LOC News
State Leaders Hear December Revenue Forecast
On Wednesday, Oregon State Economist Carl Riccadonna and the leader of the Office of Economic Analysis presented the state’s latest revenue forecast to the legislative revenue committees. Here are the topline highlights from the forecast:
- New forecast model. Riccadonna, the newly appointed state economist, has adjusted the revenue model used to produce the forecast. He felt that some of the “levers” in the model were outdated or did not reflect current economic conditions. Some of the changes to methodology are expected to more effectively help avoid the triggering a kicker. While avoiding a kicker remains a long-term goal, a kicker is still expected for the 2025-2027 biennium. It is anticipated that a personal kicker of $1.8 billion will take effect for 2025, and the corporate kicker is expected to generate $1 billion for the K-12 education system for 2025.
- General Fund resources are up from the last forecast. The budget’s Projected 2023-2025 Net General Fund Resources are $954.4 million, an increase of 2.7% from the September forecast. In addition, projected 2023-2025 Oregon Lottery resources are up $37.1 million (1.9%) from the September 2024 forecast. Projected combined Net General Fund and Lottery Resources are up 982.5 million (2.7%) from the September forecast.
- Income tax revenues are up. Personal income tax revenue is up $1.67 billion (8%) from the Close of Session Forecast (COS). Corporate tax revenue is up $1 billion (46%) from the COS. Net General Fund and Lottery resources are up $3.4 billion (10%) from the COS.
- Ending balance up significantly. The budget’s projected ending balance is up $2.3 billion from the close of session forecast. For 2025-27, the available general fund resources, which includes an increase in the beginning balance carried forward from the current biennium, are increased to a total of $37.8 billion.
- Economy slowing, but no recession…yet? The U.S. economy is slowing down, and it appears as though the country will continue to avoid recession. Inflation has moderated from 9% to somewhere between 2.5-3.5%. The goal is around 2%. Because of this, the U.S. Federal Reserve reduced interest rates by a full one-half percentage point back in September and another one quarter of 1% this month.
- Job creation and unemployment looking good. Job creation has moderated, unemployment rates are at healthy levels, and consumer spending is helping. However, the manufacturing and construction sectors are in a recession. Riccadonna did state that conditions are improving for manufacturing but whether this results in hiring in this sector remains to be seen. Furthermore, job creation, although doing generally well, is not happening evenly throughout the state.
- Housing contributing to construction sector recession. Housing starts versus completion of housing shows that Oregon is completing a lot of housing and not starting very many new projects statewide - this is resulting in higher unemployment in the housing construction sector. This also does not bode well for housing production goals in the state.
Read the full revenue forecast
Read the executive summary for the revenue forecast
Watch the revenue forecast presentation to the Legislature
Contact: Jenna Jones, Lobbyist – jjones@orcities.org
Last Updated 11/22/24