Summary of the Oregon State of the State Address

Term-limited Oregon Governor Ted Kulogonski used his final state of the state speech to look back on his eight years in office — a period, he noted, that covered not one but two recessions. But Kulongoski, a Democrat, also April 2 called on lawmakers to take a longer view of the state’s finances and make decisions to avoid what he called a “budgetary cliff” caused by the end of federal stimulus dollars and the exhaustion of the state’s rainy day fund.

 Oregon is one of five states with no statewide sales tax and it relies more heavily than any other state on its residents’ income tax payments for revenue, according to a 2009 analysis by the Tax Foundation. The surest way, Kulongoski said, the state can avoid future budget shortfalls as severe as those experienced during the current recession is to “stabilize state revenue.” To do so, he again called for reforming the state’s unique “kicker” law, which provides rebates to taxpayers when state revenues exceed expectations by 2 percent or more.

 The kicker law, Kulongoski said, prevents the state from saving when times are good and leaves it vulnerable when times are bad, and he pushed for changes that would allow the state to sock away excess revenue. The system as it currently stands “is much like a weather forecaster on July 1, 2011, predicting the temperature on July 1, 2013,” he said. “And if you miss it by more than two degrees, we shoot you!”

 Kicker reform was a no-go in the 2010 Legislature, with Democratic leaders reluctant to take action on a major tax proposal just days after voters approved $733 million in new personal and corporate income taxes in a highly divisive statewide campaign. But Kulongoski pushed forcefully for future legislatures — and all gubernatorial candidates — to back kicker reform for the good of the state. “It should be a litmus test for anyone who wants to be the next governor of Oregon,” he said.

 The governor also called for savings on the spending side of Oregon government by consolidating and eliminating ineffective programs, though he did not single out specific programs. A panel of public and private officials is set to release recommendations to Kulongoski in June about how state government can find more efficiencies.

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