Oregon taxpayers will receive a $ 1.9 billion kicker refund loan in the coming months.
The kicker occurs when actual government revenues exceed projected revenues by 2 percent or more over the two-year budget cycle. The excess, including the 2 percent trigger amount, will be refunded to taxpayers through a credit on the following year’s tax return, according to the Oregon Revenue Department.
The following is the summary of the Oregon Revenue Forecast that was presented to state lawmakers today.
The average taxpayer can expect $ 420 in credit, while the average is estimated at $ 850, according to the latest state revenue forecast summary.
See the full forecast in the appendix.
The economic outlook remains positive.
The underlying driver is strong household incomes, which were boosted significantly by federal aid during the pandemic. Consumers are no short of firepower when they want and feel safe enough to spend their money.
The key to the outlook remains how that firepower is translated into actual consumer spending, especially in the heavily impacted service industries. Companies today are trying to find staff as quickly as possible to meet this increasing demand. The actual number of jobs created this year will be the largest in Oregon. The country’s job market is now expected to regain all the jobs it lost by next summer, or a quarter earlier than the previous forecast. While this momentum remains intact, the risks are weighted down.
Growing in a supply constrained economy is a challenge. Companies struggle with supply chains and a tight labor market. Wages are rising rapidly to attract and retain workers. Prices rise as demand continues to outpace supply. In addition, the current delta wave of the pandemic makes the short-term outlook difficult. Standstills are the most economical. A moderate decline in consumer spending in some categories will not lead to mass layoffs.
If anything, any slowdown in spending today is likely to translate into stronger earnings in the quarters to come. This cycle is different. The current recovery will be faster, more complete and broader than the recent experience from the technology and real estate bubbles. As some of the pandemic-specific challenges subside, the underlying economy stands on solid footing thanks to the strength of corporate and household balance sheets. In September of the odd years, the sales forecast closes the biennium as of June 30th.
Currently, the forecast for the end of the session is calculated by adding all tax law changes made during the legislative period to the May 2021 outlook. This sets the bar for Oregon’s balanced budget and unique kicker law. The changes to the tax law were relatively minor at the 2021 session, with net receipts of $ -3.6 million on the General Fund’s budget over the 2021-23 budget period.
The September forecast also shows where the revenue ended up in the previous budget period. There are few surprises in a typical year as tax revenues are relatively low in early summer. This year was different. Due to a delayed submission deadline for the tax return, according to the May forecast, a lot of uncertainty remained. When the forecast was made, the main tax season had only just begun.
At the end of the fiscal year, the 2021 tax season turned out to be very big. Income tax, corporate tax, lottery sales, and new corporate tax collections all spiked. Recent income tax withholding is up 17% year over year. Payments during the tax season were also strong, led by collections from high-income taxpayers. For the 2021 tax year, a $ 1.9 billion kicker credit is earmarked for income tax.
The average taxpayer can expect a $ 420 credit, while the average is estimated at $ 850. Strong revenue growth during the 2019-21 biennium limited a decade of unprecedented expansion in revenue for the General Fund in Oregon.
In the past decade, the General Fund’s revenue has almost doubled from around $ 12 billion per year to around $ 24 billion. Throughout the decade, kicker payments totaled $ 2.6 billion, reducing the General Fund’s accumulated funds by 2.6 percent. Over the past biennium, kicker payments have taken away half of the General Fund’s growth. Looking ahead, the current $ 1.9 billion kicker will also reduce revenue in 2021-23.
Governor Kate Brown today made the following statement on the state’s revenue forecast:
“Today’s sales forecast is another sign that the Oregon economy is healthy, strong, and on the way to a rapid recovery. This is welcome news at a time when Oregon residents continue to face immense challenges: from forest fire recovery to extreme drought to our worst spike in cases and hospitalizations during the COVID-19 pandemic.
“And we must never lose sight of the fact that the effects of the pandemic and the natural disasters of the past year and a half, due to historical, structural inequalities, are disproportionately hardest for blacks, indigenous people, Latinos, Latinas, Latinx, Asians, Pacific Islanders and tribal communities.
“My priority will be to continue to address the challenges families face in Oregon, including the inequalities caused by systemic racism, with a special focus on making sure our hospitals and health care workers have the resources they need to in order to continue to offer patients life-saving care. “.”
Senate President Peter Courtney made the following statement after the September 2021 quarterly economic and sales forecast was released:
“Oregon’s economy remains strong. We have more money to invest in pandemic aid, childcare and housing. We are still in a crisis. Legislature will help Oregonians who have hurt the most. I look forward to doing this as soon as possible. “
Oregon House spokeswoman Tina Kotek made the following statement today following the release of the latest quarterly economic and sales forecast for the state:
“The stable outlook on today’s sales forecast is welcome news from a legislature where we have invested heavily in programs to help Oregonians affected by the pandemic, forest fires, housing crisis and other challenges. We need to maintain this momentum in order to create a better future for all.
“Today is also a reminder that our economic recovery is linked to our ability to control the virus. Our hospital systems are on the verge of collapse right now. With 1,000 Oregon residents hospitalized for COVID-19, there is still too much suffering across the state. We will continue our economic recovery if we all commit to protect one another from the Delta variant. “
Declaration by the Republicans in the Oregon Senate
Today the Office of Economic Analysis released its quarterly sales forecast. It confirmed that Oregon taxpayers will receive a $ 1.9 billion kicker. The corporate kicker will send an additional $ 850 million to K-12 schools. The state budget will also have a final fund balance of $ 699 million.
“It’s clear that the Democrats looted $ 15 million from kicker for no good reason. Unprecedented deficit-stimulus spending by the federal government and the Oregonians supporting businesses during the governor’s shutdown has left the state with excess cash.
Legislators now have money to invest in COVID and forest fire response and recovery, and prepare for the upcoming unknown issues over the next biennium. Most importantly, our children need to be in school all day to catch up after a year of learning loss. This money can help our children to recover. “
The Oregon Economic Forecast provides information to planners and policy makers in government agencies and private organizations to use in their decision-making processes. The Oregon Revenue Forecast opens the revenue forecasting process for public review. It is the basis for a large part of budget planning in the state government. The forecast reports are issued four times a year: March, June, September and December.