Revenue
Legislative Report - Week of October 13
Revenue Team
Coordinator: Peggy Lynch
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Natalie Briggs
Please see Governance Overview here.
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Revenue Updates
Revenue Updates
By Peggy Lynch
The legislature received the Aug. 27th Revenue Forecast by the Office of Economic Analysis and a Revenue Summary from the Legislative Revenue Office. Bottom line: The revenue forecasted in May is now down due to many factors, including federal actions. It is expected to continue to decrease unless federal actions around tariffs and budgets change. The personal kicker has also reduced to $1,410.4 million—to show as a credit on your 2025 Oregon taxes. Final calculations on the kicker will be done by November. Federal actions may mean that Oregon will likely bring in fewer tax dollars, spend more money on administrative tasks and receive billions less in federal funding. Per an Oct. 7 Town Hall by Rep. Owens, as of now, legislators will need to address what is a $915 million shortfall. Agencies are being asked to provide a 5% cut to their budgets. These budgets will go before each Ways and Means Subcommittee during the short session. This means people need to be engaging to help agencies when choosing their cuts list.
Rep. Gomberg provided some concerning information about the potential loss of federal funding here in Oregon: Thrown into uncertainty was the Oregon Health Plan. State figures show 33.5% of Oregonians are on the state’s Medicaid program. About 14% of Oregon’s annual education budget comes from the federal government, amounting to more than $1 billion each year. And 17,500 preschool children are enrolled in Head Start. A March 28th press release from Senate President Wagner shared more data on federal losses.
Planning for 2026: The co-chairs left unspent about 22% of general obligation bond capacity and 15% of lottery revenue bonds, which theoretically leaves some flexibility for lawmakers to make investments in next year’s short session. However, any reduction in General Fund and/or Lottery Funds will mean this capacity will need to be adjusted down.
During Interim Legislative Days, many legislative committees provided information on both the revenue and costs side of H.R.1., also known as “The Big Beautiful Bill” passed by Congress. Both Revenue Committees heard the revenue impacts to Oregon because of our rolling connection to the federal tax code.
A tax disconnect bill passed the Oregon House but not the Senate in 2025. Currently, Oregon tax code mirrors the federal code, so if something is tax exempt at the federal level, it is at the state level as well. Expect a conversation around the loss of revenue and the additional costs Oregon might incur due to changes in federal programs. It IS possible to target disconnect provisions, and that may be politically easier than a full disconnect. It MAY be the topic for another Special Session before the 2026 session. Because any bill that “raises revenue” cannot have an Emergency Clause, it would not take effect for 90 days after passage to allow for a public referral/referendum so a Special Session on this matter is not likely. The Legislature COULD delay the April 15 filing date should they decide to address the disconnect in the 2026 session. They have taken that action in the past.
The next Revenue Forecast is Nov. 19. We know that both the Legislative Revenue Office and Legislative Fiscal Office are having discussions with legislators in anticipation of further revenue reductions. Pay attention to both General Funds and Lottery Funds since natural resource agencies also rely heavily on Lottery Funds.
Oregon is better suited to address a significant downturn in the economy than the last major downturn because of Oregon’s Rainy Day and Education Stability Funds. But there are criteria that must be addressed in order to access those funds.
On top of all that, Congress was unable to agree on funding the federal government for the Oct. 2025-Sept. 2026 fiscal year. Jefferson Public Radio did a good job of covering potential consequences to Oregon. As of Oct. 7th, the shutdown continues.