Oregon's kicker grows to $5.6B, three times larger than record payout

Oregon lawmakers on Wednesday got a relatively unchanged economic outlook compared to last quarter's numbers.

The relatively level outlook comes on the heels of two prior outlooks that showed sharp revenue increases.

"We've had these really big surprises the last couple of releases in terms of ... real shifts in either the economic or the revenue outlook and that's not happening so much this time," state economist Mark McMullen said. "Although there's still a high degree of uncertainty out there, the numbers haven't changed much."

But it means residents are still on track to get a record-high kicker for their 2023 taxes.

Inflation continues to slow, hitting 3% or 4% today compared to 9% last summer. But reaching the 2% Federal Reserve target continues to be challenging, economists said.

Oregon's growth

The economists spoke of future growth in the form of positive migration and productivity gains such as peaks in entrepreneurship and start-ups and big investments into the CHIPS industry.

They forecast an increase of 3,000 additional computer and electronic product manufacturing jobs over the next five years and an additional 1,000 construction jobs over the same time period.

Concerns over population growth remain, with deaths in Oregon still outpacing births in the state, economists said.

"Which means all of our labor force growth, should we have some, will come from migration," economist Josh Lehner said.

In the full forecast, economists delved further, saying the number of Oregonians age 0-4 fell 10% in recent years and predicting the state's K-12 education population will decline by 10% also. Further declines should be expected if the fertility rate of the state does not stabilize or rebound. It is currently the 5th lowest nationwide.

Stabilized revenue outlook

Economists estimate the gross general fund revenues for the 2023-25 biennium will reach $25.6 billion, a $354 million increase from May's forecast. The increase comes from collections of corporate income taxes, which still outstrip profit earnings, economists said.

Legislative changes were "relatively modest" compared to recent years, economists added. Changes in law during the 2023 legislative session translated into a reduction of $48.6 million in expected general fund revenue during the current biennium.

State leaders released positive statements about the revenue outlook.

Gov. Tina Kotek said lawmakers "must leverage the opportunity presented by another positive forecast to invest in housing production and other urgent needs to support Oregon families and the state’s long-term economic growth.”

Senate Republican leader Tim Knopp, R-Bend, echoed the call to further invest.

Knopp suggested "boldly" investing in infrastructure including roads, sewer systems and water for Oregonians wanting to build or buy a home affordably in the state.

"We must capitalize on this moment with real assets – not empty policies – to leave our state better off for the next generation," he said in a statement.

Senate President Rob Wagner, D-Lake Oswego, said the stable economic outlook meant sustaining critical funding for services that impact Oregon families. In his statement, Wagner said he was excited to build on the investments made during the 2023 session in the upcoming 2024 session.

House Republican Lader Vikki Breese-Iverson, R-Prineville, urged "fiscal responsibility" and cautioned the Legislature from viewing the stabilizing revenue "as a free pass to spend with reckless abandon." She said public safety should be a top priority for lawmakers.

Historic kicker estimate remains

Oregon taxpayers can still look forward to the largest-ever kicker tax rebate. Economists estimate a $5.6 billion return will be paid out to Oregonians when they file their 2023 taxes.

The amount an individual receives is based on their income. The more an Oregonian earns, the larger their kicker payout.

On Wednesday, economists included an updated estimate of returns broken down by income group. Economists estimate median-income earners in the state can expect to see a $980 kicker if the kicker remains at $5.6 billion. Those in the average income group earning a gross $69,400 can expect $2,100.

The Department of Administrative Services is required to calculate the total kicker rebate. Economists said the $5.6 billion is nearly three times larger than the biggest prior kicker, which was $1.9 billion.

Dianne Lugo covers the Oregon Legislature and equity issues. Reach her at dlugo@statesmanjournal.com or on Twitter @DianneLugo

This article originally appeared on Salem Statesman Journal: Oregon's kicker grows to $5.6B, economic outlook remains positive