Oregon revenue forecast predicts more money available for 2025-27

Published: August 28, 2024

The governor's budget is still three months away, but the funding plan is being written in pencil now. After the Oregon Economic and Revenue Forecast released Wednesday, Aug. 28, budget trackers, including education advocates, will need to get out their erasers and revise the numbers up.

"We're doing about as well as you could hope for," state economist Josh Lehner told legislators.

Oregon's General Fund revenue forecast for this biennium increased $676 million from the last forecast, good news for the 2025-27 budget. Although the report lowered revenue projections for the next biennium slightly, the overall available resources climbed $610 million from the June forecast.

Senate President Rob Wagner characterized the economy as stable but offering "limited resources."

"Legislators must come into the 2025 legislative session prepared to make tough decisions about which programs, services and projects we fund and ensure those decisions are consistent with the values of Oregonians," said Wagner, a former Lake Oswego School Board member, in a news release.

OSBA Interim Executive Director Emielle Nischik emphasized Wednesday that the Legislature's priorities for spending should start with education. Providing a high-quality K-12 education to all children is a core government function and a top public demand, she said.

"There is nothing more important to Oregon's future than the success of its students," she said. "There are ample resources to invest in students, teachers and schools, from summer learning to early literacy to ensuring students with disabilities have the supports they need."

The state economists report to the Legislature every three months. Right now, Gov. Tina Kotek's office, legislators and lobbyists, including OSBA, are working behind the scenes using these numbers to figure out what will get funded in the 2025 Legislature and what will get shorted.

The next forecast on Nov. 20 will ink in the final numbers in the governor's budget, which usually is released soon after. The governor's budget proposal has no legal authority, but it sets a bar for state budget discussions in the 2025 Legislature.

The Legislature usually waits for the February forecast before revealing its State School Fund proposal.

The quarterly forecasts show how well state revenue is matching to budget plans made at the end of the 2023 session and predict how much the state can spend in 2025-27.

For this biennium, Oregon has $2.4 billion more net General Fund and lottery resources than expected when the budget was set in 2023.

Some of that will be going back in kicker refunds thanks to Oregon's unique law that returns money to taxpayers when revenue exceeds the budget by more than 2%. The forecast predicted an individual taxpayer kicker of $987 million and a corporate kicker of $883 million, which goes to education by law, in 2026.

According to the report, Oregon still faces some uncertainty as the economy slows coming out of its inflationary boom, but it is showing signs of a smaller but sustained expansion. Future biennia were revised down slightly, but Oregon has unprecedented reserves to cushion any changes.

The latest forecast predicts $1 billion in the Education Stability Fund and $1.9 billion in the Rainy Day Fund by the end of the biennium. The education fund is expected to hit its statutory cap in 2027.

- Jake Arnold, OSBA
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