Wednesday, the Office of Economic Analysis presented the second Economic and Revenue Forecast of the biennium to a joint meeting of the Senate and House Revenue Committees.

In short, Oregon received an early holiday gift. As of yesterday, the Legislative Assembly was facing a $373 million General Fund shortfall for the current biennium. However, today’s forecast reduces that gap to just $63 million—an 83% improvement. This turnaround is largely due to revised corporate income tax returns from several major Oregon companies, along with gains in other revenue sources.

Looking ahead, there are still six more forecasts before the biennium ends. Economists anticipate a moderate economic uptick in 2026, driven by expected interest rate cuts from the Federal Reserve.

That said, economists cautioned that this forecast comes with uncertainty. Due to the federal government shutdown, key employment data from the U.S. Bureau of Labor Statistics was unavailable. Since Oregon relies heavily on income taxes, this missing data adds risk to the projections. While hiring has slowed, wages are rising.
The risk of a recession remains, but it appears to be diminishing with time.

Another factor to watch is the U.S. Supreme Court’s upcoming decision on President Trump’s tariff policy. Oregon, along with other states, has challenged the President’s authority to impose tariffs unilaterally. Given Oregon’s dependence on trade, the ruling could significantly impact the state’s economy.

Revenue Highlights
•     2023–2025 Biennium (compared to 2025 Close of Session Forecast):
•     Personal income tax revenue: ↓ $237.4 million (-0.8%)
•     Corporate tax revenue: ↓ $99.8 million (-2.9%)
•     General Fund gross revenue: ↓ $318.8 million (-0.9%)
•     Net Lottery resources: ↓ $635.9 million (-1.6%)
•     No personal or corporate kicker projected for 2027–2029
•     2025–2027 Biennium (compared to September 2025 forecast):
•     Net General Fund resources: ↑ $309.5 million (+0.8%)
•     Lottery resources: ↑ $9.2 million (+0.5%)
•     Combined General Fund and Lottery resources: ↑ $318.8 million (+0.8%)
 

Reserves
•     Education Stability Fund: $1.04 billion
•     Rainy Day Fund: $1.93 billion