Oregon economists forecast $500 million less state revenue amid uncertainty, sluggish growth

SALEM, Ore. (KTVZ) -- Carl Riccadonna, state chief economist and Michael Kennedy, senior economist of the Department of Administrative Services Office of Economic Analysis, have presented the latest economic outlook and revenue forecast to the Senate Committee on Finance and Revenue.

The quarterly revenue forecasts serve to open the revenue forecasting process to public review and is the basis for much of the Oregon state government budgeting process.

What is different about this forecast?

The Office of Economic Analysis provides quarterly forecasts for the State of Oregon’s major revenue sources, including all sources contributing to the General Fund (Personal and Corporate Income Tax, etc.), Lottery and the Corporate Activity Tax. In May of odd years, OEA’s revenue forecast establishes the anticipated resource levels for the next biennium’s adopted budget.

The May 2025 economic outlook brings more uncertainty and slower growth as risk factors continue to widen. Key points include:

• The national economy was projected to grow 2% for 2025 in the previous forecast; that growth is now projected to be 0.8%, less than half the original estimate.
• The outlook is now characterized as sluggish growth, a significant slowing in economic growth that results in a rising unemployment rate. This is distinct from a recession, which is characterized as a broad-based decline in economic activity. The probability of recession is currently estimated by OEA at 25%.
• Oregon’s economy continues to be bound to national trends for growth and inflation.
• Oregon’s heightened sensitivity to trade has a direct impact on personal income taxes and state labor trends although less of an impact on corporate taxes.

Revenue Forecast

The May revenue forecast projects the 2023-25 General Fund ending balance to be $2.17 billion, with revenues decreasing by $162.3 million.

In the 2025-27 biennium, General Fund revenues decreasing by $337 million from the March forecast.

About the Office of Economic Analysis

The state chief economist oversees the Office of Economic Analysis within the Department of Administrative Services and provides objective forecasts of the state’s economy, revenue, populations, corrections population and Youth Authority population. These forecasts are used across state government and by the public for a variety of reasons, notably to inform the state budgeting process. For more information about the Office of Economic Analysis and recent forecasts, visit https://www.oregon.gov/das/oea/pages/index.aspx.

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Governor Kotek Issues Statement in Response to Revenue Forecast

Salem, OR — Today, Governor Tina Kotek issued a statement in response to the revenue forecast:

“While the Trump Administration spreads uncertainty in our economy and our social safety net, I refuse to let Oregon be knocked off of our game. We know the problems we need to solve here at home regardless of the chaos coming out of Washington, D.C.

“Oregonians will come together and take care of each other. I am committed to working diligently with the Legislature from now through the end of the session to make hard budget choices and address our challenges head on, despite the dampening of economic growth. 

“Progress requires persistence. There are still too many people sleeping outside. There are not enough houses. There are not enough places to go for care or people to provide that care. Our kids must be served better by our schools. The cost of living is on the rise. These crises don’t take an intermission, so neither can we. All of us need to dig deep, be nimble, and lead with long-term strategy over caution so we can deliver for Oregonians.”

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House Speaker Julie Fahey  

Statement on June Economic and Revenue Forecast  

SALEM, Ore. —  Today Oregon House Speaker Julie Fahey released the following statement in response to the June Economic and Revenue Forecast: 

“Today’s revenue forecast confirms what economists have been telling us: the Trump administration’s reckless decisions are damaging our economy. Even before this morning’s forecast, we knew that Trump’s policies will cost Oregon families about $3,800 per year, shutter local businesses, and make life harder for Oregon children, workers, and seniors.   

“Oregon is particularly sensitive to the fallout from federal trade policies that have been changing on a whim since Trump’s inauguration. Our trade-dependent economy is being strained by tariffs and instability, while Oregon businesses and working families are bearing the brunt of rising costs and shrinking services. 

“This morning, we learned that, over the past three months, economic growth has slowed and the state’s expected revenue has dropped half a billion dollars, jeopardizing our ability to invest in education, health care, housing, and supports for working families. 

“Oregon leaders now have a responsibility to craft a balanced budget in the face of this economic uncertainty, with a clear focus on the people who call this state home. We are committed to protecting the core services Oregonians count on and to building long-term economic stability, even as the federal administration throws the economic future of our state and nation into question.” 

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Oregon Senate Republican Caucus

Decades of Democrat Policies Are Catching Up to Oregon

SALEM, Ore. – The May revenue forecast confirms that Oregon has enough money to meet its obligations and that Oregonians are already taxed enough. The real issue isn’t revenue. It’s the stagnant economy created by years of Democrat policies.

While Democrats point fingers at tariffs and federal uncertainty, Oregon’s economic decline began long before 2025. Key industries like manufacturing and construction are shedding jobs, while government and subsidized sectors continue to grow. Business and wealth are fleeing Portland, and the damage is spreading statewide.

Senate Republican Leader Daniel Bonham (R-The Dalles) released the following statement:

“It’s no surprise that Democrats who’ve spent years passing policies that weaken our economy are quick to blame anyone but themselves.

Instead of addressing their own failures, they deflect to D.C. while pushing policies that drive jobs and investment out. Oregon’s anti-business climate, high taxes, and housing restrictions—especially over the last six years with the hidden sales tax and Portland’s layered income-based taxes—are strangling opportunity. It’s time to stop blaming D.C. and start fixing what Democrats broke here at home.

Oregon’s problem isn’t a lack of money. It’s a lack of leadership. Families are learning to live within their means. It’s time state government did the same.”

Oregon is collecting more than enough taxes to fund core services. What’s needed now isn’t higher taxes, but smarter budgeting, real accountability, and a renewed focus on growing the private sector.

Oregon families are already paying the price for decades of failed leadership. If Democrats have their way this session, they’ll be asked to pay even more.