Forecast: State revenue growing more than expected - for now
SALEM — State economists said Wednesday that they expect the state's general fund and lottery revenues to be about $47 million higher than forecast last quarter.
State revenues are also are expected to climb higher than previously expected beyond mid-2019, when the state's current budget biennium ends.
In the long term, revenues are expected to slow, as the state's population ages and more of those people exit the labor force. Oregon collects most of its revenue from the personal income tax.
However, if plans in Congress to reform federal taxes succeed, that could boost the state's income tax collections significantly, said state economist Mark McMullen.
As written, the GOP tax plan would do away with several deductions; and Oregonians can deduct their federal taxes from their state taxes. So reduced federal taxes could increase the amount that Oregonians pay to the state, although the tax plan could affect different income earners differently.
Meanwhile, the overall economic outlook is fairly stable, McMullen said.
While the rate of Oregon's job growth has slowed, the state is still outperforming the overall U.S.
The state is also seeing broader gains in the economy. McMullen said, including among low-income people and beyond the state's major population centers.
"A lot of our smaller and more distressed rural areas are starting to pick up," McMullen said.
Mid-year population estimates show that every Oregon county has added population in 2017, which makes Oregon's rural areas stand out from rural areas elsewhere in the country.
While at some point the economic expansion is going to end, the risk of entering a recession is currently low.
State economist Josh Lehner said there were few indicators of an impending recession. The state's budgetary reserves are also growing, which could pad, but not fully offset, the effects of a recession.
The economic forecast was released on the heels of new population growth estimates from Portland State University's Population Research Center, finding that the state's population had increased between 64,750 between 2016 and 2017. Much of that — about 88 percent — was due to migration into the state.
While deaths are expected to outnumber births in Oregon in 2029, which could change the long-term outlook for revenue and economic growth, but Lehner also noted that the outlook for in-migration continues to be positive.