Oregon income levels remain strong despite worries about a potential recession and that has pushed state economists’ expectations for tax revenues up yet again, in the latest forecast they delivered to lawmakers on Wednesday.
One likely upshot is that taxpayers will receive an even larger “kicker” tax rebate on their 2023 taxes when they file returns in 2024: $3.7 billion total, up from $3.5 billion just three months ago.
At the same time, economists Mark McMullen and Josh Lehner said they now believe it’s more likely Oregon will experience a recession in the near future. They incorporated a recession starting next year in their revenue and economic forecasts. “It’s rather mild from a historical perspective,” McMullen said of the recession the state economists included in their modeling.
Oregon lawmakers will start working on the next two-year budget in a couple of months and economists had already predicted months ago that lawmakers would have approximately $3 billion less in revenue compared with the current budget cycle. That is because economists expected the state’s long run of windfall tax revenues, which was fueled in part by upper income Oregonians taking capital gains and federal pandemic stimulus programs, to slow down.
“So we have the record kicker plus this pullback in profit and investment,” McMullen said.
This story will be updated.
— Hillary Borrud; email@example.com; @hborrud