Oregon Economic and Revenue Forecast, March 2016

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  • OFFICE OF ECONOMIC ANALYSIS

    Economic and Revenue Outlook:March 2016

    February 10th, 2016 Oregon Office of Economic Analysis

    Mark McMullen

    Josh Lehner

  • OFFICE OF ECONOMIC ANALYSIS

    Recent Performance

    2

  • OFFICE OF ECONOMIC ANALYSIS

    U.S. Economy Still in Expansion

    3

  • OFFICE OF ECONOMIC ANALYSIS

    Best Leading Indicator

    4

  • OFFICE OF ECONOMIC ANALYSIS

    Industrial Production is Weak

    Date # Neg.

    Nov 74 17

    May 80 14

    Dec 81 16

    Feb 91 17

    Apr 01 15

    Jul 08 15

    Dec 15 7

    5

  • OFFICE OF ECONOMIC ANALYSIS

    Oregon: Not Immune to Global Issues

    6

  • OFFICE OF ECONOMIC ANALYSIS

    Oregons Labor Market

    7

  • OFFICE OF ECONOMIC ANALYSIS

    Traditional Advantage Regained

    8

  • OFFICE OF ECONOMIC ANALYSIS

    Most Regions Full Throttle

    9

  • OFFICE OF ECONOMIC ANALYSIS

    Translates into Stronger Income GainsWage Gains Broad Based, Not Due to Composition Effects

    10

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    Participation: Mostly Structural

    11

  • OFFICE OF ECONOMIC ANALYSIS

    Businesses Casting Wider Net

    12

  • OFFICE OF ECONOMIC ANALYSIS

    Economic Outlook

    13

  • OFFICE OF ECONOMIC ANALYSIS

    Revenue Trends

    14

  • OFFICE OF ECONOMIC ANALYSIS

    Personal Income Tax Collections Remain Healthy

    15

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    Corporate Taxes Turn Down

    16

    $0

    $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 ($ Mil, 12 month sum)

  • OFFICE OF ECONOMIC ANALYSIS

    Herein Lies the Problem

    17

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    0

    2

    4

    6

    8

    10

    12

    19

    80

    19

    82

    19

    84

    19

    86

    19

    88

    19

    90

    19

    92

    19

    94

    19

    96

    19

    98

    20

    00

    20

    02

    20

    04

    20

    06

    20

    08

    20

    10

    20

    12

    20

    14

    20

    16

    20

    18

    20

    20

    20

    22

    20

    24

    Stock Prices and Oregon Taxable Capital Gains

    March 2016 Wilshire 5000 Stock PriceForecast (Right)

    Dec 2015 Wilshire 5000 Stock PriceForecast (Right)

    March 2016 Cap Gains Forecast ($ bil)

    Dec 2015 Cap Gains Forecast ($ bil)

  • OFFICE OF ECONOMIC ANALYSIS

    Here Comes April

    18

    Tax Year

    Dec-Jan

    Estimated

    Payments

    ($ mil) % change

    Non-Labor

    Income*

    (% change)

    Q2 Final PIT

    Payments

    (% change)

    2008 268 -28.4% -35.4% -45.4%

    2009 227 -15.2% -22.2% -2.8%

    2010 253 11.5% 10.9% 17.9%

    2011 268 5.6% 0.9% 3.3%

    2012 345 28.8% 36.0% 25.1%

    2013 346 0.5% -5.2% -7.0%

    2014 416 20.0% 23.4% 15.9%

    2015 455 9.4% 12.2% 8.5%Forecast

  • OFFICE OF ECONOMIC ANALYSIS

    Jackpot!

