OFS (Oregonians for Food and Shelter) Legislative Update
 Week ending May 16, 2003

MAY Revenue Forecast released on Thursday May 15 indicates that Oregon's economic woes are far from being over. The forecast is predicting the state will fall nearly $700 million short during the next two years. The May forecast will be last available prediction by state economists before the legislature has to make their final revenue and spending decisions for the
2003-2005 budget. The "highlights" of the new revenue forecast:

$666 million less from personal income taxes in 2003-05 than projected in March, a 7 percent drop in just two months;

A slight $24 million projected increase in corporate income taxes;

The May forecast marks the EIGHTH consecutive quarter in which the projections were worse than the previous quarter, forcing a downward adjustment in anticipated revenues;

10,254 fewer Oregonians are working than in March;

Reductions taken by the legislature in February, along with the increased revenues from liquor, cigarette and insurance taxes, should be barely sufficient to finish the biennium without the need for further reductions. The projected ending balance for 2001-03 or reserve, however, is now only $120 million - or about half of what the legislature had planned - provided it doesn't shrink further by the June 30 end of the current biennium.

To most conservatives this means that all but the highest priority programs will likely see additional budget reductions, and that funding for many of the lesser programs will be completely eliminated. According to news accounts, however, Governor Kulongoski said he won't accept $700 million in cuts to his $11.2 billion dollar budget, but instead would seek even higher spending for schools -- which must come from somewhere, likely higher taxes.

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