Oregon’s most recent revenue forecast was released last week during a meeting at the state capitol in Salem. I attended as part of my duties as a member of the House Revenue Committee. Members of the Senate Revenue Committee were also present.
According to representatives of the Oregon Office of Economic Analysis, the state's job market is performing well, compared to the national average. Nationally, the growth in personal income is slowing. That particular trend has yet to hit Oregon. But there are reasons for concern overall.
Weakness in the American manufacturing sector is spreading. Recessionary fears are rising, but remain low for now.
Net corporate tax collections have increased for the state, along with video lottery sales.
This forecast summary put together by the Legislative Revenue Office highlights several of the state’s recent economic trends. Personal income taxes for the second quarter of the year are up $104.7 million, a 4.7 percent increase from the most recent revenue forecast last June. Similarly, corporate income tax collections for that same period are up $7.9 million, a 4.3 percent increase.
It isn’t all good news, though—personal income tax is down $0.3 billion, a decrease of 0.2 percent, and employment is down almost 4200 jobs from June 2016.
Those new figures were also compared to what they were at the end of the 2015 legislative session. Personal income tax revenue to the state is up $0.3 million since the summer of 2015. Corporate tax revenue is up $10.8 million, or about one percent, since then. Net general fund and lottery resources coming into state coffers are up by a total of $129.3 million since we adjourned in July 2015.
Although Oregon taxpayers did receive a “kicker” tax credit on their returns this year, they are not currently projected to receive one for 2017. The corporate tax “kicker” dedicated to K-12 spending is not presently expected to produce any revenue for the 2017-19 biennium.
The projected net general fund resources for the 2015-17 biennium are down $2.2 million from the June forecast. However, lottery resources are up $8.3 million for that same time period. As such, the projected combined net general fund and lottery resources are up $6.1 million from June.
Oregon’s projected ending balance is down $64.8 million, a 20 percent decrease from the 2015 end-of-session estimate. The ending balance is down 2.7 percent, or around $2.2 million, since the June 2016 revenue forecast. A bright spot is that the state’s rainy day fund is projected to receive an additional $180.7 million after the end of the 2015-17 biennium next summer.
The revenue committees also heard a report regarding the default sunsets of various tax expenditures. Approximately 14 tax expenditures are scheduled to sunset, absent legislative action. Most are set to expire in the years 2021 and 2022.
We were also provided with information about the estimated cost of extending various tax credits. There are 16 total tax credits that are scheduled to be reviewed by the 2017 Legislature. The cost of extending them is estimated at $25.4 million for the 2017-19 biennium, and climbs to $79 million for 2019-21 and $119.5 million for 2021-23.
Eight tax credits are scheduled for legislative review in 2019. Extending them will cost $70.2 million for 2019-21 and $141.9 for 2021-23. An additional nine tax credits are set for review in 2021. The cost of extending them will be $25.4 million in 2017-19, $149.2 million in 2019-21 and $317.6 million in 2021-23.
To watch video footage of the joint House and Senate revenue committee meeting, click here.
Rep. Gail Whitsett has represented House District 56 since 2013. The district includes Lake and Klamath counties.
Representative Gail Whitsett
House District 56