The Oregon Economic and Revenue Forecast released yesterday continues a recent theme of ours. Although economic uncertainty remains high, within that uncertainty there are clear signals that the economy is slowing.
Heading into the next biennium, uncertainty about the performance of the regional economy will become paramount. Growth will certainly slow to a sustainable rate in the coming years, but the path taken is unknown. Capacity constraints, an aging workforce, monetary policy drags and fading fiscal stimulus will all act to put a lid on growth a couple of years down the road. However, the exact timing and steepness of this deceleration is difficult to predict…
As the forecast points out, right now, times are good. But the road ahead will most likely be a bit more rough. Oregon’s revenue picture is further complicated by the state’s reliance on personal income tax revenues.
With a little more than four months left in the 2017-19 biennium, Oregon’s General Fund revenue picture remains uncertain. Given Oregon’s dependence upon personal income tax revenues, the jury will remain out until the bulk of payments are received and processed in April and May.
The tax filing season has just begun. Refunds got off to a slow start and the average refund is 11% lower so far this year, in part due to no kicker being paid out. Most year-end tax payments won’t arrive for at least another month. Although April surprises are commonplace, this year’s outlook is particularly uncertain. Federal tax law changes, volatile equity markets, a nationwide dearth in recent estimated payments and strong growth in withholdings are all acting to muddy the outlook this tax season.
As we’ve said before, fiscal caution is advised, in Olympia as well as in Salem.