MENLO PARK, Calif. — Oregon’s budget woes have worsened with the state economist’s office forecasting a more than 3% drop in revenue due mainly to a dearth in tax collections.

Gov. Ted Kulongoski said in a statement he will ask state agencies to start planning cuts to help reduce spending by 8% for the nine months left in the current budget cycle.

The September revenue projection for the two-year budget cycle ending in 2011 fell $377.5 million to $12.3 billion, according to a report last week from the office of economic analysis.

The revenue report blamed the 3% shortfall mainly on an expected plunge in personal income taxes in light of a major downward revision to the state’s economic outlook.

“Just as with the U.S. economy, Oregon is also showing signs of a slowdown or 'pause’ in economic activity midway through this year,” the office said.

The University of Oregon index of economic indicators and the Federal Reserve Bank of Philadelphia’s state coincident indexes point to economic activity easing, it said.

Housing sales in Oregon have fallen and its unemployment rate has remained around 10.5% over the past eight months.

Minority Republicans called for an emergency session to tackle the budget problems. They said the Democratic-led legislature should refrain from another round of across-the-board cuts to all agencies.

After the June revenue forecast, state agencies were told to cut 9% from their budgets.Schools appear safe. The governor said he would use federal funds to hold funding levels for K-12.

The state’s general obligation bonds are rated AA by Standard & Poor’s, Aa1 by Moody’s Investors Service and AA-plus by Fitch Ratings. All three agencies assign a stable outlook.

Standard & Poor’s said in a recent report that the state’s reliance on personal and corporate income tax revenues for operations “constrains credit quality.”

So far this year, Oregon has sold $62.5 million of bonds in four issues, according to Thomson Reuters.

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