SALEM — Oregon's fiscal policies get a "D'' in a new study of all 50 states' budget systems.

Oregon's lack of a rainy day fund, its "dysfunctional'' tax system that is overly reliant on income taxes and its "kicker'' policy of refunding excess income tax revenue to taxpayers hampered the state's ability to weather the recession, the study said.

The result has been that Oregon has faced budget shortfalls year after year that forced cuts in spending on various state programs, according to the nationwide study issued by the Government Performance Project.

The project, funded by the Pew Charitable Trusts, also cited Oregon's initiative and referendum system that allowed opponents of the 2003 Legislature's $800 million tax plan to force a statewide vote on the tax, which was soundly defeated by voters in February 2004.

A spokeswoman for Gov. Ted Kulongoski said the study underscores the importance of the governor's plan to create a "rainy day'' fund reserve fund by setting aside 4 percent of revenue by the 2007-09 budget period.

"It would help Oregon have a stable, sustainable budget'' in the future, said Kulongoski spokeswoman Marian Hammond.

Many Republicans want to go a step further and place a lid on state spending, putting any extra revenue above the cutoff line into a reserve fund.