From West by Northwest.org Voices of the Northwest Can We Kick the "Kicker" Habit? Or... the Big Lie By Russell Sadler Jun 10, 2006 Beware any candidate who tells you “politicians are trying to ‘steal’ your kicker surplus refund.” There is no surplus. The State of Oregon is broke. It is living on borrowed money to pay its operating costs. The so-called “kicker,” originally designed to prevent the state from profiting from income tax “bracket creep” during the inflationary ‘70s, has morphed into an accounting trick that deliberately understates Oregon’s financial obligations to perpetuate politically popular “surplus refunds.” After the checks go out just before the fall elections, the Legislature quietly borrows the money to keep the government solvent. Over the last 15 years, the borrowing is nearing $1.5 billion, collateralized only by a promise to pay it off out of future income tax revenues. The latest calculations place the personal and corporate “refunds” at close to $1 billion. But if that money is squandered on fake refunds, the state will have to borrow more money to pay its bills. Oregon Republicans have posed as fiscal conservatives long enough. They need to be called out and made accountable. Oregon's Republican leaders ape their national party on a smaller scale: lie about revenue, give lollipops to convince everyone how well we're doing well, and borrow like mad to keep the state going. Then they tout hot-button social issues to distract attention from the real fiscal problems they are creating. Gov. Ted Kulongoski suggests suspending the “kicker” for six years to break this “borrow and spend” cycle. The Oregon Republican Party leadership ridicules this suggestion, slyly talking about “politicians stealing your kicker refund.” The practice of “borrow and spend” is not fiscal conservatism. It leads to reckless, unsustainable debt imposed on the next generation. While Republicans talk loudly of repealing the “death tax,” they are busily imposing a “birth tax” on everyone born over the next 30 years. The rare Oregon Republican legislators who have spoken out about their party’s practice have been punished. Rep. Lane Shetterly, R-Dallas, was removed as chair of the House Revenue Committee and threatened with a well-financed primary opponent. Shetterly chose not to run again. Rep. Lynn Lundquist, R-Bend, was defeated by a well-financed primary opponent when he broke with the Republican leadership and supported more money for education. Sen. Ben Westlund, R-Bend, refused to be intimidated. He left the Republican Party and is running for governor as an Independent in a effort to get into a position to stop the Republican’s reckless “borrow and spend” practices. While most Oregonians remain blissfully unaware of this burgeoning debt, the bond rating services on Wall Street are not. State Treasurer Randall Edwards has told lawmakers their ability to borrow with unsecured Certificates of Participation is tapped out. The rapid growth of unsecured debt is not the only thing that makes Oregon a pariah on in the bond markets. Bond underwriters are alarmed by Oregon’s initiative process. They see the initiative used to force large expenses on the state. Measure 5 forced the state to finance public schools and relieve local property taxes. Measure 11 forced large prison operating expenses on the state. Underwriters see the same initiative process used to restrict the ability of the Legislature to raise the money to pay these expenses. Wall Street cannot see how Oregon can continue to pay the interest on its borrowings from future tax revenues under these circumstances. So they are cutting the state off from further unsecured borrowing. Here is where Oregon could go so easily over the next few years: The demagogues win and the “kicker surplus” checks are sent out. There is not enough money to pay the bills. Republicans lead a referendum defeating any new taxes. The Legislature cannot borrow any more money. The Oregon Constitution forbids deficit spending. The whole house of cards erected by Republicans over the last 15 years comes crashing down. That is not a farfetched scenario. Nor is it mine. It is what bond underwriters actually expect to happen to Oregon and a number of other states if “borrow and spend” continues. Beware of any candidate who talks about “stealing your kicker surplus.” Ask them how they intend to pay bills the state has already run up. Copyright © 2006 by Russell Sadler Russell Sadler is a journalist and a lecturer at Southern Oregon University. You may write him c/o publisher at westbynorthwest.org. Visit Sadler's Sense columns at West By Northwest.org: Sadler's Sense: Enter Starret Stage Right -- Now a Four Way Race for Governor and Freeway Nation or Free Nation? 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