Originally published in The Oregonian — September 5, 2012 –
By Steve Buckstein –
This November, Oregon voters will be asked to direct a highly uncertain, highly volatile and relatively small amount of income tax money into the state’s general fund, supposedly to help schoolchildren.
If Measure 85 would surely benefit kids, we might have a serious debate about it. But it won’t.
Measure 85 was placed on the ballot by several public employee unions. It would take any future corporate kicker money from businesses that paid those taxes and redirect it into the state’s general fund to “… provide additional funding for public education, kindergarten through twelfth grade.”
As most taxpayers know, the “kicker law” requires state economists to estimate how much income tax revenue will be generated over each two-year budget period. If actual revenue exceeds the estimate by two percent or more, the entire surplus is returned to those taxpayers who earned it.
The kicker law covers both personal and corporate income taxes. The vast majority of income tax money comes from individuals. Corporate income tax receipts are often highly volatile and recently amounted to only 7 percent of general fund revenue.
Some argue that the way the kicker “kicks” makes little sense, because it is terribly difficult to estimate state revenue two years out. Others defend the law as an important brake on runaway government spending, especially since Oregon has no other strong tax or expenditure limitations.
Whether the kicker is good or bad policy, Measure 85 does not guarantee any benefit to public education, even though it implies that it will. This is because the general fund can be allocated to various government programs at the full discretion of the Legislature. So-called “other funds” are dedicated for specific purposes, as are federal funds the state receives. The general fund is called that for a reason — it’s the one pot of money legislators can allocate at their discretion.
When asked whether Measure 85 guarantees more funding for public schools, the Legislature’s chief deputy legislative counsel said in writing, “I think the answer to your question is no. … [Measure 85] does not require the Legislative Assembly to appropriate a total amount of moneys from the general fund to K-12 public education that is greater than what it might appropriate under current law.”
Of course, if Measure 85 passes, legislators will spend any future corporate kicker money on public education as it requires, but they then can turn right around and spend less than they otherwise might have on public education from the rest of the general fund. Voters will have no way of knowing whether Measure 85 will result in more spending on public education or not.
Why? Because any new money in the general fund will attract “special interests” arguing that they need some or all of that money for their own programs. And, those “special interests” may be some of the same public employee unions that put Measure 85 on the ballot in the first place. In particular, they might be unions whose members work in agencies not involved with public education.
This is the way the legislative process works now, and it will work virtually the same way if Measure 85 passes.
The fact that Measure 85 won’t ensure any additional spending on public education should be reason enough for voters to reject it. They also should oppose it because there are better ways to reform the kicker law. Reform could place all corporate and personal kicker money into a rainy day fund. Or, the entire kicker law could be replaced with a strong state spending limitation tied to the growth of population and inflation.
Whichever reform voters prefer, Measure 85 is arguably the worst way to reform the kicker. It will take money from the private sector and let state government grow without any assurance that Oregon’s school kids benefit at all. It should be rejected in November.