In The Money: Oregon’s Latest Revenue Forecast | New
Oregon taxpayers will likely see $ 1.4 billion in refunds due to the state’s strong tax collections.
The positive economic news came on Wednesday afternoon, May 19, from Oregon economist Mark McMullen who presented the latest state revenue forecast to state lawmakers.
“Economic growth is increasing as the pandemic diminishes.” The May Oregon economic forecast summary indicates. “Thanks to federal tax policy, consumers have higher incomes today than before COVID-19. Now they are more and more authorized and feel more and more comfortable to return to activities. limited by a pandemic like going out to eat, on vacation, having a haircut, etc. because short-term economic growth is the strongest in decades, if not generations. “
Oregon’s labor market is expected to return to full health in the next 2021-2023 biennium, according to forecasts.
“With the good near-term outlook for consumer spending, job growth is in the foreground so the biggest job gains will occur this summer and fall. almost 4% in 2023 ”, we read in the summary.
Economic forecast summary says a job gap persists in the labor market, but Oregon household incomes are 20% higher than before COVID-19 hit, largely due to temporary federal measures put in place.
“Excluding direct federal aid, revenues are back to pre-pandemic levels and are expected to grow 6-7% this year, however, with such a strong consensus in the near term, the risks are that the supply will fail. may not keep pace with demand “forecast states. “The road ahead may be bumpier than expected, although the trajectory is up.”
Supply constraints have already emerged in semiconductors, lumber and rental cars, with more bottlenecks on the horizon, according to forecasts. Work is another key factor.
“Attracting and retaining workers is already much more difficult than expected given that the economy went through a severe recession last year,” the forecast summary reads. “There are a variety of concurrent factors that affect the number of workers available, including the strength of household finances, the virus itself, and the lack of child care or in-person schooling.” While the temporary constraints from the pandemic will ease in the coming months, the job market is expected to remain tight for the foreseeable future largely due to demographics and the large number of baby boomers retiring. “
The forecast summary also indicates that there is potential for a significant revenue surprise (up or down) in the final weeks of the biennium.
“This suggests that it would be wise to leave a large closing balance.” the summary reads. “Additionally, the size of the kicker credit for next year may change significantly from the current estimate when the kicker is certified this fall.”
Read the full summary attached.
Governor Kate Brown released the following statement regarding the state’s revenue forecast in May:
“Today’s revenue forecast reaffirms that Oregon’s outlook for a rapid economic recovery from the COVID-19 pandemic and historic wildfires of last year remains strong. With strong government revenues expected over the next three biennia, coupled with historic federal investments from the US Rescue Plan and the US Jobs Plan, we have a tremendous opportunity for transformational change.
“Our expected public revenues will allow us to fully fund the core budgets of our public agencies; make priority investments through the Racial Justice Council; move forward with a school budget of $ 9.3 billion; fully fund the Student Success Act; and making sure no one gets kicked out of Oregon’s health plan, among other things. These investments will help the people of Oregon recover from the COVID-19 pandemic and move Oregon forward to a future where fairness is achieved and all are equal.
“As we near the end of the legislative session, I urge the legislature to pass a budget that reflects these investments – a budget that Oregon can be proud of and that will continue to push us forward – while setting aside additional dollars.” of the General Fund. . With a strong ending fund balance, we will be able to leverage these Crown dollars with the additional federal resources that present themselves to us, opening up tremendous opportunities for us to help families and businesses across the country. ‘Oregon to continue to recover.
“And as we recover, we must work to create a fairer and more equitable Oregon, supporting communities that have been disproportionately affected. By anchoring our recovery efforts in racial equity, we can support the economic growth of all communities in Oregon. “
Revenue forecast documents can be found on the Oregon Legislative Assembly website.