PHOENIX - Oregon's net general fund revenues are now projected to be up $371 million from the March forecast, according to the latest revenue forecast released Tuesday.
The latest forecast from Oregon’s Office of Economic Analysis projects that the state will collect almost $18.5 billion of general fund revenues for the 2015-17 biennium, up $371 million from the March 2017 forecast, and $2.4 billion relative to the 2013-15 biennium. A $311 million increase in personal income tax collections is projected as the single largest driver of the increase from the March projection.
“As the peak season for income tax collections winds down, it has become clear that Oregon has enjoyed a good year, OEA said in the projection documents. “Although revenue trends are not as strong as what was seen earlier in the economic expansion, Oregon and its Western neighbors continue to lead the way in terms of revenue growth.”
The projected revenue growth is strong enough that it could potentially cost the state a good chunk of money in the 2017-2019 biennium due to Oregon’s “kicker” law. That provision provides income tax refunds to Oregon taxpayers if revenue growth is 2% or more above the projection provided at the close of the legislative session. General fund revenues are now projected at 2.4% above the 2015 close of session estimate.
“If this holds through the end of the biennium, an income tax kicker of $408 million would be triggered for tax year 2017,” OEA said, adding that the occurrence was far from a sure thing.
Oregon is facing a roughly $1.6 billion two-year budget deficit, causing the state legislature to consider steep cuts to transportation, education, and health services. Gov. Kate Brown, a Democrat, has come out against the cuts and has called for an “all hands on deck” approach to reducing cuts to important services as much as possible. Last month she announced that she was issuing an executive order implementing a statewide hiring freeze. Brown sounded a positive but restrained tone in her reaction to the latest projections.
"This is the good news: our economy is humming; unemployment is low; and state revenue is a higher than expected,” Brown said. "Here's the bad news: this doesn't change the fact that Oregon still has a structural deficit. This means in the long term, whether the economy is good or bad, the state will struggle to pay for education, public safety, child welfare, and health care. We now have less than two months before the end of this legislative session. The stakes couldn't be higher. I will continue to hunt for every penny and rein in the costs of state government. But, without definitive action by the Legislature 350,000 Oregonians could lose health care, hundreds of teachers could lose their jobs, and college could become even more unaffordable.”
The next revenue forecast is due out in August.