Legislative Update by Oregon Representative Gail Whitsett

Hello Friends,

Oregon’s most recent revenue forecast was released by representatives of the state’s Office of Economic Analysis on December 2. Their presentation provided a snapshot of where our economy is right now and what it is projected to look like on a short and long-term basis.

There were several positive aspects of the forecast. The first is that the state will have $56 million more in resources than was anticipated during the previous forecast in September.

Around half of the $56 million in additional revenue came from corporate taxes. The analysts said that is the result of a “boom” in the state’s corporate excise tax collections.

According to the analysts, job gains in Oregon have been matching their fastest rates during the housing boom that preceded the 2008 onset of the Great Recession. Personal income tax revenues coming into state coffers are growing at double-digit rates and wages for the average Oregon worker are increasing between 3 and 4 percent. That is higher than the national average, which is between two and two and half percent.

Overall, the state has around 50,000 more jobs than it did before the Great Recession. Not all of our 36 counties are adding jobs, but that expansion is finally reaching into the state’s rural areas at a two percent rate. That is right around the national average.

The total number of jobs in Oregon is higher than it’s ever been, and so is the state’s population. Rural areas are seeing some of that population increase. A downside, however, is that housing affordability is becoming a huge issue in many parts of the state. This is especially the case in areas like Bend, Hood River and Portland.

Another revelation from the forecast is that around half of the $56 million in additional resources is from an upswing in lottery sales. One of the analysts stated that “vice sure is alive and well in Oregon.”

Revenues from alcohol, lottery and criminal fines are all growing by double digits. Cigarette sales are also doing better than expected. The gaming industry is increasing nationally after five years of weak performance, and it’s the strongest in Oregon. Much of the growth here has been driven by a double-digit increase in video lottery sales.

The state ended the 2013-15 biennium with around $1 billion in reserves. While that is the highest percentage of the general fund that the state has ever been able to save, the analysts cautioned that it would not be enough to offset another recession. They said that such a scenario would take around double that amount, $2 billion, from revenues.

Also included in the forecast was a look at options for restricting Oregon’s state and local revenue systems.

The Legislative Revenue Office was directed to prepare that analysis under House Bill 2171, which passed through both chambers with broad bipartisan support during the 2015 regular session.

A technical advisory group was formed to look into the different options that are available, and that body worked on six simulations that were presented during the forecast. The systems used by other states were examined as part of the analysis. Half of the options were revenue neutral, and the other three sought to increase dollars flowing into state government. Options that were discussed included a gross receipts tax and a value-added tax.

 The analysis of alternative revenue scenarios started with the premises that our current tax structure is volatile due to its heavy reliance on the income tax. Its second premises was that local tax systems are “rigid” due to the passage of previous ballot measures that limited the property taxes that cities and counties can levy on citizens.

All indications are that there will be further discussions in the 2016 session and beyond as to what the state’s tax structure should look like. As your elected state representative, my job is to solicit your input about these and all other matters and bring it forward when these issues are being considered in Salem.

As such, I would love to hear from you about your suggestions and ideas regarding the state’s revenue structure. Are you happy with the way it is right now, or would you like to see it changed? If so, what changes do you want made to it?

I look forward to hearing your suggestions to help ensure that your voice is heard when the Legislature meets again for its next regular session in February.

To watch the video of the Revenue forecast, click the image below:

Yours Truly,

Representative Gail Whitsett

House District 56