The Oregon Office of Economic Analysis issued its quarterly revenue forecast on Tuesday, informing lawmakers that state revenues for the 2017-19 biennium are expected to exceed March projections by $187 million. This lowers the deficit between projected revenues and current service levels for the upcoming biennium from $1.6 billion to nearly $1.4 billion. The net revenue projections would have been much higher, but the economists are now projecting that both the corporate and the personal income tax kicker will be triggered. Oregon's kicker law requires a tax rebate when the state's general fund grows at least 2 percent larger than projected.
Economists anticipate revenues will exceed the threshold for the personal income tax kicker by $69.9 million, and $408 million will be returned to tax payers as an income tax credit for filings in 2018.
However, because the margins are so small, that kicker is not a certainty. The state economist put odds of not triggering it at 1 in 3. A $75.5 million corporate kicker is also possible, but will not be returned or credited to corporate taxpayers because in 2012 Oregon voters directed future corporate kicker money to K-12 education spending.
The projected increases in overall revenues are largely the result of higher April income tax revenues, estate tax increase and an increased ending balance. The state’s unemployment rate is still below the national average, but job growth is slowing significantly throughout the state and across industries. Lottery revenues are projected to increase $3.6 million for the remainder of the 2015-17 biennium, and an additional $9.6 million for the 2017-19 biennium. The May forecast provides the final budget number for legislative leadership and the Joint Ways & Means Committee to use in finalizing the legislatively-approved budget for the 2017-19 biennium. The forecast was presented to a joint meeting of the House Revenue and Senate Finance and Revenue committees, chaired by Representative Phil Barnhart (D-Eugene) and Senator Mark Hass (D-Beaverton) respectively. The next forecast will be released August 23.
Contact: Wendy Johnson, Intergovernmental Relations Associate – firstname.lastname@example.org