Presentation to the Oregon Legislature on the latest economic and revenue outlook for the State of Oregon. Overview of the U.S. and international economic landscape in addition to what is happening in Oregon. Tax revenue tracking and outlook for personal income taxes, corporate income taxes and Lottery sales.

1. OFFICE OF ECONOMIC ANALYSIS
Economic and Revenue Outlook:
March 2016
February 10th, 2016 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. OFFICE OF ECONOMIC ANALYSIS
Recent Performance
2

3. OFFICE OF ECONOMIC ANALYSIS
U.S. Economy Still in Expansion
3

4. OFFICE OF ECONOMIC ANALYSIS
Best Leading Indicator
4

5. OFFICE OF ECONOMIC ANALYSIS
Industrial Production is Weak
Date # Neg.
Nov ’74 17
May ’80 14
Dec ’81 16
Feb ’91 17
Apr ’01 15
Jul ’08 15
Dec ’15 7
5

6. OFFICE OF ECONOMIC ANALYSIS
Oregon: Not Immune to Global Issues
6

7. OFFICE OF ECONOMIC ANALYSIS
Oregon’s Labor Market
7

8. OFFICE OF ECONOMIC ANALYSIS
Traditional Advantage Regained
8

9. OFFICE OF ECONOMIC ANALYSIS
Most Regions Full Throttle
9

10. OFFICE OF ECONOMIC ANALYSIS
Translates into Stronger Income Gains
Wage Gains Broad Based, Not Due to Composition Effects
10

11. OFFICE OF ECONOMIC ANALYSIS
Participation: Mostly Structural
11

12. OFFICE OF ECONOMIC ANALYSIS
Businesses Casting Wider Net
12

13. OFFICE OF ECONOMIC ANALYSIS
Economic Outlook
13

14. OFFICE OF ECONOMIC ANALYSIS
Revenue Trends
14

15. OFFICE OF ECONOMIC ANALYSIS
Personal Income Tax Collections
Remain Healthy
15

16. OFFICE OF ECONOMIC ANALYSIS
Corporate Taxes Turn Down
16
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Net Corporate Taxes ($ Mil, 12 month sum)

17. OFFICE OF ECONOMIC ANALYSIS
Herein Lies the Problem
17
0
5,000
10,000
15,000
20,000
25,000
30,000
0
2
4
6
8
10
12
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
Stock Prices and Oregon Taxable Capital Gains
March 2016 Wilshire 5000 Stock Price
Forecast (Right)
Dec 2015 Wilshire 5000 Stock Price
Forecast (Right)
March 2016 Cap Gains Forecast ($ bil)
Dec 2015 Cap Gains Forecast ($ bil)

18. OFFICE OF ECONOMIC ANALYSIS
Here Comes April
18
Tax Year
Dec-Jan
Estimated
Payments
($ mil) % change
Non-Labor
Income*
(% change)
Q2 Final PIT
Payments
(% change)
2008 268 -28.4% -35.4% -45.4%
2009 227 -15.2% -22.2% -2.8%
2010 253 11.5% 10.9% 17.9%
2011 268 5.6% 0.9% 3.3%
2012 345 28.8% 36.0% 25.1%
2013 346 0.5% -5.2% -7.0%
2014 416 20.0% 23.4% 15.9%
2015 455 9.4% 12.2% 8.5%
Forecast

19. OFFICE OF ECONOMIC ANALYSIS
Jackpot!
190
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
PB_SALESOregon Weekly
Powerball Sales

20. OFFICE OF ECONOMIC ANALYSIS
Surprising Cigarette Sales
20

21. OFFICE OF ECONOMIC ANALYSIS
Revenue Outlook
21

22. OFFICE OF ECONOMIC ANALYSIS
2015-17 Forecast Evolution
22
$17.6
$17.8
$18.0
$18.2
$18.4
$18.6
$18.8
$19.0
$19.2
$19.4
$19.6
$19.8
Dec '10 May 13 Mar '16
Billions
2015-17 General and Lottery Fund Resources
Evolution by Forecast Release Date
Forecast Including Tax Law Changes at Close of Session

23. OFFICE OF ECONOMIC ANALYSIS
23
March 2016 General Fund
Forecast Summary
Positive
Factor
Negative
Factor
Lottery
Sales
Personal
Income
Taxes
Estate
Taxes
Liquor
Criminal
Fines
Court Fees
Spending
Adjustments
(Millions)
2015 COS
Forecast
December 2015
Forecast
March 2016
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $15,713.5 $15,712.4 $15,692.1 -$20.3 -$21.4
Corporate Income Tax $1,100.0 $1,134.7 $1,134.3 -$0.4 $34.3
All Other Revenues $1,184.6 $1,182.0 $1,179.9 -$2.1 -$4.7
Gross GF Revenues $17,998.1 $18,029.1 $18,006.3 -$22.8 $8.3
Offsets and Transfers -$42.8 -$43.0 -$43.2 -$0.2 -$0.4
Administrative Actions1
-$20.2 -$20.2 -$14.0 $6.2 $6.2
Legislative Actions -$158.9 -$158.9 -$158.3 $0.6 $0.6
Net Available Resources $18,309.1 $18,283.6 $18,319.6 $36.0 $10.5
Confidence Intervals
67% Confidence +/- 6.4% $1,144.9
95% Confidence +/- 12.7% $2,289.8
1 Reflects cost of cashflow management actions, exclusive of internal borrowing.
2015-17 General Fund Forecast Summary
$16.86B to $19.15B
$15.72B to $20.30B
Table R.1
Full Impact:
$36.0 Net Increase
Less $16.0 Additional Spending
Plus $24.8 Lottery Funds

24. OFFICE OF ECONOMIC ANALYSIS
2424
Forecast Changes
Difference from December Forecast, $ millions
1.8
-165.7
-152.0
-4.7
27.6
-$200
-$150
-$100
-$50
$0
$50
$100
2015-17 2017-19 2019-21 2021-23 2023-25
Personal Corporate Lottery Other Total

25. OFFICE OF ECONOMIC ANALYSIS
25
Reserves
Effective Reserves ($ millions)
Feb
2016
End
2015-17
ESF $257.5 $375.5
RDF $212.4 $386.5
Reserves $469.9 $762.1
Ending
Balance $319.0 $319.0
Total $788.9 $1,081.0
% of GF 4.4% 6.0%
0%
2%
4%
6%
8%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
99-01
BN
01-03
BN
03-05
BN
05-07
BN
07-09
BN
09-11
BN
11-13
BN
13-15
BN
15-17
BN
17-19
BN
Oregon Budgetary Reserves (billions)
Gen. Fund Ending Balance Educ. Stability Fund Rainy Day Fund
Forecast -->
Percentof
General Fund-->
Source:Oregon Office of Economic Analysis

26. OFFICE OF ECONOMIC ANALYSIS
2626
Biennial Revenue Growth
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total General Fund

27. OFFICE OF ECONOMIC ANALYSIS
27
For More Information
Standard Contact:
155 Cottage Street NE
Salem, OR 97301
(503) 378-3405
oea.info@state.or.us
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