Economic forecast ‘marginally more pessimistic’ than September
Revenue growth in 2011 expected to slow sharply next year
Provided by Oregon Office of Economic Analysis
Salem-Interim Oregon State Economist Mark McMullen released the quarterly economic and revenue forecast today, which shows that many of the factors supporting Oregon’s strong 2011 revenue gains will go away, and revenue growth in 2012 will slow sharply. Income tax collections are expected to increase by roughly $600 million over the current biennium, matching the growth seen in fiscal year 2011. As such, the current outlook is only marginally more pessimistic than the September forecast.
The forecast for General Fund revenues for 2011-13 is now $13.7 billion – a decrease of $84.3 million (-0.6%) from the September 2011 forecast.
Personal income tax collections were $1.24 billion for the first quarter of fiscal year 2012, $28.9 million (2.0%) above the latest forecast. Compared to the year-ago level, total personal income tax collections were up 12.0% relative to a forecast of 9.8% growth.
“Although personal income tax collections have been tracking ahead of projections for several months, the forecast for total personal income tax receipts during the current biennium was reduced by $34 million from the September forecast,” McMullen told the Legislature in his report. “This small revision can be traced to weaker expectations for growth, and disappointing recent job counts.”
Corporate income taxes equaled $121 million for the first quarter of fiscal year 2012, $12 million below the September forecast. Quarterly corporate receipts were 7.9% lower than figures from a year ago. With collections tracking behind the forecast, and a weaker profit outlook, particularly among financial institutions, the decline in corporate income taxes is now expected to be more pronounced. As a result, the September outlook for 2011-13 was revised downward by $54 million (6.2%).
Despite external factors such as the unfolding recession in Europe, Oregon is growing, due in large part to healthy gains in business investment and exports. Even so, the economic expansion continues to disappoint by historical standards. Spending and hiring will remain constrained for some time as households repair their balance sheets and governments make do with fewer resources. The Office of Economic Analysis is not forecasting a recession for the Oregon economy; nevertheless, contingency planning remains a must.
SALEM – Senate Majority Leader Diane Rosenbaum released the following statement this morning following the release of the December 2011 Revenue Forecast:
“Today’s forecast further demonstrates that we continue to face uncertain times in Oregon. Senate Democrats recognize that middle class families and small businesses are struggling to make ends meet. This volatility on Wall Street and in Europe means we must diligently monitor the economic situation while we prepare for budget adjustments in the upcoming February session.”
“This forecast is one piece of the puzzle as legislative leaders and budget writers to work together to create a plan for the February session. The forecast we receive in February will make clear what we have to work with as we re-balance the state budget while fighting to protect the essential services Oregonians rely on – our schools, services to the most vulnerable, and the safety of our communities. Just as we do every session, we will fight to protect middle class families and small businesses when the Legislature reconvenes in February.”
The full Oregon Economic and Revenue Forecast is available at: