Last week the Legislature convened for Fall Legislative Days to receive updates from Department leadership, stakeholders and legislative staff on policy issues likely to be heard in 2025. Revenue committees also heard updated revenue projections from the September forecast. Transportation, K-12 education funding and housing production are all on the agenda for the 2025 session when legislators meet in 2025.

General Economic Outlook and Oregon Population Update

The economic outlook is stable with employment predictions generally tracking with prior forecasts. Economists noted that inflation has cooled to the point that the Federal Reserve could soon begin making long-awaited cuts to interest rates, which came to be the following week with the announcement of a .50 percent rate cut. The economists also noted that would help offset the newly developing soft labor market with job openings, new hires, and worker quit rates all cooling.

Oregon’s population growth has stalled over the last few years, and projected growth is still predicted to be only 0.6% over the next 10 years. Deaths currently exceed live births in Oregon, and the only source of population growth is in-migration. Another note the economists pressed was the continued reduction of school-aged children and the continued growth of older Oregonians. The impact of a declining population is evident in school funding challenges experiences across the state, as well as in our local Bend-LaPine School District.

Revenue Forecast

The September report increased expected tax revenues for the state by $676 million. Economists suggested that the increase could be attributed to past forecasts that underpredicted state revenues and higher than expected personal income tax returns. This is again a significant increase. It is the third increase of over $500 million in as many forecasts and it brings the total expected 2023-25 biennium General Fund and Lottery Budget to $36.7 billion compared to the original close of session budget of $34.3 billion. The new revenue strengthens the argument that any consideration of new taxes or tax increases is unnecessary and must be off the table. In 2025.

Reserves

The state has two reserve accounts, the Oregon Rainy Day Fund (RDF) and the Education Stability Fund (ESF). The September forecast indicates those funds combine to provide the state with $2.6 billion. There is additionally a predicted ending fund balance of $1.8 billion, which provides for an effective reserve of $4.4 billion.

Kicker

Finally, the state economists are now estimating both a personal kicker and corporate kicker will be paid for the 2023-25 biennium. The personal kicker is predicted to be much more modest than past kickers as it is predicted to return $987 million to Oregon taxpayers while $883 million will be transferred to the State School Fund.

Overall, it is a good report, and the state’s economic and revenue outlooks are stable. You can review the complete report here.