Quarterly Revenue Forecast Shows Continued Growth
The March quarterly revenue forecast came out on Feb. 21. State economists report that they have seen stronger than expected economic output since the last forecast, in December 2022. Economists are now forecasting a “soft landing” with positive, albeit slower, growth going forward.
Slow Growth, Soft Landing Forecast for 2023
The March forecast shows surprisingly strong economic and revenue growth in Oregon over the last few months. Economists had projected slowing growth and the onset of a mild recession due primarily to inflation and continuing interest rate increases from the Federal Reserve. While these factors remain, the state is seeing continued job strength and incoming tax revenue. In fact, economists expect tax revenue to exceed revenue forecasted in December by $487 million. With this forecast, the baseline General Fund revenue outlook for the 2021-23 biennium is forecast to be $5.5 billion ahead of the forecast used to set the state’s current two-year (2021-23) budget. This will generate higher current biennium ending balances, higher reserves and a larger kicker payout in 2024.
Ending Balance and Reserves
The growth seen in every quarterly forecast since the 2021 close-of-session forecast now means that the current biennium ending balance is expected to be $4.63 billion, which is more than enough to cover ten anticipated kicker refund of $3.94 billion. Additionally, the state Rainy Day Fund is expected to be $1.34 billion, and the Education Stability Fund is expected to be $708 million, resulting in a total effective ending balance and reserves of $6.68 billion.
2023-2025 Biennium
The gross general fund revenue now forecast for the 2023-25 biennium, which will begin on July 1, is expected to be $25.3 billion, which is $2 billion more than the 2021-23 budget, an increase of 8.5%.
2024 Kicker
Based on continued revenue growth above the June 2021 forecast, state economists now project a personal kicker of $3.94 billion to be paid/credited to individual taxpayers in 2024 and a corporate kicker of $1.55 billion, which would go into state education reserve accounts. Importantly, given the strong ending balance and reserves noted above, the large kicker payout should not impede lawmakers from adequately funding policy priorities.
Go here to read the full forecast.
Notable News
New Eugene Mills: Sierra Pacific Industries plans to build a pair of new mills at its Eugene manufacturing site, the Capital Press reports. The new cutting and stud mills will replace existing facilities and increase capacity by 86%, to 650 million board feet annually.
Oregon Exports: State exports jumped by nearly 14% in 2022 to $34 billion, an all-time high, The Oregonian reports. Though the value of semiconductor exports declined, by nearly $2 billion, the value of other exports more than compensated. Exports of engines, turbines and power transmission equipment, for example, rose by $1.6 billion.
Portland Exodus: Even though job growth is increasing in Portland, the city is losing residents and wealth to Washington, according to an ECONorthwest study of the city and its central core, the Portland Business Journal reports. Read the study here.
Legislative and Rulemaking Updates
PBA Report: The Portland Business Alliance released the annual State of Economy report it commissions. OBI is proud to support this work as part of the Value of Jobs Coalition, which includes PBA, OBI, the Oregon Business Council, Greater Portland Inc. and the Port of Portland. The report is sobering. You can see the findings here, including a supplement on the state of downtown and Portland’s central city. Among other things, the report quantifies the migration of Portland-area residents to Clark County, Wash., which features lower taxes. The report has received quite a bit of media coverage and has some elected officials taking our state’s competitiveness seriously.
Semiconductors and More: The first comprehensive legislative concept put in front of the Joint Semiconductor Committee was inadequate. OBI and other stakeholders have been aggressively lobbying to improve the package by making the eventual legislative proposal consistent with the recommendations issued last summer by the Oregon Semiconductor Competitiveness Task Force. This includes necessary land use and tax incentive reform. OBI President and CEO Angela Wilhelms testified on Feb. 22 about the good first steps and the need to do more. OBI also remains committed to make sure that this package is not just about semiconductors, but about a healthy ecosystem for manufacturing of all types. Scott Bruun will testify Feb. 27 on SB 4, the primary vehicle for the package.
Throughout the week, meanwhile, Bruun will testify on a host of other bills in OBI’s Growth and Innovation Roadmap that are important not just to the semiconductor conversation, but economic development and overall competitiveness. These include HB 2257 and HB 2663, which would extend and fund Oregon’s Industrial Site Readiness Program; SB 134, which would extend the sunset of Oregon’s enterprise zone program to 2032; and SB 699, an R&D tax credit bill that should be amended to include the full recommendations of the task force.
