5 Things You Should Know About Oregon’s Kicker Refund
What is a “kicker” and how does it affect you?
Oregon economists estimate taxpayers could be entitled to nearly $1 billion more in 2026 – an increase from the previous forecast of $582 million, according to the revenue forecast submitted in September and presented to state lawmakers Wednesday morning.
“From an economic perspective, we are doing as well as we had hoped,” said acting chief economist Josh Lehner.
The legislature passed a 2% kicker law in 1979, which voters approved in 1980. It requires the state to refund excess revenue to taxpayers when actual revenue exceeds projected revenue by more than 2%. Oregonians received part of a record-breaking $5.6 billion state kicker tax credit this year when they filed their 2023 tax returns.
Inflationary economic boom cools down
The focus of the House and Senate Finance Committee’s discussion on Wednesday was a stable economic forecast despite concerns about a slowdown in the labor market.
Lehner said the inflationary economic boom is cooling down and interest rate cuts are to be expected. He also spoke of a rise in unemployment at the national level due to a cooler labor market with lower hiring rates.
Overall, the economic outlook looks stable, according to the OEA. Government revenues continue to exceed expectations, partly due to personal and corporate taxes as well as consumption-related revenues being in line with expectations.
“The number of returns is significantly higher than expected,” Lehner told the MPs.
Total income tax revenues increased 3% in 2023. Revenue uncertainty remains high with extensions for filing income tax returns looming in the fall and another tax season beginning in April, the report said.
Oregon’s revised economic forecast
According to the revenue forecast, the general fund for the current 2023-35 biennium budget will increase by $676 million compared to the May forecast. For the 2025-27 biennium budget, economists are revising their estimate and reducing the available funds by $66 million, partly due to the payment of the personal bonus.
Reserves also remain substantial. Economists project that the Education Stability Fund will reach its statutory cap in fiscal year 2027. The Oregon Rainy Day Fund is expected to be nearly $1.9 billion at the end of the biennium. Combined with the projected General Fund ending balance of $1.8 billion and the Education Stability Fund of $1 billion, Oregon’s total effective reserves are expected to be $4.7 billion at the end of the 2023-2025 biennium.
“It is encouraging to see that our economy remains stable and there is healthy labor force participation in key sectors,” Governor Tina Kotek said in a statement. “The forecast calls for an emphasis on core programs and maintaining the most important priorities of Oregonians.”
Oregon lawmakers call for prudent spending
The parliamentarians celebrated the stable forecast, but at the same time called for cautious spending in the coming sessions.
Senate President Rob Wagner (D-Lake Oswego) and Senate Republican Leader Daniel Bonham (D-The Dalles) both issued cautious statements.
“This forecast is another clear warning that we need to exercise fiscal restraint,” Bonham said, citing inflationary pressures and rising costs.
Wagner said, “We must remember that our resources are limited. Lawmakers must enter the 2025 legislative session prepared to make difficult decisions about what programs, services and projects we fund and ensure those decisions align with the values of Oregonians.”
House Speaker Julie Fahey (D-Eugene) said the state must “remain prudent” in how it spends taxpayer dollars, and lawmakers must focus on passing a transportation package as part of the 2025 legislative package to “keep our economy moving.”
House Republican Leader Jeff Helfrich (R-Hood River) said the forecast expects continued high inflation and the private sector to struggle in the face of government expansion.
“Many of the current majority will push for new taxes next session, which will make these problems even worse,” Helfrich said. “Legislators should resist the push for new taxes to both reduce the cost burden on families and unleash the potential of Oregon’s private sector.”
The state’s longtime chief economist, Mark McMullen, left his post in May. Lehner said Wednesday he will leave the Office of Economic Analysis in September after 15 years. A new chief economist is expected to take office in September.
Dianne Lugo covers the Oregon Legislature and equality issues. Reach her at [email protected] or on X @DianneLugo
