Projected state budget deficit shrinks dramatically, but governor and lawmakers say Oregonians are still struggling
SALEM, Ore. (KTVZ) -- The state of Oregon's projected budget deficit has shrunk dramatically due to "economic resilience" that brought higher corporate tax receipts, state economists said Wednesday, pointing to a reduced risk of recession.
Gov. Kotek and legislative leaders offered their reactions on how to proceed as a result, with all pointing to the challenges many struggling Oregonians still face.
Here's what the Oregon Department of Administrative Services Office of Economic Analysis shared in their quarterly forecast Wednesday:
Economic Resilience Improves State's Financial Stability
Salem, OR – Carl Riccadonna, state chief economist and Michael Kennedy, senior economist of the Department of Administrative Services (DAS) Office of Economic Analysis (OEA), presented the latest economic outlook and revenue forecast to the legislative 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. The Q4-December economic outlook, while complicated by a lack of government economic statistics resulting from the federal government shutdown, reflects continued economic resilience both nationally and within the state. Recession risks appear to be diminishing, and the forecasts for 2026 has improved modestly.
Revenue Forecast
The revenue forecast for 2025-27 has increased $309.5 million, due largely to recent strength in Corporate Income Tax receipts. Corporate Income Tax exhibits significant quarter-to-quarter volatility, making it one of the more difficult revenue streams to forecast. For all other revenues, mild improvement in the economic landscape and outlook translate into a slight uptick in expected receipts for the biennium. The projected General Fund ending balance has improved, from a deficit of $372.7 million to a deficit of $63.1 million from last quarter.
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, please visit the OEA website.
Links: https://www.oregon.gov/das/oea/pages/index.aspx.
Governor Kotek Issues Statement in Response to December Revenue Forecast
Eugene, OR – Today, Governor Tina Kotek issued a statement in response to the fourth quarter revenue forecast:
“While this forecast reflects the resilience of Oregon’s overall economy, my focus remains on the people who are struggling right now,” Governor Kotek said. “We must hold the line against President Trump’s attacks on working families through cuts to food assistance and health care. We must continue to lean in on what’s working to address the cost of living across the state. And Oregon’s long-term prosperity won’t happen by luck, so we must come together intentionally to ensure we create jobs and chart a path for a stronger economy.”
Oregon Remains in Net Negative Fiscal Position after Trump Budget Cuts
Despite a one-time bump in state corporate tax collections this biennium, the outlook for Oregon's budget after Trump cuts is largely unchanged
SALEM, Ore. – Today, the Oregon Office of Economic Analysis released and presented to state legislators its most recent revenue forecast and economic outlook.
Senate President Rob Wagner (D-Lake Oswego) is releasing the following statement:
"Everyday Oregonians are struggling to make ends meet, and today's revenue forecast demonstrates that there is still significant economic uncertainty in the months ahead. What is clear is that due to the actions of the Trump administration, Oregon is still in a net negative fiscal position this biennium, is still going to lose $15 billion in federal funds over the next six years, and is still staring down a projected loss of $1.7 billion in federal funds that pay for Medicaid and SNAP in 2029.
We must continue the steps we are taking to protect core, mandatory state services that do the most good for the most Oregonians, while rebalancing the state budget with enough cushion to shield Oregon from future economic chaos from the federal government."
Speaker Fahey Statement on December Revenue Forecast
SALEM, Ore. — Today, Oregon House Speaker Julie Fahey released the following statement in response to the September Economic and Revenue Forecast:
“Because of the Trump Administration’s budget bill, HR 1, Oregon is facing a short-term budget challenge, and a full-on budget crisis in the long-term. Our budget shortfall in the current biennium is a small fraction of what we’ll face in future years, with Trump and Congressional Republicans cutting $15 billion in federal funding for critical programs in Oregon like Medicaid and SNAP.
“Thanks to a combination of Oregon leaders’ prudent budgeting in 2025 and the unexpected bump in corporate income tax revenue announced today, our short-term outlook is somewhat less acute than anticipated. With an eye to both our short and long-term challenges, subcommittee hearings this week considered reductions to agency budgets and our revenue experts are evaluating ways to close loopholes in Oregon’s tax code.
“Today’s forecast is also provided within the context of federal economic data remaining unavailable due to the longest government shutdown in U.S. history, as well as a pending U.S. Supreme Court case that may impact Trump’s tariffs and the broader economy – both of which add uncertainty to future forecasts.
