Oregon Revenue Collection Forecast for 2009-11 Sliced by $183 Million

SAN FRANCISCO — Oregon revenue collections continue to fall short of expectations, according to the state’s latest forecast.

The Department of Administrative Services cut its general fund revenue forecast for the 2009-11 biennium by $182.8 million Monday to $13.2 ­billion.

The cut to the forecast follows a similar cut in December. The expected revenues are $365.4 million less than forecast when lawmakers closed their legislative session in September last year.

“Today’s revenue forecast shows that this will continue to be a long, slow economic recovery,” Democratic Gov. Ted Kulongoski said in a statement.

The Department of Administrative Services said the shortfall is primarily due to decreasing personal income tax collections, which are the state’s biggest source of revenue and are down by 2.8% from the close of session ­forecast.

The new forecast leaves the state facing a deficit of $106.3 million in the current biennium.

Forecasters expect Oregon to finish the biennium with $134.7 million in its rainy-day fund and $183.3 million in its education stability fund.

The current deficit projection amounts to about a third of those official reserves, and lawmakers have signaled that they intend to spend them.

“Although revenues are down for the current biennium, the shortfall facing the state is manageable with ending balances and reserve funds,” Kulongoski said. “I will continue to work with the legislature to find a prudent and responsible path to balance this budget.”

Oregon voters last month approved $727 million of tax increases for higher-income individuals and businesses to help balance the state budget.

Business groups collected signatures to force a public vote on the tax hikes after lawmakers closed a $3.8 billion budget gap with a combination of federal stimulus dollars, the tax increases, and $2 billion of spending cuts.

Republicans, who are in the minority in both house of the legislature, said the revenue forecast shows that the Democratic-controlled legislature needs to focus more on job creation, which they say is not helped by tax hikes.

“Fewer jobs mean less revenue,” said Senate Republican Leader Ted Ferrioli, R-John Day. “This legislature must address the job shortfall if they ever want to see the end of budget shortfalls.”

The state’s forecasters said they expect job growth to pick up slowly in the coming year. In December, the state posted its first meaningful payroll growth since November 2007.

Its jobless rate remained a full percentage point above the national average at 11% in December, but it is down by more than a full point from its peak of 12.2% in May 2009.

Kulongoski said the budget picture for the next biennium is much harder to solve, given a slow forecast for economic recovery and the expiration of federal stimulus programs.

“Today’s shortfall translates into hundreds of millions more in revenue deficits over the coming years, leaving Oregon approximately $2 billion short to fund services at their current level in the 2011-2013 biennium,” he said.

For reprint and licensing requests for this article, click here.
Oregon
MORE FROM BOND BUYER