Oregon state economist Tom Potiowsky last week said the state’s economy is falling into “a pit” and dragging down revenues at an increasing rate.

The state will collect $855 million less in revenue for the current 2007-2009 biennium than projected when the $15.1 billion budget was approved, Potiowsky forecast. That’s $142 million worse than his December prediction of a $713 million gap.

He cut his revenue forecast for the upcoming biennium by $1.7 billion, which means the government will have to find a way to fill a $3 billion hole in its current-services budget for 2009-2011.

The reduction in revenues also reduces the amount of bonding Oregon will be able to do in the upcoming biennium, said state Treasurer Ben Westlund.

He said the revenue decline means the state will only be able to afford $936 million of new general fund-backed debt in the upcoming biennium, down from previous estimates of $1.1 billion. The amount of lottery borrowing capacity fell to $271 million from $400 million under the new forecast.

Oregon’s general obligation bonds are rated AA by Standard & Poor’s and Fitch Ratings and Aa2 by Moody’s Investors Service.

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