Ore.: 2009 Tax Windfall Not Expected

According to state economists, there will be no such windfall in 2009 as the economy tapers off, thanks to a tepid housing market and slowing job growth.

The quarterly revenue forecast presented on Tuesday painted a picture of a state economy that's chugging along, not making great leaps and bounds, but not facing imminent recession either.

"We're bored, but considering the alternative, bored is good," joked Rep. Phil Barnhart, D-Eugene, chair of the House Revenue Committee.

The state will have about $22 million more than expected in general fund revenue to spend in the current biennium, a total of about $14 billion, with a projected ending fund balance of $206.6 million, according to state economist analyst Michael Kennedy.

The slackening economy has caused Oregonians to trim spending on the state lottery, Kennedy said.

Lottery revenues through most of October and November were significantly below what economists had projected, Kennedy said, perhaps partly due to a run of nice weather that kept people outdoors and partly due to rising gas prices and concerns over inflation.

Still, there's about $9 million more available from the lottery in undedicated funds that lawmakers could chose to spend when they meet for a month in February to hash out budget issues and other priorities.

Tuesday's forecast closes the books on a spectacular two-year run in Oregon, when the state economy soared, a big change from the economic doldrums of 2002 and 2003, when the unemployment level in Oregon was among the highest in the nation.

The roaring state economy led to the first so-called "kicker" checks that Oregonians will receive since 2001.

Oregon's one-of-a-kind kicker law requires the state to send refunds to taxpayers when income tax collections top projections by more than 2 percent. In the current biennium, forecasters were off to the tune of about $1.1 billion, which is how much will be remitted to taxpayers, beginning next month.

In order for the kicker to recur in 2009, personal income tax revenues would have to exceed predictions by more than $241 million, something Kennedy said was unlikely given economic trends.

Because home prices in Oregon didn't skyrocket as much as they did in other parts of the country, the state has been largely shielded from the effects of the national housing downturn. That's in sharp contrast to when the Internet bubble burst in 2001 and thousands of Oregonians working at high-tech jobs were affected.

But interim state economist Dae Baek did warn that house price appreciation showed signs of slowing throughout the state in 2007.

Job growth is expected to slow to just under 1 percent in 2008, Baek said, before doubling again in 2009. Oregonians' personal income, too, is expected to rise more slowly in 2008, though it will still likely beat the national average.

There are doomsday scenarios of course, in which all bets are off -- should there be a major stock market correction, for example, or the Federal Reserve raise interest rates to ward off inflation.

Barring that, though, state general fund resources are expected to include to $15.8 billion in the 2009-2001 fiscal cycle, and $17.8 billion by 2011-2013.