    190

    2,000,000

    4,000,000

    6,000,000

    8,000,000

    10,000,000

    12,000,000

    14,000,000

    1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

    PB_SALESOregon Weekly Powerball Sales

  • OFFICE OF ECONOMIC ANALYSIS

    Surprising Cigarette Sales

    20

  • OFFICE OF ECONOMIC ANALYSIS

    Revenue Outlook

    21

  • OFFICE OF ECONOMIC ANALYSIS

    2015-17 Forecast Evolution

    22

    $17.6

    $17.8

    $18.0

    $18.2

    $18.4

    $18.6

    $18.8

    $19.0

    $19.2

    $19.4

    $19.6

    $19.8

    Dec '10 May 13 Mar '16

    Bill

    ion

    s

    2015-17 General and Lottery Fund ResourcesEvolution by Forecast Release Date

    Forecast Including Tax Law Changes at Close of Session

  • OFFICE OF ECONOMIC ANALYSIS

    23

    March 2016 General Fund Forecast Summary

    Positive

    Factor

    Negative

    Factor

    Lottery

    Sales

    Personal

    Income

    Taxes

    Estate

    Taxes

    Liquor

    Criminal

    Fines

    Court Fees

    Spending

    Adjustments

    (Millions)

    2015 COS

    Forecast

    December 2015

    Forecast

    March 2016

    Forecast

    Change from

    Prior Forecast

    Change from

    COS Forecast

    Structural Revenues

    Personal Income Tax $15,713.5 $15,712.4 $15,692.1 -$20.3 -$21.4

    Corporate Income Tax $1,100.0 $1,134.7 $1,134.3 -$0.4 $34.3

    All Other Revenues $1,184.6 $1,182.0 $1,179.9 -$2.1 -$4.7

    Gross GF Revenues $17,998.1 $18,029.1 $18,006.3 -$22.8 $8.3

    Offsets and Transfers -$42.8 -$43.0 -$43.2 -$0.2 -$0.4

    Administrative Actions1 -$20.2 -$20.2 -$14.0 $6.2 $6.2

    Legislative Actions -$158.9 -$158.9 -$158.3 $0.6 $0.6

    Net Available Resources $18,309.1 $18,283.6 $18,319.6 $36.0 $10.5

    Confidence Intervals

    67% Confidence +/- 6.4% $1,144.9

    95% Confidence +/- 12.7% $2,289.8

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

    2015-17 General Fund Forecast Summary

    $16.86B to $19.15B

    $15.72B to $20.30B

    Table R.1

    Full Impact:$36.0 Net IncreaseLess $16.0 Additional SpendingPlus $24.8 Lottery Funds

  • OFFICE OF ECONOMIC ANALYSIS

    2424

    Forecast ChangesDifference from December Forecast, $ millions

    1.8

    -165.7-152.0

    -4.7

    27.6

    -$200

    -$150

    -$100

    -$50

    $0

    $50

    $100

    2015-17 2017-19 2019-21 2021-23 2023-25

    Personal Corporate Lottery Other Total

  • OFFICE OF ECONOMIC ANALYSIS

    25

    Reserves

    Effective Reserves ($ millions)

    Feb

    2016

    End

    2015-17

    ESF $257.5 $375.5

    RDF $212.4 $386.5

    Reserves $469.9 $762.1

    Ending

    Balance $319.0 $319.0

    Total $788.9 $1,081.0

    % of GF 4.4% 6.0%0%

    2%

    4%

    6%

    8%

    $0.0

    $0.2

    $0.4

    $0.6

    $0.8

    $1.0

    $1.2

    $1.4

    $1.6

    99-01BN

    01-03BN

    03-05BN

    05-07BN

    07-09BN

    09-11BN

    11-13BN

    13-15BN

    15-17BN

    17-19BN

    Oregon Budgetary Reserves (billions)Gen. Fund Ending Balance Educ. Stability Fund Rainy Day Fund

    Forecast -->

    Percent ofGeneral Fund -->

    Source: Oregon Office of Economic Analysis

  • OFFICE OF ECONOMIC ANALYSIS

    2626

    Biennial Revenue Growth

    -15%

    -10%

    -5%

    0%

    5%

    10%

    15%

    20%

    25%

    Personal Income Taxes Total General Fund

  • OFFICE OF ECONOMIC ANALYSIS

    27

    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