State economist Josh Lehner told lawmakers Wednesday, Aug. 28, 2024, that while some industries are experiencing downturns this year, the state's taxpayers could also get a sixth consecutive kicker refund in 2026 from the Oregon Department of Revenue.
Courtesy of the Oregon Department of Revenue
Oregon revenues have been so much higher than expected that nearly $1 billion could be heading back toward taxpayers thanks to the state’s unique “kicker” law.
“More resources today means a greater kicker tomorrow,” state economist Josh Lehner told lawmakers during a revenue forecast on Wednesday.
That doesn’t mean there aren’t plenty of economic uncertainties looming, Lehner warned. But Oregon’s unique kicker law dictates that when income tax payments are at least 2% higher than what state economists estimated and lawmakers budgeted for, the revenue has to be sent back to taxpayers.
This could be the state’s sixth consecutive kicker refund, sending $987 million back to taxpayers in 2026. That’s a big jump from even the most recent May forecast, which was closer to $582 million.
A separate kicker refund dealing with corporate taxes is set to send $883 million back to K-12 schools in the 2026 budget.
At the same time, economists warned that the state is aware more layoffs are likely, particularly in industries Oregon is especially dependent on, including the footwear and apparel and semiconductor industries. Both Nike and Intel have announced layoffs. Those will tilt toward more middle- and high-wage earners, Lehner said, noting that there has been talk of a “white-collar recession.”
But those aren’t the only Oregon-specific industries taking a hit. Outside of the Portland metro area, timber remains a key economic driver, and several mills have also announced pending closures.
“These are three things that are Oregon specialities, and they are all down,” Lehner told lawmakers.
Oregon is also in the midst of a blistering wildfire season that has burned more than a million and a half acres in the state so far. Eastern Oregon was particularly hard hit, and ranchers have warned that the economic losses to their own livelihoods and in the state will be felt for years. The state economist noted there were enough cattle killed and enough land scorched that it would be difficult to sustain the same amount of cattle into the coming years.
Several Democrats highlighted the takeaway that the state is expected to have steady growth in tax revenues. Gov. Tina Kotek called the revenue report encouraging, saying in a statement that the economy “continues to be stable, with healthy workforce participation in key sectors.”
Republicans were less optimistic and called for caution.
“This forecast is another clear warning that we must exercise fiscal restraint,” Senate Republican Leader Daniel Bonham, R-The Dalles, said in a statement. “Oregon families are already feeling the squeeze from high costs, and it’s imperative that we don’t add to their burden by overspending.”