The Oregon Office of Economic Analysis forecasts the state economy and General Fund and Lottery Fund revenues. This slide presentation is a part of the December 2018 forecast (released November 14th).

1. December 2018
Economic & Revenue
Outlook
November 14th, 2018 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. Economic Outlook

3. Oregon Office of
Economic Analysis
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Data Flow Mostly Healthy
Improving OILI
Slowing Consumer Sentiment
Not Improving Help Wanted Ads
Industrial Production
UO Index Initial Claims
Capital Good Orders Manufacturing PMI
Consumer Sentiment Withholding
Initial Claims Air Freight
Interest Rate Spread New Incorporations
Weight Distance Tax Housing Permits
Employment Services Oregon Dollar Index
Manufacturing Hrs Semiconductor Billings
Housing Permits
Individual Indicators

4. Oregon Office of
Economic Analysis
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Slowing Macro Outlook
Structural Drags
• Demographics
Cyclical Drags
• Supply Constraints
• Slack is gone
Policy Drags
• Interest rate hikes
• Federal spending
• No more tax cuts

5. Oregon Office of
Economic Analysis
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The 20/20 Discussion

6. Oregon Office of
Economic Analysis
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Household Incomes Rising

7. Oregon Office of
Economic Analysis
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Labor Market Drives Gains

8. Regions & Industries

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Economic Analysis
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Valley Incomes Rising

10. Oregon Office of
Economic Analysis
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Portland’s Growth has
Been Transformational

11. Oregon Office of
Economic Analysis
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Portland-Salem CPI is Dead

12. Oregon Office of
Economic Analysis
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Apocalypse Not Now

13. Oregon Office of
Economic Analysis
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Apocalypse Not Now

14. Revenue Update and
Outlook

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Economic Analysis
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Strong Wage Gains

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Economic Analysis
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2017-19 Forecast Summary
(Millions)
2017 COS
Forecast
September 2018
Forecast
December 2018
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $17,147.4 $17,772.4 $17,804.7 $32.3 $657.3
Corporate Income Tax $1,077.0 $1,284.8 $1,306.6 $21.8 $229.6
All Other Revenues $1,327.6 $1,388.5 $1,394.7 $6.1 $67.1
Gross GF Revenues $19,551.9 $20,445.7 $20,505.9 $60.2 $954.0
Offsets and Transfers -$75.5 -$71.1 -$71.8 -$0.7 $3.7
Administrative Actions1
-$21.5 -$21.5 -$21.5 $0.0 $0.0
Legislative Actions -$180.1 -$179.4 -$179.4 $0.0 $0.7
Net Available Resources $20,055.7 $21,174.1 $21,233.6 $59.5 $1,177.9
Confidence Intervals
67% Confidence +/- 3.0% $619.4
95% Confidence +/- 6.0% $1,238.8
2017-19 General Fund Forecast Summary
$19.89B to $21.13B
$19.27B to $21.74B
Other Revenues:
Lottery +$16.0
Marijuana +$26.8

17. Oregon Office of
Economic Analysis
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2019-21 Components of Change
Positive Factors Negative Factors
Personal Income Taxes:
Faster Job Growth in 2020 & 2021
Fewer Auctioned Tax Credits (Fed Guidance)
Personal Income Taxes:
Larger BI2017-19 Kicker Payment
Less Taxable Income From Repatriation
Corporate Income Taxes (Gen Fund Portion):
Smaller PERS UAL Transfer from Repatriation
Criminal Fines and Assessments Allocation
Insurance Taxes
Estate Taxes
State Court Fees
Stock Market Prices
Video Lottery Sales
Marijuana Sales
Total Resources: General Fund +$54.0
Lottery +$12.4
Marijuana +$20.3

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Economic Analysis
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Repatriated Foreign
Earnings

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Economic Analysis
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Marijuana Outlook Raised

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Economic Analysis
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Kickers Over Time

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Economic Analysis
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What Is Your Cut?
* Based on 2016 actual tax returns ** Based on 2016 actual tax returns, PIT kicker amount ($686 million)
and the Oregon Office of Economic Analysis’ forecast for tax liability in 2018
Income
Group
Adjusted Gross
Income*
Rough Estimate
of Kicker Size**
Bottom 20% < $11,200 $13
Second 20% $11,200 - $26,300 $79
Middle 20% $26,300 - $47,800 $179
Fourth 20% $47,800 - $87,400 $329
Next 15% $87,400 - $177,300 $669
Next 4% $177,300 - $401,200 $1,569
Top 1% > $401,200 $7,175
Average $61,600 $355
Median $35,000-$36,000 $174

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Economic Analysis
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Biennial Revenue Growth
22
22
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total Net Revenue

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Economic Analysis
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Reserves Continue to Grow
Effective Reserves ($ millions)
Sep
2018
End
2017-19
ESF $530.4 $616.8
RDF $583.6 $595.7
Reserves $1,114.0 $1,212.5
Ending
Balance $1,307.9 $1,307.9
Total $2,421.8 $2,520.4
% of GF 11.8% 12.3%
0%
2%
4%
6%
8%
10%
12%
14%
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
OregonBudgetary Reserves (billions)
Educ. Stability Fund Rainy Day Fund Gen. Fund Ending Balance
Forecast -->
Percent of
General Fund -->
Source: Oregon Office of Economic Analysis

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Economic Analysis
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Contact
mark.mcmullen@oregon.gov
(503) 378-3455
joshua.lehner@oregon.gov
(971) 209-5929
www.OregonEconomicAnalysis.com
@OR_EconAnalysis