Download - Oregon Economic and Revenue Forecast, December 2016

OFFICE OF ECONOMIC ANALYSIS

Economic and Revenue Outlook: December 2016

November 16th, 2016 Oregon Office of Economic Analysis

Mark McMullen

Josh Lehner


Economic Update and Outlook

2


U.S. Economy

•Worrisome Signs Remain•Personal income growth slowing•Manufacturing weakness

•Solid Footing Heading into 2017

•Election Outcome• Too soon to tell

3


Oregon Job Growth Slows

4


Withholding Slows Too

5


Exports On The Mend

6


Improvements Across the Board

7


Household Incomes Rising(But Around a Stagnant Trend)

8


Population Growth Picks Up

9


Outlook: Relatively Unchanged

10


Revenue Update & Outlook

11


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


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 InvestmentsCapital Gains Reported on Oregon Tax Returns, $ Billions

Matched Returns for Full-Year Filers

2014 Tax Year

2015 Tax Year


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


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

Bill

ion

s

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

Forecast Including Tax Law Changes at Close of Session


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

Bill

ion

s

Forecast Release Date

General and Lottery Fund Revenues 2017-19

Source: Oregon 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 2013Forecast

Dec 2013Forecast

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 2013Forecast

Dec 2013Forecast

CurrentForecast


Record Level Estate Taxes

18


19


Smoke ‘Em if You Got ‘Em, Pt. 1

20


You Down with OTP?

21


Lottery: Casino Impact

22

Shaded areas have 25% or more Video Lottery players from Washington.

Source: Oregon Lottery


Smoke ‘Em if You Got ‘Em, Pt. 2

23


Forecast Changes

24


(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, ex clusiv e of internal borrow ing.

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


2626

Forecast ChangesDifference 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


2727

Biennial Revenue Growth

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Personal Income Taxes Total Net Revenue


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

For More Information

Standard Contact:

155 Cottage Street NE

Salem, OR 97301

(503) 378-3405

[email protected]

www.oregon.gov/das/oea

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@OR_EconAnalysis