State Revenue Forecast (2/16/18)
Today the Office of Economic Analysis presented its third economic and revenue forecasts of the 2017-2019 biennium. Oregon's economy continues to grow. However, Oregon's overall growth is slowing with the loss of nearly 9,300 jobs and personal income down nearly a half billion from the December forecast. This forecast is one that is marked with a great deal of uncertainty - made all the more difficult because the market correction that took place last week. The other primary driver of the uncertainty is due to the federal Tax Cut and Jobs Act (TCJA) that was recently passed by Congress. Specifically, it is difficult to predict the behavior of individuals and corporations based on their accountants advice. For example, it is difficult to predict what corporations who repatriate their offshore savings will do, whether they will reinvest that money, buy back stock, hand out large dividends and so on. As a result, there are a lot of unknowns.
It should also be pointed out that this forecast is based on CURRENT LAW. The Legislative Assembly is working on a bill, SB 1529, that would change statute, in response to the (TCJA) that is predicted to result in a net $240 million additional to state revenue.
Projected 2017-19 net General Fund Resources are up $69.8 million (0.3%) from the December forecast. Projected 2017-19 Lottery resources are up $29.3 million (2.1%) from the last forecast. Combined net General Fund and Lottery resources are up $99.1 million (0.5%) from the December forecast.
Personal income tax revenue is up $27.4 million (0.2%) from the Close of Session (COS) estimate. Corporate tax revenue is down $98.8 million (9-9.2%) from the COS forecast (due to TCJA). Net GF and Lottery resources are up $255.4 million (1.2%) from the COS forecast.
At this point there is no personal or corporate kicker projected for the 2019-2021. However you will recall that you will get a personal income tax kicker in the form of a tax credit for your Oregon income taxes for 2017. The amount the kicker total is approximately $463 million.
Interestingly, Oregon's Rainy Day Fund and Educational Stability Fund combined with General Fund reserves are currently at $1.3 billion representing 7% of the current General Fund and is expected to increase to $1.54 billion, or 7.9% of the GF, by the end of the biennium.
Bottom line at this point, there is still a lot of volatility with the stock market, behavioral actions that will take place due to passage of TCJA, as well as geo-political issues like North Korea.
2018 Legislative Session
The 2018 Legislative Session has begun with a constitutional sine die date of March 11th. The SDAO government affairs team is in Salem working on behalf of our special district members. The SDAO Legislative Committee met on January 24th to review bills that could potentially impact our members.
Our bill summary and bill tracking sheet are updated each Monday during session. We encourage you to review this information.
Other items of interest include:
2018 House Speaker Appointments
2018 Senate Committee Appointments
2018 Joint House and Senate Committee Schedule
2017 Legislative Report