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Oregon sees huge windfall in tax revenue

As Oregon continues to rake in historic amounts of revenue, state economists warned Wednesday that budgeters should plan wisely as a recession could be over the horizon.

Posted: May 15, 2019 12:15 PM

By SARAH ZIMMERMAN Associated Press

SALEM, Ore. (AP) — As Oregon continues to rake in historic amounts of revenue, state economists warned Wednesday that budgeters should plan wisely as a recession could be over the horizon.

The state will take in nearly $870 million more than what was initially forecasted just three months ago, according to May revenue forecast. That gives lawmakers over $22 billion for the next two-year budget cycle.

Mark McMullen, a state economist with the Office of Economic Analysis, called the extra revenue a "truly seismic event."

Tax changes on the federal level, said McMullen, spurred extra revenue in states across the country, which led to more tax revenue for states and smaller refunds for individual taxpayers.

But he stressed lawmakers shouldn't expect to rely on this historic amount of growth in the future.

"The tax filing season was really remarkable," said McMullen. "The puzzle becomes how much of this will become permanent. We know it all isn't sustainable."

The unexpected revenue, which has been a "global phenomenon" according to McMullen, will only be temporary. Personal income has actually gone down by 1 percent, and experts suggest the economy will continue to slow as Baby Boomers continue to age out of the workforce.

Gov. Kate Brown appeared cautiously optimistic with the forecast, suggesting saving some of the funds while spreading the rest across some of the Democrats' biggest priorities this session including housing, higher education, foster care and paying down the state's $25 billion pension debt.

"Today's revenue forecast shows a windfall that presents a unique opportunity to protect Oregon's future," said Brown in a statement.

Legislative leaders were more hesitant, suggesting most of the money be invested in the state's rainy day fund to prepare for an economic downturn. They've already suggested a tight budget, calling for 5% cuts across nearly all state programs.

"We need to approach these unexpected resources prudently," said House Speaker Tina Kotek. "Any use of one-time funds should be focused on areas of significant need, such as housing and pension debts."

Some of that revenue will have to be returned to the taxpayers, thanks to the state's unique "two percent kicker" law, which refunds excess revenue when the state's coffers are more than 2 percent higher than forecasted.

This year's kicker is expected to be the largest in state history at $1.4 billion, though $108 million of that will be redirected to pay for education thanks to a law recently signed by the governor.

State economists suggest the median taxpayer rebate to be around $330, which comes in the form of a tax credit. The top 1% of income earners will receive a $14,000 tax credit.

While the kicker dampens some of the state's growth, economists said Oregon's still in good shape and has enough reserve funds to provide a comfortable cushion should a recession hit.

Oregon Coronavirus Cases

Data is updated nightly.

Cases: 154554

Reported Deaths: 2204
CountyCasesDeaths
Multnomah31785528
Washington21060212
Marion18335285
Clackamas13310175
Lane10172126
Jackson8299111
Umatilla763181
Deschutes591859
Yamhill375964
Linn356556
Malheur334358
Polk302942
Klamath277455
Douglas242853
Benton231816
Josephine231649
Jefferson195028
Coos142519
Union127519
Columbia124321
Wasco122026
Lincoln112820
Hood River106329
Morrow104414
Clatsop7756
Crook77518
Baker6487
Curry4166
Tillamook4122
Lake3746
Harney2726
Grant2221
Wallowa1424
Gilliam531
Sherman530
Wheeler221
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Cases: 3554629

Reported Deaths: 51395
CountyCasesDeaths
Los Angeles118754221106
Riverside2891853749
San Bernardino2853342673
Orange2603483889
San Diego2589823260
Santa Clara1098411765
Kern102627811
Fresno947941412
Sacramento929441464
Alameda800881224
Ventura77238834
San Joaquin665691082
Contra Costa62164674
Stanislaus55775944
Tulare47784746
Monterey42138327
San Mateo38763515
San Francisco34061398
Santa Barbara31763407
Solano29968164
Merced28915395
Sonoma27954298
Imperial26843589
Kings21951218
Placer19713231
San Luis Obispo19612227
Madera15390209
Santa Cruz14588183
Marin13136197
Yolo12760185
Shasta10944174
Butte10915160
El Dorado9095100
Napa897668
Sutter884597
San Benito574359
Yuba573336
Lassen560119
Tehama508152
Tuolumne394659
Nevada393274
Mendocino379643
Amador344441
Humboldt316033
Lake313440
Glenn221023
Colusa212813
Calaveras190547
Siskiyou174014
Inyo128736
Mono12114
Del Norte9875
Plumas6536
Modoc4524
Mariposa3947
Trinity3675
Sierra990
Alpine810
Unassigned00
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