Revenue Forecast Down $2.164 billion General Fund

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Here’s latest update from our Oregon State Chamber of Commerce (OSCC) legislative counsel. Any opinions expressed or implied are those of OSCC and do not necessarily reflect those of the Springfield Chamber or its representatives.

The Q2 state revenue forecast is being unveiled now. It will show a reduction in state revenue of $2.164 billion. This includes a drop in $1.8 billion in General Fund tax revenues alongside a drop of $364 million in Lottery revenues. 

Legislative leaders and budget writers were preparing for a severe revenue drop of as much as $3 billion, which would have led to 17% cuts in agency budgets in the coming budget year. 

The loss of $2.164 billion translates into a “hard loss” of approximately $1 billion since the state had a $1.2 billion unspent ending balance. 

Clearly, today’s official estimates are not quite as dire as legislative leaders were preparing for. 

Oregon employers have shed over 400,000 jobs since the start of the COVID-19 pandemic. State economists are estimating a 38% recovery in employment by Q4 of this year with a return to February 2020 employment levels in four years. On a more sober note, economists predict that Oregon’s long term economic growth will be on a permanent lower trajectory due to the effect of the pandemic.   

State economists have also just announced that Corporate Activity Tax revenues are coming in at over $400 million less than projected. Although this is not a General Fund item, it nonetheless increases the magnitude of the overall revenue loss with today’s forecast. 

Economists are now predicting that CAT revenues will underperform expectations by around $500 million for the next three biennia. 

In combination with the $2.164 decline in General Fund resources, the overall revenue drop now approaches $2.7 billion.