OR lawmakers have hundreds of millions of extra dollars

PORTLAND, Ore. (AP) — As Oregon lawmakers barrel ahead in this year’s short legislative session, state economists presented another sunny revenue forecast Wednesday — which included an unexpected and additional $800 million of tax revenue.

The state also carried over $179 million of unspent money from the last budget period to this session. In total, Oregon lawmakers have $979 million more than what was forecasted three months ago, available to spend on an ambitious list of priorities this legislative session.

“This is a pivotal moment for Oregon,” Gov. Kate Brown said. “We have a windfall of one-time resources this year, and we have the opportunity to make big investments—and to do the big and bold work to help our working families and businesses thrive. We cannot miss this moment.”

The forecast comes as state lawmakers are a week into the five-week legislative session. Prior to lawmakers returning to the Capitol, some said — even without the forecast — they expected to spend roughly $2 billion this session.

Last year, following good revenue projections and billions in federal aid, lawmakers passed a $25.5 billion General Fund budget for the 2021-23 biennium.

The new growth in revenue means a larger budget to work with during the short legislative session. But how the money is used remains up for debate

“Nice to have more money, and sometimes bad to have more money,” state Sen. Lee Beyer, a Springfield Democrat and chair of the Senate Finance and Revenue Committee, said. “The appetite for expenditures grows, and the real trick… is to use that money wisely on one-time expenses.”

Democrats have outlined an ambitious list of priorities this session including affordable housing, increasing child care options, bolstering the state’s workforce, addressing climate change and setting aside a significant amount of money for the next biennium in case state revenues weaken.

House Speaker Dan Rayfield, a Democrat, said in a statement he wants to use the additional funds for “critical investments” for areas like schools, job training, working families, housing, small businesses and behavioral health services.

Senate President Peter Courtney echoed many of Rayfield’s priorities.

“We can build big projects across the state. We can get the homeless off the street. We can do year-round schools. And we can better recruit, train and evaluate police. Much work to do in a very short period,” the Democrat said.

On the other side of the aisle, Republicans say they want to use the revenue to address crime, emphasizing a spike in violent crime and illegal marijuana grow operations causing major issues in southern Oregon.

Senate Majority Leader Tim Knopp, R-Bend, said he is pushing for an additional $60 million in funding for Oregon State Police, to help local law enforcement with general public safety needs and to combat illegal marijuana grows.

Republicans also called for spending $50 million on forest thinning to prevent wildfires.

Senate Republican leader, Tim Knopp of Bend, cautioned against spending all of the surplus.

“We need to reserve more funds for the next downturn,” Knopp said. “We also need to look seriously at giving Oregonians a tax break. The government has buckets of money, but inflation is pinching the pockets of working Oregonians.”

During a presentation of the revenue forecast, state economists projected another tax surplus credit, in the form of $964 million, back to tax filers in 2024 as part of the state’s unique “kicker” law.

In Oregon, the kicker goes into effect when personal income tax revenues are at least 2% above initial projections during a two-year budget cycle.

The projected kicker is separate from this year’s, when Oregonians will get 17% of their 2020 state income taxes back.

Since the start of the pandemic, state economists have been giving positive revenue forecasts that have far exceeded expectations.

Oregon Public Broadcasting reports that in total the surging revenues mean the state is expected to take in $2.7 billion more during the current two-year budget cycle than economists expected at the cycle’s outset in July 2021, a nearly 10% jump.

Much of the predicted surplus is due to corporate tax revenues, which have continued to surge as businesses raised prices amid supply shortages and found consumers prepared to pay more, economists said. Income taxes are also up, driven by wage increases. Estate taxes and lottery receipts, have also exceeded expectations.

But economists do have continued concerns about inflation.

“Even though it helps revenue, inflation is clearly not costless,” said State Economist Mark McMullen, who added that many Oregonians are spending their extra income on necessities such as housing and food.

“Inflationary booms traditionally don’t end well,” said McMullen. “A lot of analysts believe that we may see another year of overheating growth, and then the bottom drops out, as monetary policy-makers try to get on top of that — and do so too little and too late.”

___

Cline is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.