Tax Competitiveness Task Force: Scott Bruun testified in support of SB 45 before the Senate Finance and Revenue Committee. Another bill in OBI’s Growth and Innovation Roadmap, SB 45 would create the Oregon Tax Competitiveness Task Force to analyze all aspects of Oregon’s current tax system, compare that to other states, and then make policy recommendations to the Legislature to improve Oregon’s competitive position. OBI is optimistic that the committee chair is interested in moving the bill.
Labor Peace Agreements: The House Committee on Business and labor will hold a public hearing on HB 3183 on Feb. 27. The bill would require an applicant for any OLCC-related cannabis license or renewal to consent to a labor peace agreement. LPAs are effectively contracts between an employer and a union where the employer agrees to remain neutral during a union organizing campaign. It is already illegal for employers to interfere with employees who exercise their rights relating to organizing. This legislation is likely preempted by the National Labor Relations Act.
Natural Gas: A public hearing on HB 3152 is scheduled for March 1. The bill targets natural gas consumers by eliminating programs that incentivize upgrades to high efficiency natural gas infrastructure in residential buildings. It also would establish the Public Utilities Commission as an environmental regulator rather than a utility regulator and prohibit ratepayer funds from being used to install natural gas line extensions to residences. OBI will testify in opposition.
Good Tax Policy: On March 1, three of OBI’s priority tax reform bills will receive second hearings in the House Revenue Committee. These are HB 2546, which would eliminate Oregon’s uncompetitive tax “throwback” rule; HB 2575, which would give associations standing on behalf of members in the Oregon Tax Court; and HB 2576, which would give the Oregon Tax Court exclusive jurisdiction over local government income tax cases. OBI believes the chair of the committee is interested in advancing these concepts and has called these second hearings to clarify needed amendment language.
Cosmetics: The Senate Committee on Energy and Environment will hear SB 546, which would require the Oregon Health Authority to create a list of high priority chemicals used in cosmetic products. This bill would broadly disfavor “classes of chemicals” and would result in Oregon regulating cosmetics more than any other state except for California. The “classes of chemicals” approach is not rooted in science and would lump together chemicals even if there were no proven harm. The bill likely would serve as a first step in a series of much more burdensome regulations.
Shaver Transportation Going Strong after 143 Years
Even in Oregon, which is known for dramatic landscapes, few employers can offer a more scenic workplace than Shaver Transportation. It’s the rare traveler who doesn’t spot at least one of the company’s barges while following Interstate 84 through the Columbia River Gorge. One of Shaver’s boats even appeared in a 1952 Jimmy Stewart western.
But Shaver isn’t just part of the scenery. Now operated by the fifth generation of Shaver family members, the company is a part of Oregon history and continues to make an important contribution to the state’s economy.
Go here to learn more about Shaver Transportation, including the film in which the company’s Henderson played the role of the River Queen.
Save the Date: OBI Annual Meeting Set for May 17
The OBI Annual Meeting will take place May 17 at the Salem Convention Center. Please stay tuned for additional information, including the time, agenda and registration link.
The Annual Meeting is a chance for hundreds of our members to get together, hear an organizational update from our board leadership and OBI staff, and network with each other as well as elected officials. This event typically features a high-profile keynote address or political panel. Past speakers include A.B. Stoddard of RealClearPolitics and Jay Timmons, president and CEO of the National Association of Manufacturers. The 2022 Annual Meeting included a post-primary election forum involving the three leading candidates for governor.
The Annual Meeting is also an opportunity to bestow our Jobs Champion Award to legislators and civic leaders who embody the values and mission of OBI. In recent years, the Jobs Champion Award has been given to Brad Hicks, retired president and CEO of The Chamber of Medford and Jackson County; Sen. Betsy Johnson, D-Scappoose; former Rep. Jeff Barker, D-Aloha; and Rep. Shelly Boshart Davis, R-Albany, for their bipartisan work promoting Oregon jobs.
OBI Members Can Save with HealthChoice
Many businesses struggle to attract and retain qualified employees. Offering an affordable and flexible health-care plan can help. Through the collective strength of OBI’s HealthChoice plans, Oregon’s small businesses can access benefit packages normally available only to larger employers. OBI offers HealthChoice plans through a partnership with Regence BlueCross BlueShield of Oregon. Plans feature:
- A full range of health care coverage options, from preventative care to catastrophic events
- Access to the largest network of providers in every corner of the state
- Flexible options for premiums, deductibles and benefits
- ACA-compliant coverage for you and your employees
- Affordable options and add-ons like dental and vision
- Options for wellness and healthy lifestyle programs
- Local support staff for claims and administrative management
To learn more please contact your agent or reach out to The Partners Group, the managing general agent for OBI HealthChoice, by emailing zfritz@tpgrp.com.