Oregon’s economy is still growing but the possibility of a recession is “pretty much a coin flip,” said State Economist Mark McMullen.
The quarterly Economic and Revenue Forecast presented Wednesday to the Legislature was more cautious than recent ones. McMullen said Oregon has nearly equal chances of a mild recession and a soft landing with slow growth in 2023.
For school board members, this economic forecast gives a preview of the direction of state spending discussions in 2023, but it has little immediate effect. The Legislature will really dig into the specifics for 2023-25 based on the forecast that usually comes out in February.
Still, a continued positive outlook helps bolster education advocates’ case that Oregon needs to invest more in the State School Fund to provide a high-quality education for all Oregon students. Recession projections will turn budget writers more cautious.
Oregon has built up its reserves, though. At the end of the 2021-23, the Education Stability Fund will have $704 million and the Rainy Day Fund will have $1.3 billion.
Net general fund and lottery resources for 2021-23 increased nearly $600 million since the last forecast in June. Overall, net revenue is up by $5.7 billion since the close of the 2021 session, an increase of almost 21%.
When revenue exceeds the budget forecast by more than 2%, Oregon taxpayers get money back. The personal kicker is projected at $3.46 billion, and the corporate kicker is projected to be $1.1 billion. The corporate kicker is dedicated to schools.
But the September forecast for 2023-25 net revenue fell $26 million from the June forecast. State agencies are just now beginning to create their budgets for the next biennium.
The next forecast in November will be the basis for the new governor’s budget proposal, which kicks off the 2023-25 budget debate.