The latest forecast of Oregon revenue ticked up slightly, cutting the estimated budget shortfall by almost $200 million.
The Office of Economic Analysis presented its March revenue forecast on Wednesday to the Senate Finance and Revenue Committee. In December, total state revenue for 2017-19 was estimated at $20.8 billion. The March forecast improved that to $21.0 billion.
Oregon revenue remains in the economic “sweet spot,” according to state economist Mark McMullen: growing faster than expected but not so fast as to force a kicker payback to taxpayers. Personal income is down slightly from the end of session 2015 forecast, but corporate taxes have grown enough to force an estimated $36.2 million corporate kicker for K-12 education in 2017-19.
Combined general fund and lottery resources are up $219 million from the 2015 end of session estimate. Although state income is growing, it isn’t growing fast enough to keep up with the state’s increasing expenses. To maintain current services would require an extra $1.6 billion.
“Today’s revenue and economic forecast shows that our economy continues to do well and that Oregon is a great place to start and run a business,” said House Majority Leader Jennifer Williamson (D-Portland) in a statement. “Unfortunately, the forecast also highlights how broken our revenue system has become.”
Oregon’s heavy reliance on income taxes limits its ability to keep pace with expenses in the good times and makes state budgets vulnerable to economic downturns.
“We need to fix our revenue structure,” said Senate Majority Leader Ginny Burdick (D-Portland) in a statement.