02/08/10 Oregon
Oregon faces these same uncertainties as it moves through the early stages of recovery. The forecast has a "jobless" recovery where employment rises slowly starting in the second quarter of 2010, going through a soft growth period into 2011.
Another uncertainty facing the Oregon economy is the impacts from the two tax measures which were passed on January 26. Studies on both sides of the issue from respectable sources derived very different conclusions. Given the uncertain nature of the impact of these two tax measures, we will not incorporate possible impacts into the Oregon economic forecast. We will be monitoring closely to see if any changes are warranted in future forecasts.
Revenue Forecast:
The forecast for General Fund revenues for 2009-11 is $13,210.3 million. This represents a decrease of $182.8 million from the December 2009 forecast. The forecast for the 2009-11 biennium is now $365.4 below the Close of Session forecast. On net, nearly all of the decrease for the March forecast is associated with lower expectations for personal income taxes, particularly in the remainder of the current fiscal year. In spite of increased expectations for corporate income taxes, the remainder of the changes to the forecast were offset by increases in the expectations for the amount of income tax credits to be claimed under the Business Energy Tax Credit (BETC) program. The expected ending balance is now a negative $106.3 million. Total available resources amount to $13,194.6 million.
Projected lottery earnings will total $1,071.7 million, a decrease of $9.5 million from the prior forecast. The typical seasonal behavior of video lottery receipts (e.g., receipts in the winter months tend to be higher than in the summer) has not been seen in the current cycle, as January receipts closely resembled those seen last July. Including the beginning balance and other earnings, total available resources equal $1,073.8 million. After adjusting for programs that receive a strict percentage of lottery transfers, the current forecast for the ending balance in the Economic Development Fund is a negative $33.6 million.
OEA (Office of Economic Analysis) forecasts a decline of 0.5 percent in total employment in the first quarter of 2010. The second quarter of 2010 will turn positive with growth of 1.9 percent followed by slower positive growth for the second half of the year. Stronger sustained job growth does not start until 2011.
The year average for 2010 is an employment decline of 1.0 percent. Job growth improves in 2011 with a yearly average growth of 2.0 percent. Job growth is projected to continue in 2012 at 2.8 percent.
