Oregon Office of Economic Analysis

• Recent tax collections have matched forecast relatively well, resulting in only a minor change in the forecast, after adjusting for legislative changes
• The 2012 Rebalance Plan passed by the Legislature makes the interpretation of the forecast changes somewhat complicated as the plan simultaneously increased revenue, largely via one-time actions, and increased expenditures
• On net General Fund and Lottery Fund available resources are up $115.7 million relative to the March 2012 forecast
• The Rebalance Plan increased available resources by approximately $133.5 million while our office’s economic and non-legislative forecast changes lowered available resources by $17.9 million
• The economic outlook has stabilized, remaining effectively unchanged

This morning the Oregon Office of Economic Analysis is releasing the June 2012 Economic and Revenue Forecast. 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.

This first graph illustrates the revenue changes for the 2011-13 biennium revenue since December 2010. As stated, the underlying forecast changes (the blue bars) are relatively minor this quarter as two important things have happened: the economic outlook has stabilized and actual revenue collections have matched forecast well, especially considering we just went through an April. Being an income tax state, Aprils are vital to understanding the economy (via tax return data on income) and state revenues. So far for the biennium, one April is in the books without any major surprises, however there is one more April to go.

Where the real changes occur in the graph are in the second red bar, the 2012 Reblance Plan. The details are included in this file HERE (PDF page 13, document page 7) – warning, large PDF.

The table below shows these same changes. The three yellow, highlighted cells tell the story. The final, effective change this forecast has is the reduction of $17.9 million to the General Fund ending balance, plus the $0.2 million increase in Lottery Funds.

Lottery proceeds continue to grow slowly. Traditional Lottery (jackpot games, keno, scratch-its, etc) have been a source of strength in terms of Lottery revenue in the past year, partially due to the large run-up in Mega Millions. Video Lottery has continued to grow, albeit at a very slow rate relative to historical growth seen in expansions. The forecast calls for continuation of the same pattern, however with Video sales gradually improving over the next few years.

Finally, on the economy, the following table highlights the industry strength and weaknesses this recession when examining regional employment trends. This is taken from previous research shown on this blog (see HERE and HERE). It’s important to note that many of the more rural areas not only had concentrations in industries that experienced severe downturns (construction) but also in industries that are lagging this recovery (state and local government and construction, again). The regions that have experienced a (partial) recovery have diverse industry mixes, namely professional and business services, information, and trade, transportation and utilities.

In sum, this forecast is essentially unchanged relative to the March forecast in terms of the underlying economic and revenue outlook. Stay tuned to the blog for more research and economic outlook posts in the future. Full forecast documents and slides are available available on our main website.