On August 30, the Office of Economic Analysis (OEA) presented its first economic and revenue forecast of the 2023-2025 biennium. There is still a high degree of uncertainty out there but compared to 18 months ago things look as though we will no longer enter a recession. The baseline economic and revenue outlook stable, which is encouraging, and the outlook appears to be steady.
The good news is that inflation is slowed from 9 percent last summer to 3-4 percent today. The bad news is getting the inflation rate down to the Federal Reserve’s 2-percent target is harder.
Oregon’s population growth is slowly returning. Population growth has been one of Oregon’s key advantages because migration growth allows local businesses to hire and expand at a fast rate. New data shows that the Portland metro population may be stabilizing even as the urban core continues to lose residents. Migration is needed to offset Oregon’s natural population decline. Deaths are expected to outnumber births in the state for the next decade and Oregon’s fertility rate is the 5th lowest in the country.
Personal income tax withholdings have picked up in recent weeks. Withholdings are now in line with what is typically seen during economic expansion. With two tax filing seasons to come, there remains a lot of uncertainty with the 2023-2025 outlook. Resources for this biennium are raised primarily due to a stronger corporate outlook, plus a larger beginning balance. Future biennia are raised approximately 2.5%, or about $1 billion.
And now to the numbers.
- Personal income tax revenue is up $5.1 billion (24.8%) from the 2021 Close of Session estimate. Personal income tax revenue is up $43.9 (0.2%) from the 2023 Close of Session estimate.
- Corporate tax revenue is up $1.8 billion (134.9%) from the 2021 Close of Session estimate. Corporate tax revenue is up $320.9 million (14.4%) from the 2023 Close of Session estimate.
- General Fund gross revenue is up $403.1 million (1.6%) from the 2023 Close of Session estimate. Net General Fund and Lottery resources are up $446.8 million (1.3%) from the 2023 Close of Session estimate.
- Projected combined net General Fund and Lottery Resources are up $891.8 million (2.6%) from the June 2023 forecast.
- For the 2023 tax season, the personal income tax kicker is expected to kick to the tune of $5.6 billion. And $1.8 billion or corporate tax revenue is projected to be dedicated to the K-12 education spending in 2023-2025.
- At this time there is no personal income tax kicker expected in 2025. The corporate tax kicker is expected to kick to the tune of $320.9 million to be dedicated to the K-12 education in 2025-2027.
For more details, you may review the economic and revenue forecast reports linked below.Economic ForecastRevenue Forecast