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MAJOR HIGHLIGHTS
Last week, Oregon State economists presented this quarter’s Economic and Revenue Forecast to lawmakers. The current forecast indicates that legislators will have $38 billion available for crafting the next biennium’s budget, an increase of nearly $350 million since November. While this may seem proportionately small in comparison to the overall budget, any additional revenue will be vital as there are many competing funding needs this session.
While looming federal decisions - particularly funding freezes and tariffs - could have a tremendous impact on state finances, economists have stated that it is too early to determine the lay of the current federal landscape. However, the uncertainty has caused Senate President Ron Wagner (D-Lake Oswego) and Governor Tina Kotek to call on the legislative assembly to use an abundance of caution when crafting our next state budget. The Governor urged lawmakers to focus their attention on core services, calling out her office's key policy areas: mental health and addiction, houselessness, and education.
This message of caution is likely apt as the Trump administration is heavily considering enforcing additional tariffs. Oregon is a state that heavily relies on exports, making it more vulnerable to shifts in the manufacturing sector, export markets, and international trade disputes – all of which could be influenced by current and future federal decisions. In addition, many agencies around Oregon remain uncertain how a freeze of federal grants will impact local projects and programs. As Governor Tina Kotek said in a recent press conference: “it will be quite a while before we understand the full impact of any potential restrictions on federal funding”. Meanwhile, many Republicans stated they are far less concerned with Trump’s current fiscal policies and more concerned with the stagnation of Oregon’s business sector. The state economist’s report showed that while there had been job growth in sectors like health care and education, Oregon has lost workers in manufacturing, finance, and retail.
The final revenue forecast will be delivered on May 14th, and this will be the official forecast that lawmakers use to craft the budget for the next biennium. Even if the forecast remains stable, it is clear there are a lot of unknowns looming in the State Capitol.
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