Kicker may pack $1 billion punch.

Byline: David Steves The Register-Guard

KICKER With state revenues exceeding last year's projections by more than $1 billion, the kicker rebates are set to deliver $1.04 billion to households. Here's what the typical or median household would get, and a breakdown of the average kicker for different income ranges:

Median personal kicker: $263 $10,000 to $20,000 income range: $86 $30,000 to $40,000 $329 $40,000 to $70,000: $567 $70,000 to $100,000: $1,000

SALEM - The end of the housing market boom is rippling through Oregon's economy - but not soon enough to cool down a scorching run-up in state revenue growth and a personal kicker that's on track to break the $1 billion mark for the first time.

State economist Tom Potiowsky said this decade's red-hot housing market accounted for between 20 percent and 30 percent of Oregon's economic bounce since 2003, including nearly 25,000 new jobs created in the construction sector.

But early indicators, including a drop in housing sales and a decline in the number of building permits, show that the boom is over.

Potiowsky called the housing boom a driver for much of Oregon's economic success of the past few years. As that force loses its steam, he said, Oregonians should prepare for the brakes to be felt throughout the economy.

It even raises the specter, he said, of the "R" word: "The risk of recession is higher than it had been before, but we do not believe ... that a recession is imminent; only that the risks have been heightened for the possibility of one," the economist said.

But any glum news for those hoping to turn big profits on housing sales was offset Thursday by the latest word on burgeoning "kicker" rebates expected to reach thousands of households and corporations with a presence in Oregon: They're once again expected to surpass their previously projected levels.

Personal income taxpayers now stand to reap kicker checks in a year that would total $1.04 billion - up from the $883 million projected in the June forecast.

The median or typical household kicker is now expected to come to $263, an increase from the June projection of $221.

For corporations, which receive the kicker as a credit to use against future tax liability, the cut totals $238 million, which is 61.3 percent of their estimated liability in 2007. Three months ago, the corporate kicker was expected to be $199 million, or 53 percent of their 2007 state taxes.

For state revenues, the economic slowdown isn't reflected in the current two-year cycle.

"There isn't a whole lot that you can read from housing for tax revenues," said Michael Kennedy, the senior economist who produced the state revenue forecast.

In fact, revenue to the general fund - almost all personal and corporate income taxes - once again jumped from the previous quarterly forecast by a combined $199 million. It's now expected to be $12.9 billion for 2005-07 when lottery proceeds are included. That's a big jump from the $11.7 billion projected when the Legislature finalized the budget last summer.

That means the overall revenue growth for 2005-06 proved to be the biggest one-year run-up in Oregon history, Kennedy said.

"It was just a remarkable year in terms of growth in revenue from virtually all sources," he said. Kennedy noted that personal income grew by 15.3 percent and corporate income taxes jumped by 35.6 percent. Both represented huge one-year increases, he said, considering that the annual average growth from 1992 to 2005 was 6.1 percent for personal income taxes and 5.8 percent in corporate taxes.

Eventually, though, signs of the emerging housing market slowdown will work their way to state income tax returns. Kennedy said they don't show up as declines in revenue, but as a slower growth rate than that of the current two-year cycle. He said the 2007-09 biennium will see personal income tax liability grow by 4 percent, which he called "exceedingly slow" and a reflection of flattened income growth in the construction sectors and a cooling off of capital gains for those selling homes.

Potiowsky said more statistical data that Oregon's roaring housing market is starting to chill will likely roll in in the coming months. But early signs show the state's hottest markets - the Bend, Portland and Medford areas - are not so hot nowadays. Those signs include reduced asking prices and longer stays for homes on the market.

Statewide, building permit applications fell 8.9 percent from January to July after several quarters of increases. And this year's second quarter rate of existing home sales dropped by 12 percent, Potiowsky said.

"All indications are this housing market has come to a halt," he said, adding that the big questions behind that halt have yet to be answered.

The two biggest, Potiowsky said, are, "Is this a bubble that has burst? ... Or is this the soft-landing scenario?"

Not surprisingly, with an election less two months away, the two major party candidates seized on the latest economic and revenue numbers to make the case for their own election - and for voters to reject each one's opponent.

Gov. Ted Kulongoski, who has presided over Oregon since taking office in 2003, said the continuation of a robust revenue outlook and job growth spoke well for his management of the state's economy.

"Investments in transportation, industrial land, skills training and improving Oregon's business environment have helped fuel that economic recovery," said Kulongoski in a prepared statement.

The Democratic governor's Republican challenger, Ron Saxton, highlighted differences between his views on the kicker and those of Kulongoski. The governor has said he wants the Legislature to join him in suspending the kicker amendment in the Oregon Constitution for six years so surplus revenue can help rebuild education and services that were cut during the last recession. Kulongoski has not proposed such a move, citing political barriers.

"The governor has said he believes state government ought to keep this money, not return it to taxpayers through the kicker, so that he can spend every cent collected even if revenue is higher than the state's plan for spending," Saxton said.