This morning the Oregon Office of Economic Analysis released its much anticipated May forecast. The importance of this particular forecast is two-fold: first, it determines whether or not the kicker kicks, and second, it lets lawmakers know how much money they’ll have to budget for the coming biennium.
For kids, the result was a mixed bag.
Both the personal and corporate income kickers were triggered. In the case of the personal income kicker, $473 million will now be returned to taxpayers as a tax credit according to the amount filed by tax payers. This means that approximately $550 for every kid in Oregon will be diverted from critical services and, for the most part, go to wealthy taxpayers. In fact, the richest 1% of taxpayers will receive a credit 37 times larger than the median taxpayer.
Projected Average Kicker Credit by Adjusted Gross Income
In terms of good news, the state economists predict that the net amount available in the General Fund for the 2015-17 biennium will be $264 million higher than they had previously forecast. 40% of this increase had already been earmarked for the State School Fund, meaning $105 million more will go to support schools in the next 2 years. This leaves approximately $160 million more that is now available to invest in programs that support children and families.
$160 million can make a difference for Oregon’s children and their families if used wisely. Child poverty is still 10% higher than it was at the end of the recession and 25% higher than before the recession. This illustrates the need for reinvestments in human services programs so that every child can live in a safe and economically secure home. For example, Employment Related Day Care could be expanded to eliminate the waiting list for families — ensuring that all families in need would have access to high-quality, affordable child care. Additionally, the Co-Chairs’ Budget Framework reduced investments in early education; Career Technical Education; and Science, Technical, Engineering, and Mathematics programs in the Governor’s Recommended Budget from $220 million to $60 million — a difference of $160 million. These are just two examples of how the state could further invest in children’s education, health, safety, and economic security.
Although $160 million is too little to be invested in all the programs that could make a difference for kids and families in Oregon, it is a significant boost. Furthermore, the legislature has options that would strengthen these programs even more — for example, by diverting the personal income kicker instead of giving large tax credits to the wealthiest tax payers or by repealing Gain Share.
The revenue forecast was a mixed bag for kids only because the state has chosen to put itself in the situation where good news can mean bad news. Higher revenue should mean more resources for critical programs that serve our state’s most vulnerable — but instead it means diversion from these programs. This doesn’t have to be the case and the legislature can take action to invest in Oregon’s kids. The question is: will they?