Oregon Economic and Revenue Forecast, September 2014

OFFICE OF ECONOMIC ANALYSIS

Economic and Revenue Outlook:September 2014

August 27th, 2014 Oregon Office of Economic Analysis

Mark McMullen

Josh Lehner


Economic Overview

2


Oregon’s Job Growth Advantage

3

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15

Oregon Job Growth


Regional: The Bigger the Better

4

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

Jan-07 Jan-09 Jan-11 Jan-13 Jan-15

Oregon Employment: Metro and Nonmetro

Portland

Oregon

Bend, Corvallis, EugeneMedford, Salem

Nonmetro


Regional: Job Recovery by County

5

Multnomah

Washington

Salem MSA

Lane

Clackamas

Deschutes

Jackson

Linn

Benton

LincolnDouglas

Clatsop

Yamhill

Umatilla

Josephine

MalheurKlamath

Coos

Hood River

Union

Wasco

Columbia

Tillamook

Curry

Jefferson

Crook

Baker

Morrow

Wallowa

Grant

Lake

Harney

Sherman

Gilliam

Wheeler

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-20% -15% -10% -5% 0%

Shar

e o

f Lo

st J

ob

s R

egai

ned

by

July

20

14

Great Recession Job Losses

Oregon Employment by County

Oregon

All RegainedMajority RegainedAbout Half RegainedAbout 1 in 4 RegainedLess than 1 in 10


Regional: Central Oregon on the Rise

6

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

Jan-07 Jan-09 Jan-11 Jan-13 Jan-15

Phoenix RisingEmployment Change From Pre-Recession Peak, 3 MMA

Oregon

Central Oregon

0

2,000

4,000

6,000

8,000

10,000

12,000

1985 1989 1993 1997 2001 2005 2009 2013

Population and Construction Return Source: Portland State, HUD

Population Growth

Housing Permits


Migration Flows to Oregon Return

7

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Number of Driver's Licenses Surrendered

From Other States From California From Washington


Domestic Net Migration: Oregon’s Comparative Advantage

8


Domestic Migration Across Time: Deschutes County

9


Domestic Migration Across Time: Coos County

10


Outlook: As Good As It Gets?

11

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

2011 2012 2013 2014 2015 2016

Oregon EmploymentYear-over-Year Job Gains

Private Public Growth Rate (rhs)

Forecast -->


Revenue Outlook

12


Forecast Evolution: No More Wiggle Room

13

$15.5

$15.6

$15.7

$15.8

$15.9

$16.0

$16.1

$16.2

$16.3

$14.2

$14.3

$14.4

$14.5

$14.6

$14.7

$14.8

$14.9

$15.0

Dec '10 Sep '11 Jun '12 Mar 13 Dec '13 Sep '14

Bill

ion

s

Bill

ion

s

2013-15 BN Personal Kicker Base

$27 Million (0.2%)

-$251 Million (-1.7%)

<--2% Kicker Threshold

Expenditures -->

<--COS Forecast


Weak Year-End Collections Put the Brakes On Personal Income Taxes

14

0%

2%

4%

6%

8%

10%

12%

14%

July Aug Sept Oct Nov Dec Jan2014

Feb Mar Apr May June July

Recent Personal Income Tax Collections% change over year ago, 3 month moving sum


15

The Tricky Part

8.4%

0.2%

11.9%15.2%

-36.6%

5.3%11.2%

30.8%

49.4%

-1.0%

24.6%

-45.4%

-2.8%

17.9%

3.3%

25.1%

-7.0%

22.8%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Growth in Year-End Personal Income Tax Payments, April-June Quarter, %


2.5

3.5

4.5

5.5

6.5

7.5

8.5

9.5

10.5

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Personal Income Tax Collections (September 2014 Forecast)

PIT Collections Excluding Kicker

PIT Collections (June 2014 Forecast)

16

Personal Income Tax Forecast$ billions, 4 quarter moving sum

2013-15

+$34.8

(million)

2015-17

-$14.2

2017-19

-$70.4

2020-21

-$81.1

2021-23

-$49.0


Corp Collections Spring to Life

17

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

July Aug Sep Oct Nov Dec Jan 2014 Feb Mar Apr May June July

Corporate Excise Tax Collections% change over year ago, 3 month moving sum


Corporate Excise Tax Forecast

100

150

200

250

300

350

400

450

500

550

600

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


Lottery At Risk

19


Lottery At Risk

20

0.30%

0.35%

0.40%

0.45%

0.50%

0.55%

0.60%

0.65%

0.70%

2000 2002 2004 2006 2008 2010 2012 2014 2016

Video Lottery as Share of Personal Income

September 2014 Forecast June 2014 Forecast


21

September 2014 General Fund Forecast Summary

Positive

Factor

Negative

Factor

Personal

Income Tax:

