Oregon economists offered a much rosier outlook last week than the bleak predictions of months past, with a third-quarter revenue forecast that shows a projected increase in general fund and Lottery revenues of $1.95 billion — nearly erasing the $2.164 billion that was projected in May.
The numbers would put state government about $200 million away from fully recuperating the losses projected from the Covid-19 pandemic.
The strong numbers are representative of a much-quicker-than-anticipated recovery in the job market this quarter. More than 176,000 more Oregonians had resumed work by September than what was expected in the second-quarter forecast in May.
Personal income was $22 billion above the Q2 forecast, and corporate income taxes came in $68 million higher than expected. Due to the positive forecast, Oregon’s reserve funds of approximately $3 billion — or 15% of the state’s general fund — remain largely intact.
Though the report is good news for the economy in general, and state workers and private industry that relies on state contracts in particular, economists caution that the full impact of the recession is difficult to predict. Actual revenues are felt in tax collections, which lag behind the forecasts.
More than 150,000 are still out of work, and the future of many small businesses and beloved institutions like museums and theaters is still far from certain.
“Oregon’s economy remains in a difficult place. The Covid-19 public health emergency has caused extraordinary difficulties for families and our economy,” said Senate Majority Leader Rob Wagner, among them the recent spate of wildfires that impacted thousands of residents. “It’s clear that Oregon still faces great challenges ahead.”
The state’s revenue forecast is also built on the assumption of receiving another round of federal coronavirus relief — which is likely, but not guaranteed.
“The substantial improvement in today’s revenue forecast highlights the uniqueness of a recession brought on by a global pandemic,” said House Speaker Tina Kotek. “While we are in a better financial position than we expected to be, it is still an unpredictable road ahead, particularly without further federal relief assistance.”
And, while the overall picture is much improved, there are certainly those who get the shorter end of the stick in any economic downturn. House Republican Leader Christine Drazan, Canby’s state representative, pointed out in a statement that this one has particularly impacted rural Oregonians — who also bore the brunt of the recent wildfires.
“Rural Oregonians are still suffering disproportionately, as are women and those in starting wage jobs that lost so much with the shutdown orders,” said Drazan. “We must oppose higher taxes and come together to advance policies that support full economic recovery for all Oregonians.”