The Oregon Office of Economic Analysis has issued the latest revenue forecast, projecting an additional $1.96 billion in state revenue.
The outlook for personal and corporate income taxes has risen by $1.5 to $2 billion over the forecast horizon due to the updated model methodology. The 2021-23 personal kicker is now estimated to be $5.5 billion, and the corporate kicker is now estimated to be $1.8 billion.
The kicker tax credit goes into effect when the actual state revenue exceeds the forecasted revenue by at least 2%. An amount is then returned to the taxpayers through a credit on their tax returns.
Inflationary economic booms have not traditionally ended well, meaning not without a recession. As such it is easy to be pessimistic about the outlook for the economy, according to the Oregon Revenue Forecast Summary.
"Economic developments like last year’s goods recession, and the banking turmoil earlier this year add more fear to the outlook. However, a near-term recession is far from a slam dunk. The reasons include some nascent signs that inflation is cooling and the Federal Reserve is looking to pause its interest rate increases which limits the potential for overtightening. Furthermore, the economy is showing some signs of renewed strength as housing and manufacturing stabilize, and income growth is again outpacing inflation. All of these indicate a sudden stop in the economy in the short- term is unlikely," the Oregon Economic Forecast Summary states.
The Forecast's Revenue Outlook states:
"Available resources are expected to be up sharply relative to what was assumed in the March 2023 forecast, both in the near term and over the extended horizon. The upward revision in the outlook is based both on a stronger than expected tax filing season, as well as methodological changes made in light of fundamental shifts seen in recent years."
Gov. Tina Kotek said the Oregon Legislature must use the incoming revenue to address the pressing spending needs of the state.
“Oregonians have clear expectations for legislators to address our housing crisis, ensure that our behavioral health system is accessible in every part of the state, and set up our youngest students for success,” Kotek said. “The revenue forecast lays the path for bold leadership. We cannot afford to squander this opportunity, and I look forward to a continued partnership with legislative leaders to deliver results for all regions of the state.”
The Governor restated her call for focusing on the state’s top priorities:
- $316 million to continue and expand on the state’s response to homelessness prevention and unsheltered homelessness, and $1 billion in bonding to build and preserve more affordable housing.
- $280 million dollar investment to address the behavioral health crisis playing out across Oregon communities and support a more accessible, better staffed system of care no matter where people live.
- $120 million to improve early literacy by delivering the science of reading across all 197 school districts in Oregon to help our students learn to read and write.
In addition, the forecast provides the opportunity to address a range of other urgent issues that are impacting Oregonian’s daily lives. The figures below are in addition to those originally proposed in the Governor’s Recommended Budget:
- $64 million to address urgent water quality and infrastructure issues in communities, particularly those that are small and rural, across the state.
- $207 million to continue advancements in the state’s wildfire protection system.
- $6.3 million to open more training slots so more officers can move through the academy at the Department of Public Safety Standard and Training.
- $6.7 million to address the backlog at the Oregon Board of Parole for updating the state’s sex offender registry.
Senate President Rob Wagner (D-Lake Oswego) released the following statement:
"We have an incredible opportunity this session to fund access to health care, stronger public schools, job training and behavioral health treatment that will improve the lives of people all across Oregon. It is critical all 30 state senators are here to have a say and vote on how we invest this money to the maximum benefit of Oregonians. Senate Republicans must return so we can seize this momentous opportunity."
Oregon House Speaker Dan Rayfield (D-Corvallis) issued the following statement after the release of a healthy revenue forecast:
“We were elected to address the top issues Oregonians care about most: homelessness, behavioral health, education, community safety, and access to healthcare. Today’s revenue forecast affirms our plan to move a responsive, sustainable budget that prioritizes these key issues.
“Despite today’s forecast, we know that working families are still struggling with the lingering effects of inflation. It’s more critical than ever that we use state dollars wisely and in a way that leads to real outcomes.
“We have to stay focused on a budget that maintains existing services, and invests in housing, healthcare, good-paying jobs, and education–while at the same time, setting ourselves up well for future needs. I look forward to continuing our work to finalize a budget that responds to the priorities Oregonians sent us here to deliver on.”
The Oregon Economic Forecast provides information to planners and policy makers in state agencies and private organizations for use in their decision making processes.
The Oregon Revenue Forecast opens the revenue forecasting process to public review. It is the basis for much of the budgeting in state government. The forecast reports are issued four times a year: March, June, September, and December.
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