June 2013 Revenue Forecast released; significant increase to state budget
Friday, May 17, 2013
On May 16, the state Economic and Revenue Forecast was released and overall state revenues available for the 2013-15 biennium increased by a net of $271.5 million. This large uptick in monies available was due to larger than expected tax collections and continuing improvements in Oregon’s economy. Total state revenues projected to be available during the upcoming budget cycle are approximately $16.9 billion, while the possibility of a $20 million corporate tax kicker is better than a “50-50 shot.”
Oregon’s state economist, Mark McMullen, noted that the state is experiencing slow and steady economic growth; he attributed the large jump in projected revenue to two primary factors. First, Oregon tax returns that were received through the April deadline included actual tax collections that outstripped even the most optimistic projections. Second, Oregon’s economy continues to slowly add jobs and the unemployment rate has continued on a downward trend. Anecdotally, McMullen also noted that the business leaders from whom he hears are talking about a renewed sense of optimism in Oregon’s economy.
The June Revenue Forecast is a significant milepost in each legislative session. This is the final set of revenue numbers that legislators will use to produce a balanced budget for the 2013-15 biennium by the anticipated session adjournment date of June 28. Advocates for public education, human services and public safety will quickly put forward their strongest arguments for budget enhancements as a result of these additional revenues.
In anticipation of an improved economic picture, Governor Kitzhaber released a revised budget proposal on May 15. It includes additional reforms to the Public Employees Retirement System (PERS) that would bring total savings in the next biennium to more than $900 million and a revenue package to raise an additional $200 million. He then challenged lawmakers to come to the table and negotiate his plan to enhance Oregon’s budget by the end of this week. Absent a bi-partisan agreement on the budget, the governor said there would be no choice but to use the current state monies available, possibly leading to cuts and reductions for some sectors of Oregon’s budget. At press time for this week’s Legislative Highlights, legislative leaders continue to have conversations about a larger budget “deal,” but no firm commitments have been made.
With the encouraging financial news out of Salem, OSBA and other K-12 education advocates will urge the Legislature to increase their investment in public education from the current $6.75 billion ($6.55 State School Fund and $200 million in PERS savings). Many school districts will experience some budget reductions under this proposed budget and the Legislature still has time to make sure that no school district in Oregon will have to make cuts to teaching staff or school days.
State economists presented the forecast to a joint meeting of the House Revenue Committee and Senate Finance and Revenue Committee May 16 at the State Capitol. For more details, click on the links below: