In response to the article written about a potential $200 million to $300 million shortfall in Oregon state revenue in this biennium, I would have to say “hold on there.”
The statement is based on an opinion from the state's Legislative Revenue Office and Chris Allanach, the acting revenue officer.
In a presentation last month, the Legislative Revenue Office presented an analysis of the Tax Cuts and Jobs Act of 2017. The presentation through graphs and charts showed what they see as a revenue decrease for the state in the early years; however, there is an increase in later years. As a member of the Finance and Revenue Committee, I asked several questions about how they came to this conclusion. I was somewhat puzzled by their response.
In predicting their forecast it seems that they forgot a few items. They did not give much weight to the fact that we are seeing a large increase in employment. These new workers will now be contributing to the system, new taxpayers. They also did not look to the fact that new money will be flowing into the state from offshore through repatriation. The acceleration of the economy from a 1.5 percent to a 3.5 percent growth rate was also not given much consideration in the report.
During the December forecast meeting, we saw that the projected ending balance is up $73.6 million from the close of the 2017 session. The rainy day fund is projected to receive $198.6 million following the 2017-2019 biennium. I don’t see great concern for Oregon’s budget from a revenue aspect; however, the spending side of the ledger is very concerning.
When we look at Oregon’s revenue income from 1993 and into the future, 2025, it shows steady, healthy revenue increases. If we can keep spending under control, then Oregon will have a solid budget. If the state keeps making mistakes in spending, like $300 million lost on Cover Oregon, $500 million paid out on crazy “clean energy tax credits” or the millions lost and continuing to be lost in health care mismanagement, then yes, I agree Oregon may have a budget problem.
No matter how you slice it, the Tax Cuts and Jobs Act of 2017 will save citizens more money by reducing their tax liability. The more tax liability one has, the more savings. If a person has no tax liability they will not see a savings; however, they might see in increase in their earnings as the economy takes off and wages increase as a result of a worker shortage and a robust economy. And where will the state of Oregon be? The state will also be in good shape, if legislators can keep their hands on their wallets.
— Sen. Herman Baertschiger Jr. represents District 2 in the Oregon Senate.