Latest news with #OfficeofEconomicAnalysis
Yahoo
22-05-2025
- Business
- Yahoo
Budgeting into the unknown
Oregon's economic forecast could set the tone not just for the remainder of the legislative session but for the campaign season to come, commentator Randy Stapilus writes. (Tim Carpenter/Kansas Reflector) The switch has flipped on the last stretch of this year's Oregon legislative session and the central dynamic for the last and busiest phase ahead has been set. So, possibly, has the campaign dynamic for next year's legislative elections. Part of it involves a raucous economic debate over the administration of Donald Trump. Most of the rest concerns how little predictability exists for conditions going forward. The kickoff was a standard trigger of the Oregon legislative schedule, the release of the May Economic and Revenue Forecast from the Office of Economic Analysis. The last such report during this year's session, it will form the basis for the legislature's decisions on how much to spend and how much income should be brought in — through existing or new taxes. Normally, it can provide a clear direction for inking in policies and budgeting plans evolving up to this point. The headline from this new report does say that less money is likely to be wrung out of existing state taxes than had been expected in previous estimates — a decrease not in revenue but in what was previously expected. But it also emphasized a deep well of unknowns. The report's summary said it 'comes at a time of exceptionally heightened uncertainty. Not only is it too soon to understand how the economy is responding to actions already taken — but, more broadly, the ultimate scope of critical policy decisions remains unknown. For example, even preliminary economic impacts from tariffs are unlikely to materialize in vital statistics such as employment or consumer prices for another month or two. Further, final details on tax reforms and budget reductions are only vaguely coming into view, and the eventual effective tariff rate will depend on the success of negotiations which have not yet occurred.' The report did not specifically say a recession is likely — it even included a number of reasons it may not happen — but figured chances of a downturn at 25%, a possibility higher than usual. The uncertainty is key. One forecaster said, 'I can't remember more tumultuous circumstances just going into producing this particular forecast.' Government budgeters typically respond to uncertainty by budgeting lower amounts, to protect against revenue shortfalls. Here is how the Hillsboro School District described the fallout: 'What this means is that the Legislature has less discretionary revenue with which to make new investments in the 2025-27 biennium. That, coupled with ongoing uncertainty about federal funding to states for a variety of initiatives and programs, will likely limit additional support being directed to K-12 education.' Coming weeks will be a budgeting session for gamblers: How confident are you of what conditions will apply at the end of this year and a year from now? Do you cut state spending, or raise taxes, when one or both may not be necessary? Those concerns may come against a background in which the state may be called on to help backfill long-expected federal help which is being withdrawn. The Republican take on the budget appears to position this year's budgeting cycle essentially like any other, with problems a function of the majority party's inability to budget well enough. Senator Bruce Starr, R-Dundee, said for example, 'This should be a wake-up call. With a half-billion-dollar shortfall, lawmakers must focus on core services and cut the waste.' Representative E. Werner Reschke, R-Malin, said in a constituent newsletter, 'Democrats need a doom and gloom message so that they can justify their plans for tax increases. If the headlines had been 'State to receive record revenues for upcoming biennium' do you think their new taxes message would be accepted by Oregonians? Of course not.' The problem with those approaches is the unusual level of uncertainty in the latest estimates, something sharply different from past cycles. But they are likely to emerge in next year's campaigns. Democrats argued the circumstances are unusual, pointing to the Trump Administration, and especially its tariffs and spending actions, as the prime mover of uncertainty. House Speaker Julie Fahey, for example, said, 'today's revenue forecast confirms what economists have been telling us: the Trump administration's reckless decisions are damaging our economy. … Oregon is particularly sensitive to the fallout from federal trade policies that have been changing on a whim since Trump's inauguration.' Look for the remaining month-plus of the legislative session to turn into a debate over the effect the Trump administration is having on Oregon. The contours of that discussion will likely shape politics in Oregon and beyond all the way to next November. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Epoch Times
19-05-2025
- Business
- Epoch Times
State Economists Nudge Oregon's Economic Forecast Down
Oregon's economy could be characterized by sluggish growth and higher unemployment for the coming years, according to the state's Although the state will take in record revenue in the 2025-2027 biennium—up 12 percent from the 2023-25 biennium—it will be significantly less than had been predicted just three months ago. The state is still expected to have billions more to spend in the next two-year budget than it did for the current one. The ending balance for the current biennium has been revised downward by $162.3 million, and projected General Fund revenue for the 2025-27 biennium has decreased by $337 million, according to the Office of Economic Analysis. The 2023-25 decrease is primarily due to decreases in personal and corporate income taxes, the report says. 'It is not a recession; let me be abundantly clear about that,' said the state's chief economist Carl Riccadonna, speaking to lawmakers on May 14. 'Nonetheless, it is the type of slow growth that will allow the unemployment rate to drift higher.' Related Stories 9/1/2022 8/8/2023 Oregon's unemployment rate for April currently sits at 4.7 percent, while the national average rests at 4.2 percent. Riccadonna put the odds of recession at 25 percent. The report's authors repeatedly express uncertainty about their findings. 