The latest report about how the Oregon economy is doing offers encouragement but also caution.
The Oregon Department of Administrative Services opened its summary statement for the September Oregon Revenue Forecast saying “the economy remains in a Great Recession-sized hole.”
The report, issued Sept. 23, finds lower-income households have borne the brunt of the recession.
“The combination of higher-income households being less impacted to date, and the large federal support means consumer spending and tax collections have held up much better than expected,” the report summary states. “The strong economic growth in recent months is encouraging, as many workers on temporary layoffs are recalled. However, normally it takes a year or two for the recessionary shock to work its way through the economy.”
The report also states that overall, the current state of the economy is much better than feared at the time of the previous forecast. But the economic outlook in the years ahead is only improved modestly. It takes time, even under the best of circumstances to regain lost ground due to recessions. 2020 so far is anything but the best.
Despite the sharp reduction in economic activity, the revenue summary states that Oregon’s primary revenue instruments have continued to grow. Collections of Personal Income Taxes and Corporate Taxes both set record highs over the post-shutdown (March-to-September) period this year.
But state officials also caution that the economic pain has yet to be fully reflected in Oregon’s revenue data.
“In the near-term Oregon’s economy is impacted by COVID-19 and the wildfires that destroyed our communities,” the summary states. “Over the long-term, Oregon’s ability to attract and retain skilled, working-age households is one of our comparative advantages. To the extent the pandemic, wildfires, drought, or protests and clashes of violence impact this advantage remains to be seen, but they all represent downside risks to the outlook. On the other hand, should telecommuting and remote work increase as a result of the pandemic and changing business practices, Oregon stands to take advantage.”
Governor Kate Brown's statement
Gov. Kate Brown said the latest revenue forecast is a testament to the resiliency of Oregonians.
“And to how we—as a state—have been able to manage the COVID-19 pandemic by working together,” she said in a statement.
Brown said the pandemic impact has been “massive” on Black, Indigenous, People of Color, and Tribal communities and those dependent on the service economy.
“While revenue projections are up for this biennium, the revenue forecast did not balance our upcoming budget, and we must tread lightly,” Brown said. “We still face structural inequities, as well as fluctuations in health care spending related to ongoing COVID-19 response, at the same time we face a serious budget deficit. In addition, many of our critical pandemic response efforts, from testing to personal protective equipment, have been funded with CARES Act funding, which expires at the end of the year.”
Brown said Oregon urgently needs congressional action to provide direct help to local governments, businesses and families so that we can all continue to provide critical services to Oregonians during this crisis.
"Oregon has a history of being smart with our reserves and saving for a rainy day,” Brown said. “We cannot abandon this approach in the middle of a pandemic, with cold and flu season rapidly approaching. Or while response and recovery efforts to a historic statewide fire emergency continue, and the costs of those efforts to save homes and lives continues to grow. We must prepare for the costs of continuing to provide critical services in the next biennium––from health care to affordable housing to wildfire readiness and response.
“This year, we must celebrate every piece of good news we can get. But even with the welcome news of increased revenue projections, my commitment remains to make prudent financial decisions and position our state to manage unforeseen economic challenges that may come our way."
Senate Republican Leader Response
Senate Republican Leader Fred Girod (R-Lyons) issued the following statement concerning the revenue forecast.
"Thanks to federal action, Oregon has $1.7 billion dollars in its ending balance, and there is absolutely no reason to raise taxes. The corporate and personal income taxes set new tax collection records.
“Governor Kate Brown’s government overreach during the COVID-19 event has deepened the income inequality in the state and lower-income Oregonians have been hit hardest. Hard-working Oregonians have also been impacted by the wildfires. Cities and counties across the state that rely on tourism for income have been decimated and are not recovering quickly, and the perpetual violent riots in Portland have damaged Oregon’s national image for anyone who thought about relocating here.”
The Oregon Economic Forecast provides information to planners and policy makers in state agencies and private organizations for use in their decision-making processes. The Oregon Revenue Forecast opens the revenue forecasting process to public review. It is the basis for much of the budgeting in state government. The forecast reports are issued four times a year: March, June, September and December.
See the entire report