On Feb. 24, the State of Oregon Office of Economic Analysis released the March 2021 Revenue Forecast, the fourth forecast capturing the impact of COVID-19 on Oregon’s economy and the first of 2021.

Overall, General Fund and other major state revenues are now slightly up from pre-COVID-19 levels, and the state has a projected ending balance of $1,232.5 million above the 2019 close-of-session estimate. In addition, the State continues to be well-positioned due to significant reserves and substantial federal aid. The full report can be found here.

Healthy revenue collections have put Oregon’s unique kicker law into play. Following a booming first half of the biennium, Oregon’s General Fund revenue outlook was very close to the kicker threshold when the pandemic hit. After filling all of the recessionary hole, the March 2021 forecast calls for collections to exceed the threshold by $170 million (0.9%), resulting in a kicker credit of $571 million. However, this kicker credit is far from a sure thing.

Although the additional revenue called for in the March 2021 outlook is a welcome sight, budget writers still face a challenging environment this session. While personal income taxes have continued to grow this biennium, many other revenue sources such as Lottery sales have not. It is also important to note that while revenue growth has now exceeded pre-pandemic levels the “needs” side of the ledger has grown dramatically in recent months. Human services caseload estimates are beginning to show the impact of pandemic-related job losses, and the state continues to face significant expenditure needs associated with the wildfires that occurred in September.

With both federal aid and asset booms expected to expire, revenue growth will remain modest during the 2021-23 budget period.

The March 2021 forecast provided a positive fiscal outlook for budget writers to work with as they develop the upcoming biennial budget this session, but the kicker, relatively low long-term growth projections and the fact that federal aid will be one-time resources may make budget writers hesitant to commit to significant investments without stakeholder groups, including public universities, making a compelling case.

Oregon’s education leaders have called on lawmakers to respond to the most recent revenue forecast by using their best economic recovery tool: fully investing in public education from pre-school through post-secondary education.

Oregon’s seven public universities joined a dozen higher education, K-12 and pre-K associations in saying that making strong investments in education is not just good for students, it's an approach that is good for the economic health of the state.

The legislature will receive the next quarterly revenue forecast on May 19th. This will be the baseline that is used to finalize the 21-23 biennial budget.

On Feb. 24, the State of Oregon Office of Economic Analysis released the March 2021 Revenue Forecast, the fourth forecast capturing the impact of COVID-19 on Oregon’s economy and the first of 2021.

Overall, General Fund and other major state revenues are now slightly up from pre-COVID-19 levels, and the state has a projected ending balance of $1,232.5 million above the 2019 close-of-session estimate. In addition, the State continues to be well-positioned due to significant reserves and substantial federal aid. The full report can be found here.

Healthy revenue collections have put Oregon’s unique kicker law into play. Following a booming first half of the biennium, Oregon’s General Fund revenue outlook was very close to the kicker threshold when the pandemic hit. After filling all of the recessionary hole, the March 2021 forecast calls for collections to exceed the threshold by $170 million (0.9%), resulting in a kicker credit of $571 million. However, this kicker credit is far from a sure thing.

Although the additional revenue called for in the March 2021 outlook is a welcome sight, budget writers still face a challenging environment this session. While personal income taxes have continued to grow this biennium, many other revenue sources such as Lottery sales have not. It is also important to note that while revenue growth has now exceeded pre-pandemic levels the “needs” side of the ledger has grown dramatically in recent months. Human services caseload estimates are beginning to show the impact of pandemic-related job losses, and the state continues to face significant expenditure needs associated with the wildfires that occurred in September.

With both federal aid and asset booms expected to expire, revenue growth will remain modest during the 2021-23 budget period.

The March 2021 forecast provided a positive fiscal outlook for budget writers to work with as they develop the upcoming biennial budget this session, but the kicker, relatively low long-term growth projections and the fact that federal aid will be one-time resources may make budget writers hesitant to commit to significant investments without stakeholder groups, including public universities, making a compelling case.

Oregon’s education leaders have called on lawmakers to respond to the most recent revenue forecast by using their best economic recovery tool: fully investing in public education from pre-school through post-secondary education.

Oregon’s seven public universities joined a dozen higher education, K-12 and pre-K associations in saying that making strong investments in education is not just good for students, it's an approach that is good for the economic health of the state.

The legislature will receive the next quarterly revenue forecast on May 19th. This will be the baseline that is used to finalize the 21-23 biennial budget.