State economist say increased revenue could trigger personal income tax kicker

CAPITAL BUREAU - State economists say tax receipts are up $370 million.SALEM — State economists say the state may have nearly $200 million more than expected in net available resources, narrowing Oregon's projected budget gap to about $1.4 billion.

The May economic and revenue forecast provides the best estimate of how much the state can expect to realize in revenue before the Legislature adjourns in July. Legislators are busy trying to resolve the gap between what it expects to bring in and how much it would cost to maintain state services at current levels.

Tuesday's higher than expected revenue forecast also brings Oregon closer to triggering the kicker, although that's not a sure bet, said state economist Mark McMullen.

Overall, Oregon's rate of economic growth is slowing, although "Oregon's economy is bigger than ever and getting bigger every day," McMullen said.

Oregon Gov. Kate Brown said in a statement that the forecast included good news about revenue growth and the state's economy, but cuts to key services remained possible.

"...This doesn't change the fact that Oregon still has a structural deficit," Brown said. "This means in the long term, whether the economy is good or bad, the state will struggle to pay for education, public safety, child welfare and health care."

The governor said she was meeting with business and labor leaders every week to prevent significant cuts to such services, which may be required in order to close the budget gap without new revenues.

Patrick Criteser, chair of the Oregon Business Plan and the CEO of the Tillamook County Creamery Association, reiterated the Oregon Business Plan's stance in a written statement Tuesday, saying that new revenues alone "will not fix the state's basic budget problems."

However, Criteser said the coalition of businesses behind the Oregon Business Plan "remained optimistic" and "encouraged" by engagement from the legislature and the governor.

State Sen. Mark Hass, D-Beaverton, said the revenue outlook does not change what he has characterized as the need for changes to the state's tax system, a sentiment echoed by Senate Majority Leader Ginny Burdick, D-Portland:

"We can't dig out of this hole with cuts alone," Burdick said in a statement. "We need to reform and stabilize our revenue system as well." Burdick said legislators were examining "both sides of the ledger."

Meanwhile, Republican leaders in the legislature said higher than expected tax revenues were evidence in favor of spending cuts. House Minority Leader Mike McLane, R-Powell Butte, called the forecast "more evidence that Oregon needs to tighten its belt and get serious about the unsustainable rate of spending in Salem."

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