Hello Friends, Oregon received remarkable news this week. In a dramatic change from dire projections a year ago, our economy is recovering quickly from the COVID pandemic and appears very positive moving forward. The latest revenue forecast from the Oregon Office of Economic Analysis reports that we’re looking at the fastest economic growth since the 1984 rebound of Ronald Reagan’s “Morning in America.”
The May forecast allows the Legislature to move forward on the final budget for the 2021-23 biennium. Now that we know how much we have to spend, we can finalize plans on how to spend it. Here are links to the PowerPoint presentation and the reports referenced in their presentation.
Some of the highlights:
Unprecedented federal aid in the form of direct payments to households, enhanced unemployment benefits, and payments to cities and states have led to income levels that are actually higher than they were prior to the pandemic.
There is a pent-up demand for travel, recreation, and other forms of spending that have been suppressed during the pandemic.
As vaccinations increase, Oregon’s labor market will return to full health during the coming biennium.
We’re seeing an increase of 11%-15% in individual tax withholdings suggesting a large increase in projected revenue.
Corporate payments are at record-setting levels.
Video poker and other lottery revenues are now above pre-pandemic predictions.
Record-level stock market earnings will result in big increases in capital gains payments.
The economists did issue a plea that we put some of these anticipated increases into savings.
They agree with the Governor’s call to put more money into community colleges and workforce development to build for the future.
The same disparities that existed before the pandemic existed during the pandemic and will likely continue after the pandemic.
Mothers have been hit especially hard compared to fathers and women without children because of their critical role as caregivers.
The Revenue Forecast indicates that Oregon is clearly on the road to recovery from the economic impacts of COVID-19, and that Oregon is experiencing its strongest growth in years. However, it is important to recognize that many families are still struggling, and the state needs to make intentional investments to assist these families in getting the help they need. As co-vice-chair of the Ways and Means Committee, I’ll keep you informed about decisions being considered for the budget. As you can imagine, things are about to heat up on that front, and will continue to do so between now and adjournment in five weeks.
There is one other important detail in this rosy revenue forecast. We now expect to send more than $1.4 billion back to Oregonians as credits on next year’s taxes as a result of our personal income tax “kicker” process.
The Kicker is Oregon’s policy that applies when actual revenues exceed forecasted revenues by 2% or more. To be clear, tax rates have not increased. But more people are paying taxes or paying higher taxes because of higher income. Rather than put that extra money into savings for future downturns, we issue a refund.
Oregonians at the state’s median income level - those making between $35,000 and $40,000 a year - will receive $312 back while more wealthy taxpayers will receive over $12,000. You will not receive a check. Instead, it will appear as a credit on your taxes next year.
Kicker Tax Credits
As I said, not everyone is doing well. New Emergency Rental Assistance for tenants is now available through the Oregon Emergency Rental Assistance Program (OERAP). This program can help with rent or utilities payments for low income households at 80% of Area Median Income or less, and which have experienced a financial hardship due to the pandemic.
Unlike the Landlord Compensation Fund, OERAP can cover current and future rent in addition to past rent. To apply, there will be one centralized, statewide tenant application run by Oregon Housing and Community Services. Visit the OERAP website for more information and for a link to the application.