Legislative Report - Week of 6/29

• Revenue

• Senate and House Committee Meetings

Revenue

Josie Koehne  

2026 Revenue Forecast

Although the June forecast presented on May 21st showed a slight increase of $345 million over the previous forecast in February, state chief economist Carl Riccadonna pointed out that this figure reflected the impact of kicker and federal income tax refunds and a transfer of emergency funds. The economy is actually weaker than projected because of the rise in energy prices. Oil/gas prices have increased from $60 a barrel in January to $110 in May, and gas from $2.85 to $4.50 due to the Iran war. Energy swings have been far worse in the past however. Oil prices have a vital impact on all businesses and households. Uncertainty with the swing in tariffs has also taken a toll, as has the 4.4% inflation rate as a result of increased energy prices among other factors. The result is a decline in GPD from an anticipated increase of 2.4% to 1.6% in the May forecast. This shows a sluggish economy, but not a recession. Sustained over a long period, these factors could bring on a recession but there are no warning signs as yet. Because Oregon’s GDP is highly dependent on exports for its largely agricultural products, Oregon GDPgrowth lags the US average by 1.1%.

In terms of the job situation, real income growth has fallen slightly, although unemployment has remained fairly low and steady at 4.3% over the year. But the real picture shows that business income has risen dramatically due to the booming stock market, while personal income has remained flat and the consumer price index has jumped off the charts, especially in Oregon. This shows that lower income earners and small businesses are suffering greatly while the corporations are doing exceptionally well, and the wealth gap is steadily worsening (K- shaped economy). Should the stock market crash as it did in 2001-2002, Oregon's expected revenue could tank.  Adding to this story, wealthy investors are investing extremely heavily in data centers and AI, which news reporting suggests may be a bubble, especially as AI and data center build-out seems to be facing a headwind of negative public opinion.

Senate and House Committee Meetings

Nili Essaides

Interim Session: House and Senate Revenue Committees

On June 15 and 16, 2026, the Senate Finance and Revenue Committee and the House

Revenue Committee, respectively, met for informational sessions on progress made on

some revenue collection items and legislative issues.

The first item for both committees was the progress made on collecting the new tax on

oral nicotine products, such as nicotine pouches.

Oral Nicotine Tax

Oregon’s Department of Revenue (DOR) provided the Senate and House Committees

with an update on the administration of Oral Nicotine Tax. In the first quarter of 2026,

the State collected $6.4 million in revenue (twice the expected amount), of which $6.1

were distributed to the Oregon Fire Marshall and the Forestry Department. The state will

distribute proceeds monthly going forward.

On the Senate Finance and Revenue Committee, there were three additional

items:

1. VITA

Dee Anne Everson, from the United Way of Jackson County, appealed to the committee

to extend the funding for the administration of the Volunteer Income Tax Assistance

program (VITA) in the 2027 legislative session. VITA, which provides free tax-filing help

to certain communities, has helped 10,000 consumers receive $18 million in tax credits.

Its full impact will be available next year, after the filing season.

2. SB 1507

In its update on the implementation of SB 1507, the Legislative Revenue Office (LRO)

noted that it is too early to report on the bill’s full revenue impact. SB 1507 disconnected

Oregon’s taxes from some parts of the Federal tax code. The full impact will not be

available until after the filing season.

3. Tax Expenditure Report

In its presentation, DOR discussed the voluminous report’s lack of distinction between

what is a tax expenditure vs. a spending item.

The House Revenue Committee discussed the following items:

1. Revenue System Interdependencies

In its presentation, The Legislative Revenue Office (LRO) explained the intricate and

often unexpected interdependencies created by taxes from different revenue collection

entities, such as cross deductibility. The discussion focused on the resulting policy

implications ahead of the next legislative session.

2. New Taxing District

The Oregon Legislative Office (LRO), in a joint presentation with the Lane County Tax

Assessor and Tax Collector, explained how a local entity can apply for a special taxing

district. The LRO’s presentation and the Lane County Tax Assessor outlined how to

secure a new taxing district as well as a case study example.

However, the bulk of the conversation focused on the restrictions and implications

related to Oregon outdated property tax infrastructure, as determined by Measure 5 and

Measure 50, both dating back 35 years. The Revenue Committee has established a

task force to study the system and make reform recommendations.

3. Other Items

Not on the agenda was a list from the LRO of bills to be discussed during the next

session, including the sunsetting of the tax exemptions for medical marijuana and estate

taxes, as well as tax credit extensions and employment requirements for providing

investment tax incentives.

Both Committees will meet again on the September 10-12 legislative days.