State forecast: Revenue up for 2011-13

An Oregon revenue forecast released Thursday offered some good news for legislators struggling to prepare a state budget that will cut education, human services and other programs.

For the 2011-13 budget cycle, the revenues should be almost $130 million higher than previous forecasts because of improving economic conditions, according to the Oregon Office of Economic Analysis.

However, for the current 2009-11 budget, revenues are down $49 million more than anticipated.

The revenue forecast provides the basis for the state's budget and predicts continued, but not particularly robust, improvement in the state's economy.

Job growth will continue to get better through the end of the year, the forecast predicts, citing a drop in the Oregon unemployment rate from 11 percent last year to 10 percent this year.

Oregon had the seventh-fastest job growth in the nation year to year, the forecast stated.

Personal income taxes are up, but the forecast predicts corporate tax revenue will slow.

Rep. Peter Buckley, an Ashland Democrat and co-chairman of the Joint Ways and Means Committee, said the revenue forecast means the Legislature can mitigate some budget cuts, citing specifically programs for seniors and people with disabilities.

These human services programs have been subsidized by federal stimulus dollars over the past two years.

"We are going to continue to press hard to make sure that we produce the best possible budget considering the resources we have available," Buckley said.

The improving numbers are a good sign that Oregon is pulling out of its economic slump, Buckley said.

"Overall, I am very encouraged the job numbers are starting to grow," he said. "We need to get more people back to work and we need to keep the growth going solid."

Rep. Dennis Richardson, a Central Point Republican who is co-chairman of the Joint Ways and Means Committee, expressed caution about being too hasty to spend the projected revenues.

"I look at the history of the forecasts, and they haven't been good," Richardson said. "In the past the state economist has been overly optimistic. I hope he's not in this instance."

Over the past two years, revenues have dropped $1.2 billion more than the state economist projected, Richardson said.

He said some in the Legislature treat the projected revenues as being in the bank, when, in fact, they are just estimates.

If he were in charge, Richardson said, he would be extremely conservative with the projected revenues, but said the matter will be heavily debated between Republicans and Democrats before the budget is resolved.

The state economic forecast provides a mixed picture of Oregon recovery until 2021, with gas prices and instability in the Mideast possibly changing the outlook.

The housing industry will continue to show a sluggish recovery.

However, the forecast said signs point to a stronger labor market in the immediate future. For instance, newspapers and software publishers are expected to add jobs at a rate of 5.5 percent this year. Professional and business services will increase by 6.2 percent, and leisure and hospital will see a 4.4 percent job growth.

In the long term, Oregon and other states will see declines in growth as the baby boom generation works less and spends less, the forecast predicts. As a result, the rate of economic expansion will be slower than other periods of growth.

The forecast predicts the general fund revenues for 2011-12 will increase 12 percent in the next biennium to almost $13.9 million. Lottery dollars will increase by $1.2 million to $1.1 billion in the next biennium, bringing general fund revenues to $14.8 billion.

Damian Mann is a reporter for the Mail Tribune. Reach him at 541-776-4476, or e-mail

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