SALEM - Oregon's economic rebound is boosting state government revenue as economists project higher profits - and taxes - from corporations, legislators were told Thursday.

A quarterly update by Tom Potiowsky, chief state economist, projects general fund-lottery revenue for the 2003-05 budget will be $142 million higher than was estimated in the last forecast, in March.

Most of the rise is due to a $75 million increase in expected corporate income tax collections.

Oregon's job growth in the past six months was at the highest rate in four years, Potiowsky said in his report to the House Revenue Committee.

"The job market finally appears to partake in the economic recovery," Potiowsky said. "With a strong outlook for the U.S. economy in 2004, Oregon should follow the same course."

Economists estimate revenue for the current general fund-lottery budget will total just over $11 billion, and leave a slightly more than $100 million ending balance in mid-2005.

The estimated revenue rise is relatively small. But the outlook is a stark contrast to the 2001-03 budget period, when income tax collections plunged by more than $2 billion and forced lawmakers repeatedly to slash spending.

Potiowsky raised his forecast for the state's net share of lottery revenue by $46 million, to $769 million, in the current budget. He said the change mainly is due to an upcoming reduction in commissions that the lottery pays to video poker retailers and to the agency's administrative savings.

Local schools will get an additional $8.3 million in state aid for the 2004-05 school year because of the new budget forecast. The 2003-05 state schools budget has a provision that if economists predicted an ending balance of more than $100 million in the total state budget by June 2004, schools would get the money above $100 million.

Potiowsky estimated the state will end up with $108.3 million on hand when the budget period ends in mid-2005.

He is predicting job growth for Oregon of 1.4 percent this year and 2.1 percent in 2005. He said the high-tech electronics industry, hard hit by the recent recession, should begin adding jobs and show a 3-percent gain in Oregon next year after continuing a net employment decline this year.

Potiowsky also foresees job growth this year in construction, manufacturing and retail trade. But he also emphasized there are major risks to forecasting, including Iraq, terrorism threats and energy prices.

Uncertainty about the Iraq transition, North Korea tensions and "code orange security alerts all weigh heavily on business and consumers," the report says.