All eyes on the revenue forecast

By Taxpayers Association of Oregon

On Wednesday, at 3:15pm the House and Senate Revenue will hear a presentation from staff at Oregon’s Office of Economic Analysis regarding the May Economic Revenue Forecast.

Legislators are updated regularly on the state of our economy; employment; short and long term risks, but the May forecast is arguably the most important milestones in an even-year session. The forecast provides the best, most refined projection of tax revenue available to the legislative budget writers. And, traditionally, after the May forecast, the speed of the session accelerates as sine die approaches.

A year ago, nobody would have guessed that our national economy would be as strong as it is. That’s not to say there haven’t been negative impacts on many working-class families. But, from a budgeting perspective, for a variety of reason Oregon has record tax collections.

Federal stimulus, an income tax on stimulus payments and lower than expected unemployment are all adding to Oregon’s tax surplus. Creating an ironic problem for legislators – how do you spend all the money

I’m reminded of one of my favorite 80’s comedies, Bruster’s Millions. A minor league baseball player must spend $30 million in thirty days, to inherit $300 million. How does Richard Pryor’s “Montgomery Brewster” do it? Well, he runs for office, of course!

Structurally, there are pitfalls given Oregon’s newfound cash, mostly in roll up costs that subsequent legislative assemblies must roll back when one-time funding sources go away.

Dirk VanderHart reported for OPB on April 23, the plan for spending the surplus $240 million in federal aid.

“Under a plan being put forward by Senate President Peter Courtney, D-Salem, and House Speaker Tina Kotek, D-Portland, $240 million in relief money from the recently passed American Rescue Plan Act would be separated out from the normal jockeying for cash that comes with the biennial budgeting process.

“Rather than — or perhaps alongside — fighting to get funding for pet projects within their districts through more normal channels, each of Oregon’s 90 lawmakers will be allotted a pot of money they can control. Every one of the state’s 30 senators will have the authority to spend $4 million in federal funding as they see fit. Every member of the 60-person house will get $2 million to control.”

After the May revenue forecast is presented tomorrow afternoon, the pace of the assembly will pick up drastically. And, we’ll finally have a better idea of what legislators might do with their newfound resources. I’m sure there will be some doozies in the mix.