Legislators jump on predicted surplus.

Byline: David Steves The Register-Guard

SALEM - As soon as state economists told legislators Tuesday that they would have an extra $152 million to spend, the House and Senate budget chiefs had a plan to spend it.

The co-leaders of the budget-writing Joint Ways and Means Committee plan to put half of the latest windfall into universities and community colleges - good news but still not enough, according to education advocates.

The rest would go to public safety, the Head Start preschool program, economic and work force development, and a reserve fund, according to the plan released by Sen. Kurt Schrader, D-Canby, and Rep. Mary Nolan, D-Portland.

For many Oregonians, the big news in the forecast was the latest estimates for their kicker checks. They're on pace to reach a record $675 on average, or $285 for the median household. Those figures are up from the $633 average and $271 median projections in March.

The kickers are based on the actual revenues that come in for the 2005-07 biennium in excess of the Legislature's official projections when that budget cycle began. With just a few weeks before the biennium ends in June, revenues for the personal kicker are expected to exceed the Legislature's projections by $1.16 billion, or 22.7 percent of the taxes Oregonians otherwise would have paid for 2006.

Corporations' kicker rebates were canceled by the Legislature's already-passed plan to create a rainy-day fund. That means they will forgo $309 million in tax credits.

The latest quarterly projection of expanding revenues may have allowed lawmakers to move closer to satisfying those calling for increased spending for programs that were forced to shrink during the economic downturn earlier this decade. But it did not snuff out the session's debate about whether added revenues were required to improve education and health care.

"It helps, obviously. The problem is we're still way too short on higher education. We're still way short on health care," said House Revenue Committee Chairman Phil Barnhart, D-Eugene, who expects the Legislature to continue pursuing an increase in the corporate minimum tax - set at $10 a year since 1931 - for higher education and a rise in cigarette taxes for children's health coverage.

House Republican Leader Wayne Scott said he could not imagine the Legislature going ahead with a tax-increase push after a string of increased revenue projections that will give this assembly close to $2.5 billion more to spend than the previous one had in 2005.

"It really takes raising taxes off the table," he said.

Scott agreed that the "Healthy Kids Plan" was worth pursuing, but said majority Democrats needed to reprioritize the overall budget to find the money without raising cigarette taxes.

Nolan said she expected the latest revenue boost to allow the Legislature to put out a responsible budget for 2007-09, while isolating tax-and-spend debates and negotiations to those two fronts: whether to boost the corporate minimum to elevate Oregon's higher education system to "first class" status and whether to raise the cigarette tax for the Healthy Kids Plan proposed by Gov. Ted Kulongoski.

The latest forecast calls for the state to have $15.49 billion for the 2007-09 spending cycle.

Revenue economist Michael Kennedy said the biggest factor behind the upward adjustment was that April's tax filings revealed higher than expected incomes in 2006.

That unanticipated prosperity was not seen among wage and salary earners, whose income went up 4.6 percent from 2005 to 2006.

The big drivers of the state's rosier revenue picture were investors - with capital gains income up 10.6 percent and dividend income up 21.5 percent - and retirees, with income up 8.9 percent.

WHAT YOU'LL GET

The state's latest revenue forecast projects record-high personal "kicker" refunds in the fall

Average kicker: $675

Median kicker: $285

PLUGGING IN DOLLARS

Here's where the Legislature's two budget chiefs want

to plug in the $152 million in added revenue:

Oregon University System: $8 million more for general support (to $664 million), $3 million more for statewide services (to $107 million), $3 million more for the Engineering and Technology Industrial Council (to $31 million) and

$1 million to other programs (to $8 million)

Higher education capital construction: $25 million more to debt service and building repair (to $81 million)

Community colleges: $35 million more for general support (to $493 million) and $2 million for health care programs

Head Start: $10 million more for preschool for low-income children (to $96 million)

Public safety: $6 million more for the court system and

$4 million more for public defenders

Economic and workforce development: $5 million more

Reserves: $50 million more