Republicans will renew spending lid push

SALEM, Ore. (AP) — Republicans will be back in charge of the Oregon House when the 2005 Legislature convenes on Jan. 10 — and they’ll return with a plan to clamp a lid on state spending as a way to create a rainy day fund.

The plan likely would involve asking voters to change the state’s “kicker” law, which refunds money to taxpayers when revenue tops budget estimates.

The GOP plan would divert extra money to a reserve pot, instead of into the kicker fund. When the pot was full, refunds to taxpayers could resume.

This could result in less-frequent refund checks for taxpayers. But House leaders say if lawmakers don’t restrain spending, government critics will do it for them by putting an initiative measure with a tight lid on the ballot next year.

Russ Walker is poised to do just that.

“There’s a 95 percent chance we’ll have something on the ballot,” said Walker, Oregon director of a group formerly called Citizens for a Sound Economy.

Walker said he’s not ruling out that legislators might come up with an acceptable plan to cap spending, but he’s skeptical.

“Frankly, I don’t think we will get anything out of the Legislature,” he said in an interview this past week.

He sees rough going for a spending lid in the Senate. Democrats often balk at the idea, and they’ll hold a solid 18-12 majority in the chamber in the coming session.

Walker said he probably will file a ballot initiative with state election officials “in the next month or six weeks or so” that would ask voters to approve putting a limit on state spending.

Walker, whose Washington, D.C.-based organization now is called FreedomWorks, would need to gather 100,000 petition signatures to put the measure on the November 2006 ballot.

He has a track record showing he can do that. Walker led the petition drive last year that sent a legislatively approved tax increase to the ballot, and voters trounced it in February.

He said his group probably will propose a constitutional amendment to limit state spending increases to around 4 percent to 5 percent a year. Extra revenue would be refunded.

Walker said he also would like to see a reserve fund created but that he can’t include multiple constitutional changes in a measure without risking it being overturned in court.

Republicans will have a 33-27 advantage over Democrats in the House.

House Majority Leader Wayne Scott said Republicans may try to counter the potential ballot initiative by pushing for a special election in 2005 on a spending cap-reserve fund measure.

The measure likely will resemble one that Republicans crafted for a planned special session in June. That meeting didn’t happen after Democrats in both houses boycotted it.

Scott said the GOP measure probably also would cap spending at a 4-5 percent annual increase, with any leftover revenue above the cutoff line flowing into a reserve fund.

Once the reserve pot equaled say, 10 percent of the budget, any excess revenue would go back to taxpayers, he said.

The change would replace the kicker law. The law bases refunds not on whether revenue tops a spending cap but whether it ends up as 2 percent more than an estimate made two years earlier.

Numerous lawmakers of both parties say the kicker is poor budget policy because it prevents the state from saving money during good times to be used to preserve services in bad times, when economic slumps caused decreased tax revenue.

Some also say changing the kicker fund policy makes sense to create a general reserve fund.

“A rainy day fund is extremely important in restoring fiscal sanity to this state,” said House Minority Leader Jeff Merkley, D-Portland.

Democratic Gov. Ted Kulongoski, who this week offered his own reserve fund proposal, generally opposes spending limits.

“I don’t think he believes a spending cap on the front end is what is needed,” said Theresa McHugh, the governor’s chief of staff.

Kulongoski is suggesting putting about 4 percent of revenue into reserve, but not starting until the 2007-09 budget period.

Democratic leaders are leery of adopting spending lids that are too tight.

“We should be focused on talking about a reserve fund,” said Senate President Peter Courtney, D-Salem. “A spending cap could tie your hands. You never know what’s going to happen.”

Walker said he could support Kulongoski’s reserve fund plan as long as extra money beyond reserve needs would be refunded to taxpayers and not spent.

“What created the problems we have been through was a desire by Republicans and Democrats to spend every dime that comes in,” he said.

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