State tax rebates balloon to record.

Byline: Diane Dietz The Register-Guard

An unexpected bump in the Oregon economy means the state will send a record $297 tax rebate back - by check - to the typical taxpayer this December.

And tax revenues were so high that the state will chug into its next two-year budget cycle with an additional $1 billion in reserves.

"We are constantly surprised by the resilience," acting state economist Dae Baek told a gathering of lawmakers Friday.

So why aren't pinot noir corks popping all over the state?

Among lawmakers, economists and even some people on the Eugene streets, there's an uneasiness about the future that's dampening enthusiasm even with this promised infusion of spending money.

Linda Vonderheit, a 56-year-old Eugene office manager, said her rebate or "kicker" check will go straight into savings. She said she believes in savings, "and we'll probably have to pay taxes at the end of this year."

Bob Wright, a 63-year-old Eugene accountant, also will pad his savings with the windfall check. "That captures me pretty well - boring," he joked.

Still, some people are eager to spend their kicker, which is a sum of money returned to Oregon taxpayers - in accordance with the state constitution - when unexpected infusions of tax money arrives in the state coffers.

"If I got $250 in the mail Dec. 1, I would spend it on extra stuff - frivolous stuff, go out to dinner, food, things I don't need. Shoes," said Hillary Darland, a 33-year-old mother of four.

About a dozen lawmakers who gathered Friday to hear the state economic forecast - and news of the kicker - were as subdued as the dollar clutchers.

Despite robust personal earnings in Oregon of late, some lawmakers worried about the national housing credit crisis, the nation's growing debt to Chinese financiers and the uncertain future of energy costs.

Although Oregon's housing prices have increased during the past couple of years, the state hasn't seen the explosive appreciation in other states - and that's going to help on the downside, Baek said.

Oregon home prices are still on a gentle upward slope, he said. "As a consequence, we have a little bit less problem with delinquencies."

And the Federal Reserve is acting to contain the credit upset to the financial markets and may be able to keep the trouble from spilling over to larger economy, he said.

The economists predicted that the state would take in $15.5 billion in revenue in the next two years, compared with $14.1 in the current biennium.

Sen. Rod Monroe, D-Port<302>land, would not be reassured.

"Given what's happened to the rest of the nation, and given that Oregon is part of the national economy, given the fact we often follow what happens to the national economy, that ought to be a concern of ours," he said.

Another wildcard is energy. "No one can rule out a sharp increase in oil prices. No one can rule out the possibility of gas prices reaching over $4 (per gallon)," Baek said.

Rep. Phil Barnhart, D-Eugene, cautioned against too much glee following the good economic numbers, reminding fellow lawmakers about a $2.5 billion drop in state revenue that happened in 2001-2003 biennium - and caused painful budget cuts.

"While a reserve of $1 billion looks like a lot of money, in reality it isn't. It's a very modest reserve," he said.

The kicker rebate to be distributed in 1.6 million checks come December totals a historic $1.1 billion.

But, on the individual level, the big sum breaks down to modest checks for most Oregon taxpayers.

The average check is $612, but huge checks going to wealthy individuals are factored into that sum. The median - or typical - check will be $297. And people earning less than $20,000 will see checks less than $70.

Christmas will be green at the homes of the top 10 percent of Oregon earners - or those getting $100,000 or more.

"They're going to get 50 percent of that $1.1 billion in their mailbox, but that's because they paid 50 percent of the total $5.7 billion in tax for the year," senior economist Michael Kennedy said.

Eugene resident Margaret Hansen, 32, warmed to the idea of even a couple hundred bucks arriving among Christmas cards this year.

"Ah. That would be nice, wouldn't it?" she said.

Her son, Lowden, a fourth-grader at Meadowview Elementary School, was already thinking. "If I had $250, I'd buy myself a Wii," he interjected.

"He knows exactly how much they cost: $249. He's been saving his money," Margaret said, and then to Lowden: "Unfortunately, you don't get an income tax (rebate)."