State lawmakers have now received the June 2020 Economic and Revenue Forecast.
By the numbers
Due to the pandemic, we are looking at a $2.7 billion shortfall the 2019-21 biennium. Oregon is in a COVID-19 caused economic recession, and it is expected to take years to fully recover. In all, the state economists project a loss of $10.5 billion over the next five years.
With the Phase One reopening in most Oregon Counties, people are beginning to go back to work, but until there is an effective treatment or vaccine for the novel coronavirus, the economy will not return to normal. Initially, with the reopening of the economy we will see a strong but incomplete rebound in consumer spending. This will result in slower growth over the next year, or until effective medical treatment is widely available. After that, we should see stronger economic growth, with projections having the state’s economy return to health by the mid-decade.
This is a world-wide pandemic, with the greatest impacts in the United States. The federal government has stepped up with stimulus checks, which provided $4 billion to Oregon households. Expanded unemployment benefit programs, provided another $7 billion to displaced workers, and the Paycheck Protection Program funneled another $6.83 billion into businesses in the state. These programs are slated to end this summer.
Oregon’s revenue outlook is volatile due to our state’s reliance on personal and business income taxes. Video lottery terminals were also shut down for eight weeks, but are now coming back on line for counties in the Phase One reopening. Oregonians are demonstrating their pent up demand for gaming, and lottery terminals are already at about 60% of normal play. Due to the economic uncertainty and limited incomes, lottery revenue is not expected to reach pre-recession levels anytime soon.
Normally, state economists would have a clearer picture of income tax revenue by now, but the filing deadline was pushed from April 15th to July 15th to match the federal 90-day tax filing extension. Not surprisingly, people who will be receiving refunds have been filing their forms, and those who owe money are waiting to file. Oregon’s record $1.7 billion personal kicker is being distributed, $1 billion is already sent and the rest will be expended with the later filings.
In anticipation of the projected multi-billion dollar shortfall, Governor Brown asked all state agencies to reduce their budgets by 17%. These across the board budget cuts would help bring state spending in line with the revenue shortfall, but the unilateral approach is arguably not the best way to accomplish this goal. We need more targeted cuts and spending to meet the needs of our agencies and the citizens they serve.
Calling for Special Session
I strongly believe that a Special Session of the Oregon Legislature needs to be convened to take up these important budgetary issues. Oregon has received $1.39 billion through the federal CARES act, and we have $1.6 billion in reserves. The decisions on how to best allocate these billions of dollars and determining the necessary budget cuts in the interest of our state and citizenry should now go to the people’s elected representatives….the sooner the better, in my opinion.
As is the case with many public spaces, the Capitol Building remains closed to the public, but my office staff and I monitor our email and phone daily, and we are working to assist constituents. If you need help or have an issue or concern please feel free to contact my office.
Please take care of yourself and each other. Be Safe.
Rep. Brad Witt serves House District 31. He may be reached at:
• Email: Rep.BradWitt@oregonlegislature.gov
• Telephone: 503-986-1431
• Capitol Building: 900 Court St NE, H-382, Salem, OR, 97301 • Website: http://www.oregonlegislature.gov/witt