State Economist Mark McMullen’s November 21 forecast of the state of Oregon’s economic situation found its recovery and budgetary outlook “on track.” A broad, though gradual, economic recovery continues throughout the state and McMullen predicts it will continue. However, the impact on state revenue may be so positive that it activates Oregon’s “kicker” law, returning a portion of those revenues to taxpayers.
McMullen’s quarterly Economic and Revenue Forecast was released at a joint meeting of the Oregon Senate Finance and Revenue Committee and the House Revenue Committee. According the forecast, growth in Oregon’s jobs, household income levels and tax revenues has accelerated in recent months and growth is expected to continue. McMullen noted that Oregon has a history of good performance during recoveries, and that there is a solid chance the state will outperform forecasts. He pointed to the broadening of the recovery, which is now taking effect in several communities previously lagging behind the state’s progress, as the best chance for the state to outperform predictions.
The revenue forecast predicts an increase of about $132 million in total state resources for the 2013-15 biennium, bringing the projected total of general and lottery funds close to $17 billion. McMullen noted the increase is due both to the recovery and to the tax increases passed by the state Legislature as part of a “grand bargain” during a three-day special session this fall. Since these taxes fell outside of the normal budgeting window, there is a chance they could trigger Oregon’s personal income tax “kicker” law, sending revenue back to taxpayers; activation of the “kicker” would create a deficit in the state budget.