'The Office of Economic Analysis has diminished confidence in the central forecast as a result of pending policy decisions which are expected to have substantial economic consequences for growth, employment, inflation and financial markets—all of which are critical variables driving the compilation of our revenue forecast.' Democratic lawmakers were quick to blame Trump policies for a possible downturn, specifically citing tariffs. Republicans emphasized that the state will still collect record revenue and pointed to Democratic policies for any economic downturn. 'A double-digit increase in Oregon's budget is real growth which legislators must spend wisely to fund the core functions of our state,' wrote House Republican Leader Christine Drazan in a statement. 'This increase could have been greater if it weren't for Oregon's highest in the nation taxes, aggressive regulatory environment, and public policy choices that harmed our economic engine,' she added. Democrats have had a 'trifecta,' in the state since 1992. The Democratic Party currently controls the offices of governor, secretary of state, attorney general, and both chambers of the state Legislature. Call it Chaos 'While the Trump Administration spreads uncertainty in our economy and our social safety net, I refuse to let Oregon be knocked off of our game,' 'We know the problems we need to solve here at home regardless of the chaos coming out of Washington, D.C.' She went on to identify those problems as homelessness, a housing shortage, a dearth of medical care, underperforming schools, and cost-of-living increases in the state. In this year's budget request, Kotek had pressed for more than $800 million to bolster housing and homelessness, $246 million for the state's behavioral health system, and $200 million for education. She said she is ready to 'make hard budget choices and address our challenges head on, despite the dampening of economic growth.' Democratic Senate President Rob Wagner joined the governor in calling out the president's policies. 'Oregon's economy is greatly reliant on our international trading partners, and it is clear the tariffs and chaos from the federal administration is making it harder for businesses to plan and slowing economic growth,' Wagner wrote. 'With this forecast, we are starting to see real impacts to businesses, workers, and state revenues.' But the report's authors also acknowledge that the forecast was written 'in the midst of bilateral trade negotiations,' which it said 'showed signs of promise.' Attorney General Dan Rayfield said the economic forecast reinforces the need for the multi-state lawsuit against the Trump Administration tariffs. 'These tariffs are not just policy missteps—they're doing real damage to the state, Oregon families, workers, and small businesses,' Rayfield wrote. 'Tariffs were imposed without proper oversight or consideration for the long-term harm they would cause. That's why we filed this lawsuit—to push back against federal overreach and protect the stability of Oregon's economy.' To date, Rayfield has participated in more than 16 lawsuits against the Trump Administration. Blaming the Trifecta Republicans said the sky isn't falling, and that Democratic policies have hurt Oregon's economy. 'Democrats have taxed, regulated, and micromanaged this state into decline—and now they want to point the finger at Washington,' wrote Republican Rep. Dwayne Yunker in a statement to the media. 'The real problem is right here in Salem.' A number of 'If we want to see our state budgets grow, we shouldn't raise taxes, we should cut them,' noted Leader Drazan. The real issue isn't revenue, added Senate Republican Leader Daniel Bonham. 'It's the stagnant economy created by years of Democrat policies,' he wrote. Bonham cited 'Oregon's anti-business climate, high taxes, and housing restrictions—especially over the last six years with the hidden sales tax and Portland's layered income-based taxes,' which he said are 'strangling opportunity.' 'Key industries like manufacturing and construction are shedding jobs, while government and subsidized sectors continue to grow. Business and wealth are fleeing Portland, and the damage is spreading statewide,' he added. While Democrats point fingers at tariffs and federal uncertainty, he said 'Oregon's economic decline began long ago.' Business Environment Oregon ranked 48th out of 50 states for 'Business Friendliness' in 'CNBC's In a study across nearly every industry in the state, the University of Oregon's (UO's) Institute for Policy Research and Engagement More than two-thirds of those either expanded their presence outside of Oregon or packed up and moved. Many said that they were already considering relocation prior to being courted. 'Survey data indicate the state has lost thousands of potential jobs and billions of potential private investments in the past five years and is poised to lose even more in the next five years,' the report states. A concerning number of businesses indicated they were choosing to expand outside of Oregon due to 'an unfavorable business climate.' 'Oregon's businesses have mixed perceptions about Oregon's business environment. While some view the state as a good place to do business, others cite high taxes, regulatory challenges, and social issues like homelessness and crime as significant drawbacks. This is particularly true with manufacturing and tech firms,' the UO report added. Between June 2023 and June 2024, Oregon ranked 45th in manufacturing growth, It also ranks among the bottom 10 states for job growth in other sectors, including construction and professional and business services. OBI identified specific issues that state policymakers could 'These include the scarcity of developable land, the state's tax environment and the expense of living here.' Strengthening Oregon's manufacturing sector would generate big dividends, according to OBI. 'A 10 percent increase in Oregon's manufacturing output would add $7 billion to the state's gross domestic product, support nearly 51,000 new jobs and generate an additional $4.2 billion in personal income. 'This would produce more than $850 million in new state and local revenue,' the report stated.
