Oregon Court Rules Lost Rebates Legal

The 2001 Oregon Legislature transferred over $100 million to the federal Medicaid reimbursement from the state’s special health account fund.  Some anti-tax critics believe this transfer is a scam, and proponents view it as “creative accounting”.  The transfer had the effect of reducing tax refunds by almost one-third under Oregon’s kicker law.  Under the state’s kicker law, taxpayers are refunded tax dollars that exceed Oregon’s projected revenue.  This depends on if the unexpected revenue surpasses the estimate by 2 percent or more.

Although the transfer has caused a lot of heat from anti-tax critics, the Oregon Supreme Court held that the tax return reduction was legal.  Proponents believe the transfer was the right thing to do because they believed that it never made sense that federal money that was set aside for healthcare to be transferred in the form of tax rebates to taxpayers. 

Oregon lawmakers are still awaiting a Supreme Court holding regarding a proposal that will completely change the state’s budget.  Oregon justices are deciding whether cost-cutting strategies aimed at reforming the state’s pension system in 2003 violated contract rights.  The 2003 legislation reduced the long-term obligations of the Public Employees Retirement Systems by almost $8 million.  However, these savings resulted from cutting anticipated benefits.  The lawsuit was filed by a coalition of anti-tax activists against the state.