It’s official: The collective “kicker” tax rebate Oregonians will likely receive when they file in 2020 is going to be $108 million smaller, thanks to a bill Gov. Kate Brown signed into law on Wednesday.

At the last forecast in February, state economists predicted Oregon’s one-of-a-kind personal income tax rebate could reach $748.5 million. At that time, economists estimated that individuals earning the median adjusted gross income of $35,000 to $36,000 would receive kickers of roughly $180.

But, with Brown’s action, individual taxpayers will likely receive kicker rebates that are 14.5 percent smaller than would otherwise have been the case.

Oregon’s unique kicker rebate, which is enshrined in the state Constitution, is triggered when the general fund comes in more than 2 percent above economists' forecast made at the start of the budget cycle. Personal income tax revenues account for most of the money in that fund.

As recently as April 4, Brown declined to say whether she would sign House Bill 2975 into law, explaining that she would not take a position until her staff completed a review of the legislation. Her spokeswoman could not immediately be reached for comment Wednesday on why the governor decided to sign the bill.

Under Oregon’s Constitution, Brown had until midnight Wednesday to decide whether to sign or veto the bill. If she did nothing, it would become law automatically after midnight.

This year’s one-time reduction of the kicker grew out of legislative budget maneuvers dating back to 2017. At the time, lawmakers balanced the budget in part by scheduling $108 million from a handful of sources — including a state insurance fund and legal settlements won by the Department of Justice — to transfer to the state general fund in May 2019.

But since tax revenues subsequently outstripped expectations, Democratic lawmakers now say they no longer need that money in the current budget. They voted to prevent the transfer and instead sock away the money for the next budget.

Although economists expect the state will have 5 percent more revenue available in the 2019-2021 budget compared with the current $22.5 billion budget, Democrats who lead the Ways & Means committee proposed 5 percent cuts across much of state government as a strategy to get the state on a more sustainable budget path. State economists have repeatedly predicted Oregon and the rest of the nation could enter a recession in the next two years.

Preventing the $108 million transfer of other funds to the general fund will lower the balance, and therefore the potential kicker, by the same amount. Rep. Dan Rayfield of Corvallis, who is co-chair of the Ways and Means committee, told lawmakers last month that he and other Democrats who lead the committee want to use the avoided kicker rebate to fund critical services such as community colleges and higher education in the next budget.

— Hillary Borrud | hborrud@oregonian.com | 503-294-4034 | @hborrud

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