Dear friends and neighbors,

It is an honor to serve as your State Senator and I want to thank you for subscribing to my newsletter. In this edition I would like to announce last month’s survey results, invite you to my upcoming town hall, and talk about one of the most important issues facing Oregon today: the need to stabilize our revenue system by boosting our Rainy Day Fund.

Session Updates

SJR 29—Creating a Healthy Rainy Day Fund

In 2007, legislators created the Task Force on Comprehensive Revenue Restructuring to take a big-picture look at our tax structure and make recommendations. One of the key proposals to come from that work is Senate Joint Resolution 29, a bill to increase the state’s reserve funds to help pay for critical services during economic downturns. Given the state of our economy, I want to take a moment to explain why it is so important for Oregon’s future to have a robust Rainy Day Fund.

At the end of each legislative session, state economists predict how much revenue Oregon will bring in over the next two years, and then lawmakers create a budget based on that estimate. Unfortunately, these estimates are notoriously inaccurate because of our heavy reliance on the income tax, which fluctuates sharply with the economy.

Because the budget for state services is based on an inaccurate revenue estimate, lawmakers have to cut services when less money comes in than was budgeted. Conversely, when the state receives more money than was budgeted, excess revenue is refunded to taxpayers. These refunds, more commonly called “kickers,” are given when the state brings in at least 2% more revenue than was budgeted. The kicker in its current form makes it very difficult for the state to create a sufficient reserve fund to sustain critical services when revenues don’t meet the budget.

To bolster the state’s reserve fund, SJR 29 would modify the current kicker law to set aside a portion of excess revenues into the Rainy Day Fund—up to 6% for personal income taxes and 36% for corporate income taxes (percentages based on how far off revenue estimates have been over time). Additional excess revenues would be returned to taxpayers. So rather than the kicker “kicking” at 2%, it would kick at 6% for personal income and 36% for corporate income and the difference would go into the Rainy Day Fund. As is presently the case, the revenues saved in the Rainy Day Fund could only be used during economic downturns, not to increase the budget.

In years that the Rainy Day Fund is full—totaling 10% of the previous budget—the kicker would be triggered at the usual 2% and all of the excess revenue would be returned to taxpayers. This arrangement is a common sense budgeting practice, smoothing the hills and valleys of our state budget without increasing taxes or growing government. SJR 29 will allow Oregon to save a reasonable amount of excess during the good times to protect schools, public safety and other critical services during the bad times, while still providing for kickers.

Because SJR 29 amends the state Constitution, this change will need to be approved by the voters. I welcome your thoughts and questions on this resolution as it goes through the legislative process.

Survey Results

Thank you for sharing your priorities in our February survey. For those of you who missed it, last month I asked our readers to share their priorities for the Legislature as we face the prospect of budget cuts. Here’s a summary of the responses, and a few thoughts you shared with me:

Urgent Priority:

• Public K-12 education
• Reducing the cost of health care and improving access
• Tax reform to provide adequate and stable revenue for critical public services

High Priority:

• Higher Education
• Working on developing alternative energy sources
• Human services

Medium Priority:

• Improving the state’s roads and highways
• Public safety
• Affordable housing

Public K-12 education has to be the highest priority this session. We need to begin looking at alternatives to shore up education funding and provide some stability to our schools.

—Tigard constituent

Oregon needs to eliminate the "kicker" tax rebate.  Imagine where we would be today if the money that was returned to taxpayers was sitting in a budget stabilization fund instead!

—Tigard constituent

Working on developing alternative energy sources is important but I want to be careful about using too many tax breaks. Take advantage of federal dollars here as well as private investment. This should be a growth industry for us and help us out of the recession.

—SW Portland constituent

Read my lips... no new taxes. Time for the state to live within its means.

—SW Portland constituent

Funding for improving the state’s roads and highways absolutely must emphasize alternative modes (transit, bicycle and pedestrian facilities statewide) and help transport people, goods and services without dependence on single-occupancy vehicles and fossil fuels.

—SW Portland constituent

Town Hall

As your State Senator, I value your opinions about the critical issues facing our state. To give us a better chance to discuss the work we're doing in Salem, Representative Larry Galizio and I are hosting a joint town hall on Saturday, April 4. We hope you will join us and share your thoughts on the Legislative session and the issues Oregonians are facing in these difficult economic times.

What: Town Hall Meeting with Senator Ginny Burdick and Representative Larry Galizio

Where: City of Tigard Town Hall Meeting Room, 13125 SW Hall Blvd, Tigard

When: Saturday, April 4, 10:00 a.m.

Staying in Touch

As the 2009 Legislative Session continues, I encourage you to share your ideas with me. Please contact my office at (503) 986-1718 or by e-mail at sen.ginnyburdick@state.or.us and let me know how I can best represent you.

Warm regards,

 Ginny Burdick