Yahoo
14-05-2025
- Business
- Yahoo
Report estimates $756M decline in Oregon resources amid tariff uncertainty
PORTLAND, Ore. () — The latest Oregon Economic and Revenue Forecast is less hopeful than what was projected just three months ago. The on Wednesday, revealing a potential $755.7 million decline in funding for the 2025-2027 biennium. State economists noted that personal income taxes had the most measurable change, with a $529 million decrease from what was anticipated. Portland to Vancouver ferry project making final critical push for funding Economists are also projecting about $37.4 billion in General Fund revenue for the upcoming biennium. The estimated resources would be around $38.2 billion. The revenue changes have impacted the personal kicker refund expected for Oregonians when they file their 2025 taxes. That figure now stands at $1.639 billion, about a 5% drop from the prior estimate of around $1.726 billion. In the report, officials noted further challenges could be in store for the state as its economy braces for the impact of federal tariffs. Close Thanks for signing up! Watch for us in your inbox. Subscribe Now 'Not only is it too soon to understand how the economy is responding to actions already taken — but, more broadly, the ultimate scope of critical policy decisions remains unknown,' the Office of Economic Analysis said. 'For example, even preliminary economic impacts from tariffs are unlikely to materialize in vital statistics such as employment or consumer prices for another month or two.' But with the uncertainty underway, economists have highlighted pre-existing challenges in other areas — like the cannabis industry. The forecast reported that Oregon had a record-breaking harvest of more than 5.7 million pounds last October, and the expansive supply has continued to lower prices as businesses see an increase in input costs amid a plateau in consumption. Officials are expecting a 2.5% drop of about $7.6 million in marijuana revenue from 2025-2027. US egg prices fall for the first time in months but remain near record highs Oregon leaders are expected to finalize the budget for the upcoming biennium by the end of the current legislative session, on June 30. 'Oregonians will come together and take care of each other,' Gov. Tina Kotek said, in part, in a statement. 'I am committed to working diligently with the Legislature from now through the end of the session to make hard budget choices and address our challenges head on, despite the dampening of economic growth.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
14-05-2025
- Business
- Yahoo
Federal chaos leaves Oregon's economic outlook sluggish, uncertain, short hundreds of millions
Oregon lawmakers are facing a two-year budget cycle with hundreds of millions of dollars less than anticipated due to slow economic growth expected as a consequence of President Donald Trump's tariffs. (Julia Shumway/Oregon Capital Chronicle) Uncertainty from President Donald Trump's tariffs have thrown a wrench in state revenues previously expected to grow by hundreds of millions of dollars, state economists report. Forecasted growth in the national and state economy has deteriorated in the last few months, leaving Oregon lawmakers to craft a two-year state budget with nearly $756 million less than they anticipated, according to the latest revenue forecast from the state's Office of Economic Analysis. This comes on top of uncertainty around the federal budget and as Congressional Republicans debate cutting hundreds of billions that states rely on to provide healthcare and social services. State economist Carl Riccadonna and senior economist Michael Kennedy, presented the quarterly forecast Wednesday to House and Senate revenue committees, and previewed some of their findings on a call with reporters Tuesday evening. Riccadonna said the rest of 2025 will be characterized by sluggish economic growth due to existing tariffs and uncertainty around the future of tariffs, especially in the manufacturing and construction sectors. Tariffs disproportionately hurt coastal states and states with large ports like Oregon, he added. Senate Majority Leader Kayse Jama, D-Portland, said in a news release that the forecast shows reckless federal actions are harming Oregon's economy. 'Tariffs amount to a sales tax on shoppers here and act as headwinds against shipping products overseas. These policies threaten to push our state and the nation into an economic recession,' he said. Oregon Republicans said state Democrats are to blame. 'It's no surprise that Democrats who've spent years passing policies that weaken our economy are quick to blame anyone but themselves,' Senate Republican Leader Daniel Bonham, R-The Dalles, said in a news release. 'What's needed now isn't higher taxes, but smarter budgeting, real accountability, and a renewed focus on growing the private sector,' he said. At the beginning of the year, economists expected the national economy would grow by about 2% in 2025. The consensus now among economic forecasters is that it's likely to be less than half that — about 0.8%. Slower economic growth leads to higher unemployment, lower wages and consequently the state taking in less corporate and personal income tax revenue, which make up the bulk of the state's general fund. 'It is a sluggish growth period, which will lead to instability in the labor market,' Riccadonna said. He and other economists do not yet forecast a recession, though he said the risk is 'certainly elevated.' The state's Office of Economic Analysis puts the risk of a recession in the next 12 months at about 25%. In a typical year, the risk is 10% to 15%. 