Strong Oregon economy triggers taxpayer refund
SALEM, Ore. (AP) — Revenues in Oregon have soared beyond expectations, according to the state’s economic office, which could mean an extra tax credit for taxpayers next year.
The state is forecasted to bring in $20.6 billion by the end of June, which is $147 million and over 4 percent more than what economists originally predicted, according to the state’s Economic and Revenue Forecast released Wednesday. But the Legislature will have to return some of that money to taxpayers under the so-called “two percent kicker” law, which refunds excess revenue when the state’s coffers are more than 2 percent higher than forecasted.
The Office of Economic Analysis predicts that the Oregon will have to shell out $748 million in kicker payments in the first half of 2020, the largest payout in state history. But given the size of the state’s economy, individuals will see a smaller share of that refund - which comes in the form of a personal and corporate income tax credit - than in years past. The average payout to taxpayers is expected to be $367, with those earning $26,300 to $47,800 per year predicted to get $185 in tax credit.
Oregon has financially benefited from a strong U.S. economy, a robust labor market and better-than-expected sales in exports and the state’s budding marijuana industry.
“Oregon’s economy continues to hit the sweet spot,” according to the state’s revenue forecast, which is released four times a year. “Even as disparities remain, these gains are seen by all ages and racial or ethnic groups across the state. The feel good part of the economy is here.”
This is the last revenue forecast before the Democratically-controlled Legislature will be tasked to come up with a budget addressing the state’s affordable housing crisis and chronically underfunded education and pension systems, among other things.
Economic growth has particularly benefited from an influx of in new residents, who have come to the state in search of new opportunities and lower costs of living. More people are working for higher pay, and state’s median household income is now on par with the rest of the nation--the first time that’s happened since the 1980s.
The state’s also remained largely insulated from President Donald Trump’s ongoing trade disputes. Oregon’s economy largely depends on exports, with its biggest customers being China and Canada. But its main products, including electrical and industrial machinery, haven’t yet been touched by tariffs.
And the recreational marijuana market, made legal in 2014, has provided a steady stream of revenue. That’s especially surprising given that an oversupply of marijuana has led to plummeting prices, which means the state is taking in less money per item sold. More Oregonians admit to smoking marijuana than cigarettes, and the state has the highest population of adults in the nation who admit to regular marijuana usage.
But although the state’s economy may currently be riding high, economists also warn that the good times won’t last forever. Job growth is slowing, and the state doesn’t have enough housing to keep up with population growth--which has led to skyrocketing housing prices and could dampen growth in the future.
Follow Sarah Zimmerman at @sarahzimm95 .