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: September 2016
September 14th, 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
Oregon’s Job Market Continues to
Impress
3

4. OFFICE OF ECONOMIC ANALYSIS
Nationwide Income Growth Slows
4

5. OFFICE OF ECONOMIC ANALYSIS
But Not in Oregon (Yet)
5

6. OFFICE OF ECONOMIC ANALYSIS
Manufacturing Weakness Spreading
6

7. OFFICE OF ECONOMIC ANALYSIS
Good Times for the American
Consumer
7

8. OFFICE OF ECONOMIC ANALYSIS
Recessionary Fears Are Rising, But
Remain Low For Now
8

9. OFFICE OF ECONOMIC ANALYSIS
Job Growth Remains Strong
9

10. OFFICE OF ECONOMIC ANALYSIS
Changing Workforce Demographics
10

11. OFFICE OF ECONOMIC ANALYSIS
Labor Market Getting Tight
11

12. OFFICE OF ECONOMIC ANALYSIS
Potent Mixture: Education,
Polarization and Participation
12

13. OFFICE OF ECONOMIC ANALYSIS
Slowing Down Soon
13

14. OFFICE OF ECONOMIC ANALYSIS
Revenue Update
14

15. OFFICE OF ECONOMIC ANALYSIS
Wages Still Strong…
15

16. OFFICE OF ECONOMIC ANALYSIS
…but Overall Growth Slows
16
-15%
-10%
-5%
0%
5%
10%
15%
20%
Jan
2015
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan
2016
Feb Mar Apr May June July Aug
(E)
Sept
(F)
Kicker Takes a Bite: Personal Income Tax Collections
% change over year ago, 3 month moving sum

17. OFFICE OF ECONOMIC ANALYSIS
Corporate Taxes Turn Down
17
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Net Corporate Taxes
($ Ths, 12 month sum)

18. OFFICE OF ECONOMIC ANALYSIS
Revenue Outlook
18

19. OFFICE OF ECONOMIC ANALYSIS
2015-17 Forecast Evolution
19

20. OFFICE OF ECONOMIC ANALYSIS
2017-19 Forecast Evolution
20

21. OFFICE OF ECONOMIC ANALYSIS
How Long Will Bull Markets Persist?
21
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
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
Sept 2016 Wilshire 5000 Stock Price
Forecast (Right)
Sept 2016 Cap Gains Forecast ($ bil)

22. OFFICE OF ECONOMIC ANALYSIS
Lottery: Casino Impact Update
22

23. OFFICE OF ECONOMIC ANALYSIS
Sept 2016 Forecast Changes Relative to the June 2016 Outlook
(millions of dollars)
2015-17 2017-19 2019-21 2021-23 2023-25
General Fund
Revenues -$1.3 -$56.2 -$135.4 -$32.3 $33.4
Other General Fund Changes
Beginning Balance $0.0 -$2.2 -$0.7 -$1.7 -$0.4
ORDF Transfer -$0.9 -$0.7 -$1.8 -$2.5 -$4.3
Expenditures $0.0 $0.0 $0.0 $0.0 $0.0
Sub-Total -$0.9 -$2.9 -$2.5 -$4.2 -$4.8
General Fund Ending Balance -$2.2 -$0.7 -$1.7 -$0.4 $0.4
Lottery Fund
Revenues $8.3 -$14.4 -$15.0 -$17.1 -$18.3
Other Lottery Changes
Beginning Balance $0.0 $5.6 $0.0 $0.0 $0.0
Total Available Resources $6.1 -$67.9 -$152.9 -$53.6 $10.3
Forecast Changes
23

24. OFFICE OF ECONOMIC ANALYSIS
2424
Forecast Changes
Difference from June Forecast, $ millions
6.1
-65.7
-152.2
-51.9
10.8
-$200
-$150
-$100
-$50
$0
$50
2015-17 2017-19 2019-21 2021-23 2023-25
Personal Corporate Lottery
Other Total

25. OFFICE OF ECONOMIC ANALYSIS
2525
Biennial Revenue Growth
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total Net Revenue

26. What Could Possibly Go Wrong?
Potential 2017-19 General Fund Revenues*
No Recession
Slow Growth Rapid GrowthToday July 1
2017
June 30
2019
$19.6B
$19.6B$19.9B$17.4B
Kicker Refunds Are TriggeredAbove Forecast,
but Below 2%
Kicker Threshold
Revenue Shortfall
Revenue Losses
Potentially Known
Before Budgets
Are Written
$19.6B
*Two scenarios are omitted for simplicity:
1) No recession, but extremely weak growth leading to budget shortfall
2) A recession starting very late in the biennium following strong growth that triggers the kicker
Recession Begins
Forecast

27. OFFICE OF ECONOMIC ANALYSIS
27
Reserves
Effective Reserves ($ millions)
Jul
2016
End
2015-17
ESF $303.2 $382.9
RDF $372.8 $387.8
Reserves $676.0 $770.7
Ending
Balance $259.6 $259.6
Total $935.6 $1,030.4
% of GF 5.2% 5.7%

28. OFFICE OF ECONOMIC ANALYSIS
28
For More Information
Standard Contact:
155 Cottage Street NE
Salem, OR 97301
(503) 378-3405
oea.info@state.or.us
www.oregon.gov/das/oea
Social Media:
www.OregonEconomicAnalysis.com
@OR_EconAnalysis