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Economists predict slight uptick in Oregon revenue

May 28, 2014

By The Associated Press

Economists predict slight uptick in Oregon revenue

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SALEM — Improving employment will lead to a slight uptick in Oregon state revenue, inching closer to the threshold that would trigger “kicker” tax rebates for individuals, state economists said Wednesday.

Economists project the state will collect $55 million more than was expected three months ago, according to the quarterly revenue forecast delivered to state lawmakers. The increase is driven primarily by unexpectedly strong job growth, especially in the housing industry.

It was the third straight quarter showing a slight uptick in revenue.

“As a result, no emergency budget cuts or credit issues are going to arise here like we're seeing in some of our other income-tax-dependent states,” said Mark McMullen, the state economist.

With more people working, combined with tax increases enacted during a special session last year, projected personal income tax collections were $74 million shy of triggering “kicker” tax rebates for individuals.

The rebates would kick in if actual revenue over the two-year budget cycles exceeds the original projections by at least 2 percent. If it happens, the additional revenue — which would total at least $290 million — would be returned to taxpayers. Kicker rebates, unique to Oregon, were created as a check on government spending to ensure that unanticipated money returns to taxpayers. But critics complain that it prevents the state from saving money during good times to weather economic downturns.

Job growth had been limited primarily to urban areas, but economists said it's now widening to include more industries and more regions of the state. Four out of every five counties is now seeing job growth, said Josh Lehner, a senior economist in the Office of Economic Analysis.

Despite unexpected strong job growth, however, the economists still expect the recovery from the Great Recession to be slower than Oregon's typical rebound following economic downturns.

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