Updated at 3:38 p.m.

It's looking more likely that Oregon taxpayers will receive a rebate on their state taxes in two years, thanks to the continued strength of the economy, and changes to federal and state tax laws.

State economists delivered the first kicker prediction of this budget cycle on Wednesday, during a quarterly revenue forecast for lawmakers in Salem. The fate of the kicker is not official until the August 2019 forecast, after the budget year ends, so taxpayers wouldn't feel its effect until 2020.

If revenues come in $185.6 million below the latest forecast, the state could avoid the kicker.

"That $185 million is still razor thin in the context of everything," said legislative revenue officer Chris Allanach, who pointed out that dollar figure is roughly 1 percentage point above the threshold to trigger a kicker.

Under Oregon's unique kicker system, the state issues personal income tax rebates when it collects 2 percent more revenue than expected. The state returns all the extra money, even if it exceeds 2 percent. As of Wednesday, economists estimated that could be $555 million.

Tax revenues from the state's prolonged economic rebound have repeatedly overshot economists' expectations, and this would be the third consecutive kicker rebate. Taxpayers received a rebate worth a total of $464 million when they filed their 2017 returns this year, and also got one on their 2015 taxes. The median kicker forecast for this year was roughly $89. The state issues the rebate as a credit on taxes owed, so only people who pay taxes benefit.

Oregonians to get $464 million tax rebate

The continued growth in tax revenues still isn't sufficient to plug the gaping hole in the next two-year budget that some lawmakers and Gov. Kate Brown have predicted. Last month, Brown said she expects the state will be $2 billion short, largely due to a shortfall in the state's Medicaid budget.

In addition to the good economy, economists from Oregon's Office of Economic Analysis also pointed to new federal and state laws that boosted the revenue outlook. The federal tax overhaul is expected to increase state tax receipts for a variety of reasons. State lawmakers also passed a plan earlier this year to ensure the state taxes corporate money brought back from overseas under the federal changes.

Another state tax change passed this year, Senate Bill 1528, will not be to blame if Oregon does end up issuing a kicker rebate, state economist Mark McMullen said. The state largely copies federal tax law, and the bill prevented Oregon from replicating a new federal business tax deduction passed by Congress.

McMullen pointed out that the kicker will be based on how closely revenues track with the economic forecast around the end of the 2017 legislative session, well before either the federal or state tax laws were passed. According to McMullen, Senate Bill 1528 did not affect the 2019 kicker outlook because it canceled out a potential state revenue loss tied to the federal tax overhaul in late 2017. Economists could not have anticipated either of those changes last spring.

"As much as I'd like to blame the errors on the policymakers here, this one I think we have to own," McMullen said.

-- Hillary Borrud

503-294-4034; @hborrud