Senate moves to jettison kicker.

Byline: David Steves The Register-Guard

SALEM - Oregonians' cherished kicker tax rebates could end up in a government rainy-day fund instead of their own bank accounts under a measure approved Thursday by the Senate.

Senate Joint Resolution 2, which was approved on a 21-7 vote, would require voter approval to amend the Oregon Constitution.

If approved, along with companion Senate Bill 5, revenues that exceed the state economist's close-of-session forecast by 2 percent no longer would be returned to taxpayers in what's become known as kicker rebates.

Instead, once that threshold is met, the first 1 percent would be carried forward to the next spending cycle; remaining surplus dollars would be squirreled into a stability fund - available to future governors and legislatures to tap when certain indicators of an economic downturn emerge.

To a degree, the proposal forces lawmakers and voters to decide which priority is more important:

Preventing a repeat of the current climate of plunging state revenues with no rainy-day fund to shelter schools and human services?

Or holding out hope for a revival of 1990s prosperity, when Oregon's sizzling economy delivered unexpected revenue surpluses that resulted in more than $1 billion in kicker checks at Christmas time and tax credits for corporations in the spring?

Sen. Frank Morse, R-Albany, said he is convinced that Oregonians are ready to sacrifice their kicker checks in the name of financial prudence.

"Do we wish to have crisis and chaos? Or do we wish to have stability?" the freshman lawmaker and former construction-company executive asked his Senate colleagues.

The reserve fund that Morse wants to create would collect surplus until it reaches 10 percent of what's in the general fund. Morse said that funding level was chosen as a halfway point between the 5 percent and 15 percent reserve levels recommended by the Government Finance Officers Association and the bond raters at Standard & Poors.

Both SJR 2 and SB 5 drew yes votes from all four senators whose districts include portions of Lane County: Republican Ken Messerle of Coos Bay and Democrats Tony Corcoran of Cottage Grove, Bill Morrisette of Springfield and Vicki Walker of Eugene.

The Senate's seven opposition votes came primarily from fiscal conservatives who questioned whether the Legislature should be asking taxpayers to give up their cherished kicker checks.

"The problem here is not the kicker. The problem is fiscal discipline here within this building," said Sen. Gary George, R-Newberg.

After the two measures' passage in the Senate, Morse said he was encouraged that the House would follow suit.

"I believe there are a group of moderate Republicans to form a coalition with Democrats to give us enough legs to get this out to the voters," he said.

That would mean rolling over the conservatives who, though outnumbered by the sort of coalition Morse envisioned, still are a powerful force within the House.

Republicans hold 35 of the chamber's 60 seats, and several key House posts are held by the GOP caucus's more conservative members. One is Majority Leader Tim Knopp, a Bend Republican who jump-started his political career during his second House term by pushing the 2000 ballot referral that locked the kicker into the constitution, which puts changes out of lawmakers' reach without voter approval.

"Because our majority leader was the one who put the kicker in the constitution, he may be disinclined to consider it," said Rep. Jeff Kruse, a Sutherlin Republican whose district includes eastern Lane County.

Kruse said he and other fiscal conservatives in the House would be reluctant to tamper with the kicker law, which has given them plenty of political capital during years of legislative fights over whether to spend some of it on programs.

"The voters overwhelmingly approved protecting their kicker. With this, the prospect of a kicker in the foreseeable future goes away," he said.

Given the political stakes, Kruse said he was likely to band with other GOP House members in pushing for a strict limit on the future growth of state spending, using their vote for the kicker/rainy day legislation as leverage.

"I wouldn't even consider it without a spending cap included," he said. "A little quid pro quo, don't you think?"

ANOTHER PROPOSAL

The House will take up two of its own proposals to change the kicker in the Rules and Public Affairs Committee.

House Joint Resolution 54 and companion legislation, House Bill 3611, would: Ask voters to amend the constitution so that kicker rebates are triggered when state revenues exceed those of the previous spending cycle by 5 percent, instead of the current 2 percent-above-forecast threshold. The surplus would be split among taxpayers (40%), an emergency account (40%) and the general fund (20%).