SALEM, Ore. — With Oregon economists continuing to track a relatively rapid economic rebound after pandemic shutdowns, tax-payers should see rebates next year through the state's unique "kicker" rule.
State economists delivered their quarterly Economic & Revenue Forecast to lawmakers on Wednesday, outlining a recovery from pandemic shutdowns and job losses that they expect to continue at a relatively rapid pace, though not without growing pains.
"The economic outlook remains bright. Strong household incomes, boosted considerably by federal aid during the pandemic, are the underlying driver. Consumers have no shortage of firepower if they want to and feel safe enough to spend," the Office of Economic Analysis wrote in its executive summary.
The report predicted that Oregon's labor market will regain all of its lost jobs by next summer, one quarter sooner than estimated in the last forecast.
"While these dynamics remain intact, the risks are weighted toward the downside," the economists continued. "Growth in a supply constrained economy is challenging. Firms are struggling with supply chains and a tight labor market. Wages are rising quickly to attract and retain workers. Prices are increasing as demand continues to outstrip supply. On top of this the current Delta wave of the pandemic complicates the immediate term outlook."
Unsurprisingly, the Office said that the biggest threat to economic recovery would be the return of COVID-19 shutdowns on sectors of the economy.
Though Oregon's tax collection deadline was delayed this year by the pandemic, the economists said that the 2021 tax season "turned out to be a very big one," with collections surging from personal income taxes, corporate income taxes, lottery sales, and the new Corporate Activity Tax.
As a result of the strong tax revenues, Oregon tax-payers are expected to receive a $1.9 billion personal income tax kicker credit for the 2021 tax year. The median taxpayer will receive a credit of about $420, and the average payment is estimated at $850.
Governor Kate Brown and a number of Oregon's state lawmakers released statements reacting to the revenue forecast on Wednesday, with most of them highlighting the state's apparently stable and recovering economy, looking ahead to investments in communities that are still struggling the most.
“Today’s revenue forecast is another sign that Oregon’s economy is healthy, strong, and on the path for a rapid recovery," Governor Brown said in a statement. "This is welcome news at a time that Oregonians continue to face immense challenges: from wildfire recovery to extreme drought to our worst surge of cases and hospitalizations during the COVID-19 pandemic."
Senate Republican Leader Fred Girod narrowed in on the kicker, an additional $850 million heading to K-12 schools, and a state budget with an ending balance of $699 million.
“It’s clear that Democrats raided $15 million from the Kicker for no good reason," Girod said. "Unprecedented deficit stimulus spending by the federal government and Oregonians stepping up to support businesses during the Governor’s shutdowns has given the state excess money.
“The legislature now has money to invest in COVID and wildfire response and recovery and preparing for upcoming unknown expenses in the next biennium. Most importantly, our kids need to be in school full-time to get caught up after a year of learning loss. This money can help our kids recover.”