Posted by: Josh Lehner | November 17, 2011

Economic and Revenue Forecast, December 2011

  • General Fund revenue, particularly Personal and Corporate Income Taxes are tracking very well in recent months
  • The economic outlook has turned more pessimistic due primarily to mounting concerns in Europe
  • Employment forecast for Oregon has been revised slightly lower
  • The General Fund plus Lottery Fund forecast for the 2011-13 BN has been revised down $107 million (-0.7 percent)

This morning the Oregon Office of Economic Analysis is releasing the December 2011 Economic and Revenue Forecast. To follow live, please find the video stream on the Oregon Legislature’s website, Hearing Room A . (Our apologies for the delayed posting here. The scheduled, auto post set for 8 am did not work properly.) All documents, including a copy of the slides, are available on our main website. What follows is a very brief summary of the forecast in graphs and tables.

The first graph shows recent forecasts for total General Fund and Lottery Fund dollars for the current 2011-13 biennium. The components of change from the September forecast to the December forecast: Personal Income Taxes (-$33.7 million), Corporate Income Taxes (-$54.2 million), Lottery (-$22.5 million) and All Other (+$3.5 million).

As shown in the graph above, the revisions to the 2011-13 BN tax revenue to date have not been drastic and the values fluctuate within a couple percent of each other (Close of Session to December is -2.0 percent). Unfortunately, the growth associated with these forecasts is relatively weak compared to recent history due to the nature of the recovery and our underlying economic forecast. Tax revenues are projected to grow 4.9 percent this fiscal year (FY12) and 4.4 percent next fiscal year (FY13), which is below growth Oregon experienced during previous economic expansions.

The employment outlook has been lowered in the near term due to slightly slower jobs the past six months and a more subdued outlook. Oregon’s return to peak employment date has been pushed back 3 months compared to the September forecast and Oregon is now projected to reach its previous peak in fall 2014.

The next graph highlights a revenue source that does not get discussed quite as much as others, such as the Personal and Corporate Income taxes. The graph below illustrates the total Lottery resources and where the monies are distributed. Today, 18% of the Lottery transfers are dedicated to the Education Stability Fund, 15% are dedicated to Parks, while the Sports Lottery Account and Gambling Addiction both receive 1% each.

Finally, while our baseline forecast is our best guess and most likely outcome, clearly there are other factors and risks that will affect the economic and revenue outlook. The last graphic shows our alternative scenarios for Oregon employment as well as growth rates for employment and personal income under the various scenarios. Should the U.S. and Oregon fall back into recession, the associated revenue impacts are currently estimated at approximately $1 billion to the negative.

For much more information on the Oregon economy and extended outlook, please reference our full forecast available over on our main website.


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