Oregon Democrats and progressive groups have long bemoaned the “kicker” — the rebate that sends money back to taxpayers when state revenues come in higher than expected.

They’ve also largely resigned themselves to the fact that Oregonians will never vote to end the kicker, a conclusion backed up by years of polling.

Now, some Democrats have another suggestion: Ask taxpayers to share the wealth.

State Sen. Floyd Prozanski, D-Eugene, is introducing a bill this year that would allow Oregon to keep some of the money that would otherwise flow to taxpayers in instances when the kicker is triggered.

The proposal would require Oregonians’ input by asking voters to approve an amendment to the state constitution. If they agreed, Prozanski’s change would ensure that the first $300 million of future kicker refunds flow back to taxpayers as usual. Any money on top of that $300 million threshold would be split evenly — half to taxpayers, and half to the state to fund education and to prevent and fight wildfires.

“This approach provides much-needed funding to two of our state’s most critical funding needs while maintaining the kicker in a form that Oregonians are familiar with,” Prozanski’s office said in an email.

Created in the late ’70s to keep state spending in check, the kicker has increasingly become a matter of discussion in Oregon politics. Whenever personal income taxes and other non-corporate revenue streams come in at least 2% higher than predicted when legislators were building a budget, the law sends all the excess money back to taxpayers.

A separate kicker law tied to business taxes – typically called the “corporate kicker” – sends money to schools when triggered. It would not be impacted by Prozanski’s proposal.

Kickers are commonplace. Since the law passed, 14 out of Oregon’s 23 two-year budgets have featured the rebates. And the trend has grown more pronounced recently, with each of the last six budget cycles featuring kickers, four of them sending more than $1 billion back to taxpayers.

In that environment, Prozanski’s proposal could have a potent impact. In 2024, for instance, when a record-shattering $5.6 billion rebate went out, the change the senator is proposing would have kept about $2.65 billion in the state’s hands.

This year, when taxpayers are due a $1.41 billion rebate, it would have ensured the state kept an additional $555 million for schools and fire preparedness at a time of looming budget cuts. Taxpayers’ cut would be reduced to around $850 million.

There is no guarantee that the era of eye-popping rebates will continue. Oregon recently hired a new chief state economist, whose duties include generating the revenue predictions that are used to determine whether the kicker kicks. That economist, Carl Riccadonna, says he is using an updated forecast methodology that should make rebates less likely.

As the kicker has routinely sent big money out the door in recent years, Democrats, who control the state government, have shown greater interest in finding a way to keep some of the money.

In 2024 and 2025, state Sen. Jeff Golden, D-Ashland, urged his colleagues to vote to suspend the $1.4 billion that is headed to taxpayers this year. Golden argued that using the money to create an interest-bearing fund would offer sustained funding for wildfires.

Last year, Gov. Tina Kotek chimed in with support for suspending $1 billion of the kicker rebate for wildfires. But suspending the kicker comes with a high legislative hurdle: a two-thirds vote of lawmakers in both legislative chambers. With many Republicans strongly opposed to messing with the rebate, the idea went nowhere.

Golden told OPB he supports Prozanski’s idea. He is also backing a kicker-reform proposal from state Rep. Mark Gamba, D-Milwaukie. Gamba declined to share details of that bill with OPB.

Prozanski told OPB recently he wasn’t sure what kind of legs his bill might have, but that he wanted to begin a discussion.

Republicans are unlikely to sign on. The party in recent years has insisted the kicker rebate is an essential check on the growth of state spending that should not be tampered with. The Senate Republican Office and House Republican Office did not immediately respond to an inquiry on Tuesday morning about Prozanski’s proposal.

The bill will find boosters in groups like the Oregon Center for Public Policy, a progressive nonprofit that has long railed against the kicker. The organization recently noted the law has diverted nearly $11 billion from state services in the last decade. That money primarily went to high-income earners, since they pay the bulk of income taxes.

“There are many ways to reform the kicker that would be an improvement over the current situation,” Alejandro Queral, executive director of the OCPP, said in an email. “Limiting the size of the kicker and using the savings to strengthen education and protect Oregonians from wildfires would be much better than the current failed policy.”

Democrats hold supermajorities in both the House and Senate. Sending Prozanski’s proposal to voters would require a simple majority vote in each chamber.

News Source : https://www.opb.org/article/2026/01/27/oregon-kicker-tax-rebate-politics/