SALEM, Ore. (AP) — Oregon will take in $35 million less in tax revenue than projected three months ago, an amount that isn't likely to require cuts beyond those recommended by key legislators last week, officials said Wednesday.
The latest shortfall revealed in a quarterly revenue forecast was less severe than lawmakers previously anticipated. It was driven primarily by slower-than-expected growth in personal income tax collections.
The $35 million brings the total expected budget shortfall to $341 million.
Reserves built into the two-year spending plan can cover some of the shortfall. But the three lawmakers in charge of budget legislation have proposed laying off state workers, closing a prison and cutting back on compensation for workers who provide in-home care for seniors and people with disabilities.
The latest forecast provides a clearer picture of anticipated state revenue, a key step before lawmakers can press ahead on balancing the budget. Senate President Peter Courtney, D-Salem, said the latest revenue projection doesn't require changes to the framework already proposed.
"That means we can move forward with a budget rebalance that will keep our schools open and criminals behind bars," he said.
Economists sounded a cautious tone, saying the recovery is getting a more solid footing but is still slow.
"The bleeding has really stopped, and the job losses have stopped even if no hiring has happened," Interim State Economist Mark McMullen said.
Businesses are profitable and have cash, trade is improving, consumers are spending more, and the average workweek for manufacturing workers has risen above 40 hours a week — all positive indicators for future job growth, economists said.
Still, they project that Oregon won't return to pre-recession employment levels until the end of 2014. And they warned that their forecasts assume Europeans avoid a catastrophic recession resulting from debt crises, particularly in Greece and Portugal.
It's unclear how a default on European debt would reverberate through the global economy, said Joe Cortright, chair of the Governor's Council of Economic Advisers.
"As long as we battle perpetually high unemployment and lower than average personal income levels, we'll have a growing need for services and a dwindling income tax base," said House Republican Co-Speaker Bruce Hanna of Roseburg.
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