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: December 2016
November 16th, 2016 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. OFFICE OF ECONOMIC ANALYSIS
Economic Update and
Outlook
2

3. OFFICE OF ECONOMIC ANALYSIS
U.S. Economy
•Worrisome Signs Remain
•Personal income growth slowing
•Manufacturing weakness
•Solid Footing Heading into 2017
•Election Outcome
•Too soon to tell
3

4. OFFICE OF ECONOMIC ANALYSIS
Oregon Job Growth Slows
4

5. OFFICE OF ECONOMIC ANALYSIS
Withholding Slows Too
5

6. OFFICE OF ECONOMIC ANALYSIS
Exports On The Mend
6

7. OFFICE OF ECONOMIC ANALYSIS
Improvements Across the Board
7

8. OFFICE OF ECONOMIC ANALYSIS
Household Incomes Rising
(But Around a Stagnant Trend)
8

9. OFFICE OF ECONOMIC ANALYSIS
Population Growth Picks Up
9

10. OFFICE OF ECONOMIC ANALYSIS
Outlook: Relatively Unchanged
10

11. OFFICE OF ECONOMIC ANALYSIS
Revenue Update &
Outlook
11

12. OFFICE OF ECONOMIC ANALYSIS
The Salad Days Are Over
12-10%
-5%
0%
5%
10%
15%
20%
Jan 2013 July Jan 2014 July Jan 2015 July Jan 2016 July
Kicker Takes a Bite: Personal Income Tax Collections
% change over year ago, 3 month moving sum

13. OFFICE OF ECONOMIC ANALYSIS
September Surprise
13
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
Processed Prior to September Processed in September & October
Extension Filers Cashed in Investments
Capital Gains Reported on Oregon Tax Returns, $ Billions
Matched Returns for Full-Year Filers
2014 Tax Year
2015 Tax Year

14. OFFICE OF ECONOMIC ANALYSIS
Corporate Taxes: Have We Hit
Bottom?
14
100
200
300
400
500
600
700
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Single Sales
Apportionment
Factor Enacted
M67 Minimum
Tax & Credit
Sunsets Enacted
Tax Haven
Legislation
M67 Minimum
Tax Reforms &
Small Business
Tax Cut
Approximate
Peak in BETC
Credits Taken
Corporate Excise Taxes, $ millions, 4 QTR Sum

15. OFFICE OF ECONOMIC ANALYSIS
2015-17 Forecast Evolution
15
$17.5
$18.0
$18.5
$19.0
$19.5
$20.0
Dec '10 May '13 May '15 Dec '16
Billions
2015-17 General and Lottery Fund Resources
Evolution by Forecast Release Date
Forecast Including Tax Law Changes at Close of Session

16. OFFICE OF ECONOMIC ANALYSIS
2017-19 Forecast Evolution
16
$19.0
$19.5
$20.0
$20.5
$21.0
Mar May Sep Dec Mar Jun Sep Dec Mar May Sep Dec Mar Jun Sep Dec Mar May
2013 2014 2015 2016 2017
Billions
Forecast Release Date
General and Lottery Fund Revenues 2017-19
Source: Oregon Office of Economic Analysis

17. OFFICE OF ECONOMIC ANALYSIS
Small Business Are Doing Better
Than Expected
17
$1
$2
$3
$4
$5
$6
$7
$8
$9
1990 1995 2000 2005 2010 2015 2020
Schedule E Income (Real Estate, S-Corps,
Partnerships, Trusts, etc), $ bil
September 2013
Forecast
Dec 2013
Forecast
Current
Forecast
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
1990 1995 2000 2005 2010 2015 2020
Proprietor's Income, $ bil
Sept 2013
Forecast
Dec 2013
Forecast
Current
Forecast

18. OFFICE OF ECONOMIC ANALYSIS
Record Level Estate Taxes
18

19. OFFICE OF ECONOMIC ANALYSIS
19

20. OFFICE OF ECONOMIC ANALYSIS
Smoke ‘Em if You Got ‘Em, Pt. 1
20

21. OFFICE OF ECONOMIC ANALYSIS
You Down with OTP?
21

22. OFFICE OF ECONOMIC ANALYSIS
Lottery: Casino Impact
22
Shaded areas have 25% or more Video Lottery players from Washington.
Source: Oregon Lottery

23. OFFICE OF ECONOMIC ANALYSIS
Smoke ‘Em if You Got ‘Em, Pt. 2
23

24. OFFICE OF ECONOMIC ANALYSIS
Forecast Changes
24

25. OFFICE OF ECONOMIC ANALYSIS
(Millions)
2015 COS
Forecast
September 2016
Forecast
December 2016
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $15,713.5 $15,713.7 $15,678.4 -$35.3 -$35.1
Corporate Income Tax $1,100.0 $1,110.8 $1,103.7 -$7.1 $3.7
All Other Revenues $1,184.6 $1,197.8 $1,225.7 $27.9 $41.1
Gross GF Revenues $17,998.1 $18,022.3 $18,007.7 -$14.6 $9.7
Offsets and Transfers -$42.8 -$44.4 -$44.2 $0.3 -$1.4
Administrative Actions1
-$20.2 -$14.0 -$14.0 $0.0 $6.2
Legislative Actions -$158.9 -$158.3 -$158.3 $0.0 $0.6
Net Available Resources $18,309.1 $18,334.3 $18,320.0 -$14.3 $10.9
Confidence Intervals
67% Confidence +/- 3.1% $551.1
95% Confidence +/- 6.1% $1,102.2
1 Reflects cost of cashflow management actions, exclusive of internal borrowing.
2015-17 General Fund Forecast Summary
$17.46B to $18.56B
$16.91B to $19.11B
Table R.1
25
December 2016 General Fund
Forecast Summary
Positive
Factor
Negative
Factor
2015
Income
Taxes Paid
by
Extension
Filers
Slower Job
Growth
Expected
in the Near
Term
Estate
Taxes
PDX Photo
Radar

26. OFFICE OF ECONOMIC ANALYSIS
2626
Forecast Changes
Difference from September Forecast, $ millions
-12.5
-52.3
6.6
-37.3
-42.4
-$100
-$50
$0
$50
2015-17 2017-19 2019-21 2021-23 2023-25
Personal Corporate Lottery
Other Total

27. OFFICE OF ECONOMIC ANALYSIS
2727
Biennial Revenue Growth
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total Net Revenue

28. OFFICE OF ECONOMIC ANALYSIS
28
Reserves
Effective Reserves ($ millions)
Oct
2016
End
2015-17
ESF $330.1 $383.2
RDF $373.4 $387.6
Reserves $703.5 $770.8
Ending
Balance $245.4 $245.4
Total $948.9 $1,016.2
% of GF 5.3% 5.6%

29. OFFICE OF ECONOMIC ANALYSIS
29
For More Information
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