SALEM — If state projections hold steady, Oregon will refund nearly $24 million in corporate taxes even as a projected tax shortfall has lawmakers planning roughly $3 billion in cuts to the budget for prisons, social services and schools.

And if that seeming non sequitur makes you scratch your head, you now know why Sen. Chris Telfer, R-Bend, is ready to do what some Republicans would consider unthinkable.

“We may not win a lot of votes on this, I may lose a few constituents,” she said. “But I just think it’s the right thing to do.”

Telfer is ready to sign on with Democrats and some other Republican lawmakers to reform Oregon’s unique tax rebate law, called the “kicker.”

Besieged by rising property taxes, voters approved the government-spending curb in 1980 and then put it into the state Constitution in 2000. The kicker law requires that if either the state’s corporate or personal income tax revenue in a two-year budget cycle exceed expectations by 2 percent, anything above that will be “kicked” back to taxpayers.

So today, even as the state’s overall tax revenues appear on track to fall short of expectations, and the state’s next two-year budget looks even worse — with a roughly $3 billion projected gap — corporations are in line for a kicker tax credit. That’s because as things stand now, it appears that when the fiscal year ends June 30, state economists will have underestimated the state’s corporate tax revenues by more than 2 percent.

Paul Warner, the state’s Legislative Revenue Officer, said that as of the last economic forecast, in December, “corporate revenue is just $7 million over the 2 percent threshold.”

If the numbers hold, he said, $23.6 million will be returned to corporate taxpayers. But that’s only if things remain the same — and because a few large companies generate so much of the state’s corporate revenue, “Literally their payments in the last week or two of the biennium can make the difference.”

Telfer has only been a lawmaker for just over two years. But in that time, she says she’s learned that economists rarely can predict the future with 98 percent accuracy.

She said that “14 out of the last 16 revenue forecasts have been off the mark. … We just cannot depend on them.”

Telfer thinks a 2 percent margin of error is not enough, and will join with Sen. Frank Morse, R-Albany, Sen. Ginny Burdick, D-Portland, and Sen. Mark Haas, D-Portland, on a bill that would place constitutional protections on the state’s rainy day fund and essentially divert half the personal-income kicker into it. Meanwhile, the bill — which has been drafted, but is not yet formally introduced — would divert nearly the entire corporate kicker into other uses, such a “stabilization fund” for higher education to prevent drastic budget cuts to state universities.

“I think the nexus between higher education and business in this state is so clear,” Morse said. “It’s in businesses’ interest to have the best higher education system we can have.”

Those diversions would only last until the rainy day fund and higher education fund are filled to reach about a sixth or a seventh of the previous General Fund budget — meaning about $2.5 billion in the current budget cycle.

Telfer said, “I still believe the kicker is a good cap on spending, which is why (the legislation) wouldn’t keep all of it. It would still put a cap on how much we keep before we return it.”

Morse says that he envisions the bill simply referring the matter to voters, with Republican support, to prevent the bitter political warfare sparked by Measures 66 and 67 in January 2010.

“If we don’t have strong bipartisan support, we just create another partisan war,” he said.

Morse hopes that Republicans’ willingness to compromise on the kicker leads to Democratic willingness to reduce Oregon’s high capital gains tax on investment profits, to encourage economic growth.

“I’m hopeful that we can seriously consider how we find the common ground that refers something out that is robust, so that the next economic valley we come into we don’t just fall into a deep hole again,” Morse said.

Morse and Telfer could run into opposition among their House Republican counterparts.

Nick Smith, a spokesman for the House Republicans, said “we support the kicker and we are generally opposed to taking away Oregonians’ kicker checks.”

He said Republicans in the House instead support legislation that would force the state to save one percent of its projected tax revenue at the start of every two-year budget cycle, “which essentially forces the Legislature to save money before it spends at all.”

The second-highest ranking Democrat in the House, Leader Dave Hunt, D-Gladstone, said he thinks modifying the kicker is the next big step when it comes to tax reform. He pointed to the kicker checks of 2007, which returned more than $1 billion to taxpayers.

If Oregon had instead put that money in a constitutionally protected rainy-day fund, he said, it would have meant no need for the divisive January 2010 tax measures, with about $400 million extra to boot.

“There are five or 10 different ways you could do it,” he said of kicker reform. “I think there’s strong Democratic support for multiple options. … If we do not do that this session, I think we’ve really not learned the lesson of this recession.”

Telfer knows she may run into opposition, but thinks the state’s boom-and-bust economy requires bold measures.

“We need to smooth that volatility out through savings,” she said.

Ironically, budget geeks might be hoping for the state’s economy to dim a bit, according to Warner. That’s because if the state’s corporate tax revenue projections drop just $9 million, the figure will won’t meet the 2 percent threshold for a kicker. That means the corporate kicker — currently projected at nearly $24 million — wouldn’t kick. By losing $9 million, the state would pocket the difference, or nearly $15 million.

Warner cites this brain-twisting example to show the kicker law “works in bizarre ways.”