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Oregon job growth cooling off, tax revenue slowing down

By ANDREW SELSKY
Of the Associated Press

SALEM — Oregon's job growth has cooled down, and as a consequence growth in personal income taxes the state collects has also slowed, the state said Wednesday in its economic and revenue forecast.

Even if the job growth had continued at its former red-hot pace, Oregon would have faced a large budget shortfall. And that's what Gov. Kate Brown focused on in her response to the revenue forecast.

“On the positive side, job growth is higher and unemployment is lower than the national average and Oregon's economy remains stable overall,” Brown said. “However, our obligations to fund important services such as public education and health care still exceed available revenues, and, looking ahead, there will be some very tough budget choices to make.”

Brown's communications director, Kristen Grainger, said the governor will propose a balanced budget on Dec. 1, and that it will accommodate the revenue shortfall. That shortfall was approximately $1.3 billion before the election but with the fiscal impact of ballot measures that passed, it is now closer to $1.8 billion, Grainger said in an email.

That budget shortfall comes from increased health-care costs, including the state's share of the cost to implement the Affordable Care Act after federal funds for start-up vanish; the fiscal impact of 2016 ballot measures that specify and redirect state spending; and Oregon's Public Employee Retirement System unfunded liability, Grainger said.

A remedy to the shortfall that Brown had backed — Measure 97, that would have brought in billions in corporate sales taxes — was rejected in the Nov. 8 election.

The forecast said new employment data and state income tax withholdings from paychecks of Oregonians show the economic slowdown is already here. While Oregon's labor market growth is slowing somewhat, the state is at or near full employment.

“Going forward, slower, more sustainable growth rates are expected to be the norm,” said the forecast compiled by the Office of Economic Analysis of the Department of Administrative Services.

Currently, revenues are expected to land within $8 million of the estimate from the close of the last legislative session. The slowdown had been expected and was built into the baseline forecast.

Brown said the 2017-19 budget that she will propose “will reflect my top priority — investing in kids and lifting families out of poverty — but will necessarily include a level of program cuts I find unacceptable.”

She said she has started discussions with legislative leaders about how “to better align state resources with our aspirations for a stronger, better Oregon.”

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Follow Andrew Selsky on Twitter at http://twitter.com/andrewselsky

Comments

kona

Not surprising. Our state government has promised too much in relation to what we can afford. We are one recession away from economic disaster in this state. There have been some who have been saying for 25 years that PERS will eventually become an insurmountable problem. This has been largely ignored (or not) by the Oregon Democratic Party and the public sector unions and now the budgets will be left with "little wiggle room". Locally there will be a real squeeze on the K-12 budgets and they will find it almost impossible to staff the yet to be built additional classrooms at the high school.

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