'You will see the unemployment rate drifting higher over the course of the next several quarters,' Riccadonna said. Gov. Tina Kotek in a news release said she would, 'refuse to let Oregon be knocked off of our game.' 'We know the problems we need to solve here at home regardless of the chaos coming out of Washington, D.C.,' she said. 'There are still too many people sleeping outside. There are not enough houses. There are not enough places to go for care or people to provide that care. Our kids must be served better by our schools. The cost of living is on the rise. These crises don't take an intermission, so neither can we.' The quarterly revenue forecasts take into account all of Oregon's major revenue sources, including personal and corporate income taxes — which make up the bulk of the state's general fund — as well as lottery revenues and the Corporate Activity Tax. In February, Riccadonna and Kennedy told Oregon lawmakers they could expect to have about $38.2 billion to spend in the state's next two-year budget. That was $350 million more than they thought they would have at the last forecast in November 2024. Now, Oregon lawmakers can expect to have about $37.4 billion to spend in the state's next two-year budget. That's the result of both a reduction in expected revenue, mostly from income taxes, and additional spending in the current budget cycle, primarily on higher-than-expected caseloads for Medicaid and the state department that provides services to seniors and people with disabilities. House Majority Leader Ben Bowman, D-Tigard, said in a news release the latest forecast shows lawmakers will need to make 'hard choices.' 'This forecast means we will have fewer resources available in order to support our education priorities, human services, and the many other priorities throughout the state,' he said. The state's 'kicker' tax refund is also expected to be about $87.5 million lower than expected. The refund, now projected to return about $1.64 billion to Oregon taxpayers, is triggered when actual revenues come in at least 2% higher than lawmakers projected. Riccadonna was more optimistic about growth and revenues in 2026 and the first half of 2027 than the current fiscal year, assuming tariffs are lower, the Federal Reserve reduces interest rates and Congress passes a budget that includes extending the 2017 Tax Cuts and Jobs Act — which reduced personal and corporate income taxes intending to stimulate spending and economic growth. He said hard economic statistics impacted by tariffs, like unemployment or the nation's GDP outlook, are not likely to show up in federal reports until June and July, leaving forecasters at the moment with heightened uncertainty in terms of understanding how all of Trump's tariffs and cuts to federal agencies and the workforce plays out. Trump cuts to the federal workforce have so far not caused the state's unemployment rate to tick up, but have hit local economies, Riccadonna said, mostly in eastern Oregon. 'We should make no bones about it. This is a very dynamic situation that is very sensitive to policy being set at the federal level, policies which are not clearly defined at this point in time, in terms of where the end point or the ultimate consequence will be, where that effective tariff rate will ultimately settle, how the restructuring at the federal level ultimately pans out,' Riccadonna said. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
26-02-2025
- Business
- Yahoo
Looking forward to your tax kicker next year? Forecast shows slight drop in 2026
PORTLAND, Ore. () — The projected kicker for state taxpayers in 2026 has slightly declined since officials last released the Oregon Economic and Revenue Forecast. The Department of Administrative Services unveiled the on Wednesday. According to the Office of Economic Analysis, more than $1.726 billion in refunds are estimated to go to personal income taxpayers in 2026. New exhibition gives closer look at how Oregon topography has changed since early 1900s The projected a return of more than $1.792 billion. A 1979 law established that officials must refund taxpayers if Oregon's actual revenue throughout a two-year period exceeds the estimated amount. In 2024, this led to a . While the latest projections show a massive decline from last year, the new numbers represent less than a 4% drop from the December forecast. The Office of Economic Analysis reported that Oregon's General Fund resources will grow to $38.2 billion — an increase of $350.1 million during the 2025-2027 biennium. Leaders have consequently noted the state's healthy economy. 'Oregon's economy continues to be stable, and now is not the time to get distracted,' Gov. Tina Kotek said, in part, in a statement. 'We must lean in on what we see working when it comes to housing and homelessness, mental health and addiction and education.' However, the new forecast noted federal changes could affect funding. What does it take to be middle class in the Pacific Northwest in 2025? New study explains President Donald Trump's proposal to impose 25% tariffs on imports and exports from Canada and Mexico could hinder some businesses contributing to Oregon's economy, like those in the . The administration has also begun job cuts at the federal level, which has . 'We need to be prepared for economic headwinds created by the federal administration's actions and for potential cuts to federal programs that Oregonians rely on, like Medicaid,' Oregon House Speaker Julie Fahey said in a statement. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
