Nasty governor’s racing shaping up in Oregon

The Oregon governor’s race is shaping up as a contest of opposing opinions on the future of the state’s “kicker” law, which refunds revenues to taxpayers, and promises to be nasty, analysts said on Friday.

Republican candidate Ron Saxton this week launched the contest’s opening salvo, a radio advertising campaign attacking Democratic Gov. Ted Kulongoski’s position on the law, which requires the state to “kick back” revenues to individuals and businesses when income tax collections exceed state estimates by at least 2 percent.

Saxton charges Kulongoski wants to suspend refunds, translating into a $1 billion tax hike.

Kulongoski wants the state to retain taxes only from businesses to build reserves, said spokeswoman Anna Richter Taylor.

“His point is, why are we afraid to talk about it?” Richter Taylor said, noting that the state would retain about $280 million by withholding refunds of business taxes.

“He would build it into his budget to build a rainy-day fund,” Richter Taylor said, noting support for that goal from the state’s business community.

Wall Street credit ratings analysts dislike that Oregon is unable to build reserves because of the “kicker” law. They say reserves would help bring stability to Oregon’s finances because the state economy is prone to wild swings.

Oregon is posting a strong recovery in payrolls after a deep slump during the high-technology downturn that left it with one of the highest unemployment levels among states.

Richter Taylor charged Saxton with hypocrisy over the kicker-law debate.

“He’s totally flip-flopped on the issue,” she said, noting Saxton had three years ago proposed that the kicker law should be changed so the state could establish a rainy-day fund for bad times. “He’s pandering to his base.”

Saxton’s campaign did not return a telephone call to discuss the race against Kulongoski.

There is little chance any governor of Oregon could make a serious run at overhauling the kicker law because of how easily initiatives can be placed on the state’s ballot to undo the work of the legislature, said Russ Dondero, a political scientist at Pacific University.

“We want all of our services but we don’t want to pay for them. The kicker is just an example of how that plays out,” Dondero said.