One of the Fine Institutions that's educated a number of the Laquedems is inviting my class back for a milestone reunion. The Fine Institution's official hymn includes this quatrain:
Integrinti sint curatores,
Eruditi professores,
Largiantur donatores
Benepartas copias.
A translation that conveys the meaning, if not quite word-for-word, is:
May [the Institution's] caretakers be honest,
May its professors be erudite,
May its supporters be many
And give copiously when asked.
The Fine Institution seems willing to excuse the Laquedems from auditing the trustees and enlightening the professors, but hopes that we can help it meet the third portion of this tripartite prayer. Although its development office's estimate of the Laquedem fortune is optimistic (I should present it to my banker) it does correctly believe that I stand ready to help out, albeit in some amount perhaps closer to parvo than to copias.
These thoughts passed through my mind as I read about Governor Kulongoski's proposal to have the state of Oregon hang on to the "kicker" instead of refunding it to taxpayers. A little background: several years ago as part of the plan to starve the legislature into submission an anti-tax group proposed, and the voters adopted, a constitutional amendment that says that if the state takes in more income tax money than it budgeted, it must return the excess to the taxpayers in the following year. This refund of the tax surplus is called the "kicker," perhaps because it's sort of a kickback to taxpayers. The kicker check usually arrives with a letter from an elected official which makes it appear that the kicker check is the gift of a munificent government, rather like the handouts that Gaius Julius Caesar used to give to the masses, instead of the truth, which is that it's an unpleasant duty imposed on the state by its voters.
Even though the kicker law represents bad public policy at its finest, it's widely viewed as political suicide to suggest reducing the refund checks of the taxpayers. The soundest reason for returning the excess money to the taxpayers is that Oregon's legislature is too dysfunctional to spend surplus money wisely. The main reason advanced for the refund, I think, is different: it's that the taxpayers are counting on receiving the kicker money and it somehow represents extra taxes that the taxpayers have paid.
Nonsense. I expect to pay the state an income tax of about nine percent on my income, and that's about what I do pay. The rates don't change very much. It's not as if the state told me at the beginning of the year, "We estimate that your share of the cost to run the state is $X thousand" and at the end of the year says, "Good news! We didn't need to spend all your money, so here's a refund of the extra you paid." Rather, the state gives me the kicker refund because the citizens and businesses of Oregon collectively had a better year than the state expected they would, and paid more taxes in total than the state had predicted.
If the kicker is bad policy (as I believe) and shouldn't be refunded to the taxpayers, and if the legislature can't be trusted to spend it well, what should be done with it? I like the Governor's idea of creating a rainy-day fund, except that I believe that if we had such a fund, the legislature would quickly find rainfall on the driest of days, and spend it. I also believe that we're letting our public universities run down and become third-rate, which will keep down the growth of the tech industry in Oregon.
Hence my idea on what to do with the kicker, which I'm calling the Laquedem Kicker in the Pants for Higher Education Plan. The surplus will be set aside in an endowment in which the principal is untouchable, to be managed by the Oregon Investment Council and to be separate from the state's general fund (i.e., not reachable to pay for any deficit in PERS). The actual income of the endowment in each year will be given to the state colleges in the following year in direct proportion to the number of undergraduates who graduate from the college within four years of entering. The allocation board doesn't get to say (for example) that this year Oregon State University is more deserving than Oregon Institute of Technology, or that Eastern Oregon University is more deserving than Southern Oregon University (which I still think of as SOSC) -- it's strictly allocated by the number of graduating seniors. Why support schools that can't produce graduates?
Under my plan the kicker fund can't be diverted to pay for highways, or salmon habitat, or trams (compare the lottery fund, which was to go only to economic development and which the Legislature's tapped for a variety of pet causes). The principal is saved forever and the income goes to Oregon's public colleges. How much income? It's possible that the fund would build to $1 billion in a few years of surplus, which should produce about 4% ($40 million) of cash flow if invested prudently. The public colleges have about 85,000 undergraduates. Each school would get an average of almost $500 per undergraduate per year; not a fortune to be sure, but still a meaningful sum for a public college.
We aren't going to make our state colleges world-class, or even national-class, institutions overnight. But we ought to at least make the effort to get them back into the competition by the time that today's students are ready to send their own children to college.
Recent Comments