 million shortfall in its nearly $70 million budget for the 2006-07 school year. To cope, the college will boost tuition costs to $69.50 a credit next year, which amounts to an 83 percent increase since 2001-02. Enrollment at LCC is down 20 percent from 2001.

Sorenson said his opponent in the May 16 Democratic primary election, incumbent Gov. Ted Kulongoski, has not fought for the state's community colleges since taking office in 2003.

"It's a do-nothing and disappointing governor who has let this happen," Sorenson said.

Sorenson joins a chorus of critics of the corporate kicker - but the idea of killing it has made little progress in the Legislature.

Business groups have typically resisted any reduction of the corporate kicker.

Officials with Kulongoski's office said the governor has not commented on eliminating the corporate income tax kicker. Kulongoski in recent months has touted his "education enterprise" proposal, which beginning in the 2007-09 biennium would increase funding for every level of the state's education system, from pre-kindergarten through post-secondary education and work force training.

Kulongoski's plan would involve a variety of funding mechanisms, including dedicating revenue to education from both personal and corporate income taxes.

In the current two-year budget cycle, personal income taxes are projected

to bring in $10.36 billion for the state - or 87 percent of the state's general fund dollars. Corporate income taxes, projected at $586 million, would account for 5 percent of the general fund in 2005-07.

In the most recent forecast, state economists in November projected an $86 million corporate kicker for the current biennium. That would follow a $101 million corporate kicker for the 2003-05 budget cycle.

The latest forecast also anticipated a personal kicker totaling $240 million in 2007.

The kicker has drawn scorn from public spending advocates as an undeserved windfall for mostly out-of-state conglom- erates.

Senate Revenue Committee Chairman Ryan Deckert months ago began informally discussing with business lobbyists eliminating the corporate income tax kicker, with the money going to state program areas, such as higher education, that would benefit businesses' economic interests.

In addition, the Oregon AFL-CIO is considering a ballot-measure campaign to get rid of the corporate kicker.