Recent

Withholdings

& Cap Gains

Outlook

Personal

Income

Taxes:

30-day

Accrual

Number

Booming

Corporate

Excise Taxes

Estate Taxes

DCBS

Insurance

Fees

Lottery Sales

(-$16 mil)

(Millions)

2013 COS

Forecast

June 2014

Forecast

September 2014

Forecast

Change from

Prior Forecast

Change from

COS Forecast

Structural Revenues

Personal Income Tax $13,558.2 $13,816.7 $13,851.4 $34.8 $293.2

Corporate Income Tax $1,056.6 $1,007.6 $1,046.7 $39.1 -$9.9

All Other Revenues $1,027.9 $990.7 $1,002.5 $11.8 -$25.3

Gross GF Revenues $15,642.6 $15,815.0 $15,900.6 $85.6 $258.0

Offsets and Transfers -$120.8 -$72.7 -$72.6 $0.1 $48.2

Administrative Actions1 -$18.2 -$12.7 -$12.7 $0.0 $5.6

Legislative Actions -$136.9 -$136.9 -$136.7 $0.2 $0.2

Net Available Resources $15,910.1 $16,079.5 $16,165.4 $85.9 $255.3

Confidence Intervals

67% Confidence +/- 3.8% $609.7

95% Confidence +/- 7.7% $1,219.4

1 Reflects cost of cashflow management actions, ex clusiv e of internal borrow ing.

2013-15 General Fund Forecast Summary

$15.29B to $16.51B

$14.68B to $17.12B

Table R.1


Effective Reserves

22

0%

1%

2%

3%

4%

5%

6%

7%

8%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

99-01BN

01-03BN

03-05BN

05-07BN

07-09BN

09-11BN

11-13BN

FY14 FY15 15-17BN

17-19BN

Oregon Budgetary Reserves ($millions)

General Fund Ending Balance Education Stability Fund

Raindy Day Fund Percent of General Fund, rhs


2323

Forecast ChangesDifference from June forecast, $ millions

70

-55.1

-123

-146.3

-128.3

-$175

-$150

-$125

-$100

-$75

-$50

-$25

$0

$25

$50

$75

$100

2013-15 2015-17 2017-19 2019-21 2021-23

Personal Corporate

Lottery Other

Total

OFFICE OF ECONOMIC ANALYSIS24

10-Year Forecast

Table R.2

General Fund Revenue Forecast Summary (Millions of Dollars, Current Law)

Forecast Forecast Forecast Forecast Forecast Forecast

2011-13 % 2013-15 % 2015-17 % 2017-19 % 2019-21 % 2021-23 %

Revenue Source Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg

Personal Income Taxes 12,118.2 15.8% 13,851.4 14.3% 15,613.1 12.7% 16,985.4 8.8% 18,729.4 10.3% 20,668.3 10.4%

Corporate Income Taxes 883.9 6.8% 1,046.7 18.4% 1,042.4 -0.4% 1,006.7 -3.4% 1,036.1 2.9% 1,112.1 7.3%

All Others 1,164.9 -5.0% 1,002.5 -13.9% 965.5 -3.7% 1,025.9 6.3% 1,103.5 7.6% 1,170.1 6.0%

Gross General Fund 14,167.0 13.1% 15,900.6 12.2% 17,621.1 10.8% 19,018.1 7.9% 20,869.1 9.7% 22,950.5 10.0%

Offsets and Transfers (12.0) (72.6) (95.8) (84.1) (39.4) (42.5)

Net Revenue 14,155.0 13.0% 15,828.0 11.8% 17,525.2 10.7% 18,934.0 8.0% 20,829.7 10.0% 22,907.9 10.0%

Other tax es include General Fund portions of the Eastern Oregon Sev erance Tax , Western Oregon Sev erance Tax and Amusement Dev ice Tax .

Commercial Fish Licenses & Fees and Pari-mutual Receipts are included in Other Rev enues


2525

Biennial Revenue Growth

-12%

-8%

-4%

0%

4%

8%

12%

16%

20%

24%PIT TOTAL


26

For More Information

Standard Contact:

155 Cottage Street NE

Salem, OR 97301

(503) 378-3405

[email protected]

www.oregon.gov/das/oea

Social Media:

www.OregonEconomicAnalysis.com

@OR_EconAnalysis

Oregon Economic and Revenue Forecast, September 2014

Economy & Finance

Transcript of Oregon Economic and Revenue Forecast, September 2014