Legislative Report - Week of 9/21

Revenue

Josie Koehne  

Important news: At this point in time, the state economists think it unlikely that either the personal income kicker  or the Corporate kicker will be triggered, but we will not know for sure until the forecast in late May, 2027.

Revenue Report and Economic Forecast

Revenue Report and the Economic Forecast

The September Economic and Revenue forecast was presented to the Joint revenue committees on Aug 26^th by Carl Riccadonna, Chief Economist, and  Michael Kennedy, Senior Economist. 

Although the September forecast showed a slight increase of $55 million in General Fund revenue over the June forecast, this is a relatively small increase to the net General Fund revenue of $37.8 billion for this 2025-27 biennium that ends June 30. The rise in higher than expected personal income tax (PIT) withholdings is due to higher wages, whereas corporate income tax collections were weaker than anticipated. The economists pointed out that corporate income and excise tax revenue is hard to predict because of the timing of when tax credit refunds are taken from previous years tax filings. Corporate profits and the stock market remain very strong and they predicted there is only an 18% chance of recession by the end of the 2027 session. 

The PIT should bring in $30 billion this biennium, whereas corporate taxes are projected to bring in under $3.6 billion. The Corporate Activities Tax (CAT) imposed on businesses with over $1 million in Oregon sales is projected to bring in an additional $3.1 billion, slightly lower than the previous forecast, which if the kicker is triggered, could reduce K-12 school funding. The projected CAT receipts is $88 million less than the 2025 close of session, but “with indicators of economic activity, such as state output exhibiting signs of strength, this pattern is viewed as a temporary data anomaly rather than a systemic or structural issue” the report states. Lottery earnings are up 3%, bringing in about $1.8 billion and Marijuana projected proceeds $261.7 million, down from the last forecast due to lower retail prices, but is expected to remain flat.

It is important to understand Other Fund revenue. Other Funds are revenues collected by state agencies and are projected to bring in $58 billion during this 2025-27 biennium, far outweighing the General Fund PIT and corporate income revenues combined. Other Funds are generally derived from taxes, fees and charges related to specific activities, as well as federal reimbursements, settlements, interest, and investment income. The largest share by far of Other Fund revenue includes interest and investment income of $23 billion from the Public Employees Retirement System (PERS) which is separate from state revenue. The Oregon Health Authority income is $10.5 billion of the $58 billion this biennium.

LWVOR in the News

On June 25, 2026, the Governor’s Prosperity Council delivered its final report to Governor Kotek: Recommendations for Oregon's Long-Term Competitiveness and Prosperity. Among other recommendations, they request four tax breaks, an R&D Research Tax Credit, a raise in the exemption to the estate tax with other exclusions, a reduction in the Corporate Activity Tax (CAT) and an exemption for Qualified Small Business Stock. Joe Cortright who served as Executive Officer of the Oregon Legislature’s Joint Committee on Trade & Economic Development from 1983 to 1985 and served as Chair of the Governor’s Council of Economic Advisers for 15 years estimated that these tax breaks would reduce Oregon’s revenue by $650 million.

The League wrote comments and provided invited testimony during Legislative Days on Sept 8, in opposition to these four tax proposals in the House Committee on Economic Development, Small Business and Trade arguing that these tax savings would go to wealthy investors and large corporations and that investing in higher education would be a better investment for Oregon quoting our LWVOR positions. Written  testimony  here, the powerpoint presentation is here, and here is the meeting recording (begin at 1:43:25). The Statesman’s Journal reported on the League’s comments on Sept 10, as did another newspaper.

Economic Outlook Trends

In terms of general national trends, high oil prices due to the Iran war, inflation at 3.6% (aim is 2%), frequently changing tariffs and uncertain geopolitics affecting supply chains combine to make it extremely difficult for businesses and families alike to plan ahead. Despite this, the GDP is growing - slowly inching upwards from 2%.

Recently, Oregon has been closing the GDP gap at 1%, catching up to the national average at 2%, but Oregon’s GDP is approximately half of last year’s total GDP. Not surprisingly, the industries that are suffering most are construction and utilities with higher energy costs, followed by transportation and trade. The winners are professional services, IT, real estate and finance, plus travel. Healthcare growth is strong at 5% but weaker than the first quarter of last year.

Our population is aging, requiring more health services, while young people are having fewer children and not moving to Oregon as much as they did a decade ago, which puts pressure on schools to close or merge due to headcount loss.

Unemployment however is leveling out, but is still ahead of the national average, at almost 5%. There have been fewer job postings over the past four years but it is now trending slightly upwards.

Economic disparity continues to get worse, with the wealthiest families benefiting from high stock market prices, spending and investments, while the average and poor Oregonians struggle to keep up with rising costs of basic necessities like food, rent and utility bills.

This trend needs to be reversed.