“Even with today’s modestly improved numbers, Oregonians who are struggling will continue to feel the impacts from the Trump administration’s actions. Legislative leaders will keep working to safeguard our schools, health care, food assistance, and other essential services, and to protect the most vulnerable Oregonians as we navigate the difficult years ahead.”
Majority Leader Bowman Releases Statement on Oregon Revenue Forecast
SALEM, Ore. – Today,House Majority Leader Ben Bowman (D-Tigard, Metzger, & S. Beaverton) issued the following statement on the Revenue Forecast released this morning by the Oregon Office of Economic Analysis:
“This month’s federal government shutdown impacted our state in many ways: missed benefits, furloughed workers, closed national parks, canceled flights, and more. But it also delayed vital statistics that we depend on for revenue forecasts. We should take this forecast with a grain of salt.
There are signs of optimism in this forecast. But nothing in this data changes a core truth. Working families are struggling. As we work to balance the budget, we need to focus on the future: protecting vulnerable Oregonians from the cruelty of the Trump Administration, creating good-paying jobs, and fighting to lower costs for Oregonians.”
Statement from Senate Majority Leader Kayse Jama on Oregon’s Economic Outlook and Revenue Forecast
SALEM, Ore. – The State of Oregon’s Chief Economist today issued the latest state revenue forecast and economic analysis. Senate Majority Leader Kayse Jama (D – East Portland, Damascus, Boring) made the following statement:
“President Trump’s attacks on working families are playing out in real time with slowed wage growth coming up against rising prices for food and utilities. Spite-driven tariffs that remain the highest they've been in decades do extra harm to trade-heavy economies like Oregon's. That's the unmistakable lesson in otherwise murky economic data that contains huge gaps because the federal administration didn't get its work done during the Republican shutdown.
“Oregon Senate Democrats are moving ahead with the serious task of protecting core services in the wake of Trump’s massive tax giveaway to billionaires, and the concerns of struggling Oregonians will stay at the heart of that effort. Today's economic analysis shows us we're right to be leading where national Republicans won't: toward living-wage jobs, and an affordable cost of living for everyone, not just those at the top.”
House Republican Leader Lucetta Elmer Responds to November Revenue Forecast
SALEM, Ore. — Today, House Republican Leader Lucetta Elmer (R-McMinnville) released the following statement in response to the fourth quarter economic forecast:
“Despite the improvement in Oregon’s financial standing, a deficit of any size is a problem, and Oregonians are feeling the pinch,” said Leader Elmer.
Just this week, Intel cut hundreds more jobs in Oregon – bringing Oregon’s total job losses this year to more than 3,000. And Providence Oregon cut more than 150 additional jobs in its latest round of cuts.
A recent poll revealed how Oregon voters are feeling about the economy:
- 67% say the economy is seriously off on the wrong track.
- 66% say it would be difficult to find a similar job in Oregon if they left their current job.
- 64% say taxes are too high.
- 53% say they would be likely to explore relocating to another state to find a new job.
“Oregon’s rising unemployment numbers and high taxes are harming families and forcing businesses to leave our state. If we want to see our budget grow, we must cut taxes and create an economic climate where businesses can thrive and grow – not fear loss and decline,” she added.
Revenue Forecast Confirms No Justification for Higher Taxes
SALEM, Ore. – Today’s quarterly revenue forecast revealed that Oregon’s ending balance is now projected at –$63.1 million, an improvement of $309.5 million from the previous forecast.
“The latest numbers make one thing clear: there is absolutely no reason for the majority party to tax workers’ overtime or tips, or to enact more policies that would drive more Oregon businesses to other states as they had planned. A $63.1 million deficit is a drop in the bucket for a state with a $140 billion budget,” said Senate Republican Leader Bruce Starr (R-Dundee). “People are already stretched thin, and they need relief, not new burdens.”
The economic picture for everyday Oregonians is worsening. The forecast shows wages declining, and key industries like manufacturing, trades, and construction continue to bleed jobs while government and government-subsidized sectors expand.
Recent reporting from The Oregonian shows just how serious the job market has become: employers have averaged more than 600 layoffs per month in 2025, comparable to the job losses seen during the Great Recession when Oregon’s unemployment rate exceeded 11%.
Additionally, market research from Public Opinion Strategies conducted in September found that two-thirds of Oregon voters believe the state’s economy is on the wrong track. Among employed Oregonians surveyed:
- A majority are pessimistic about the job market.
- Two-thirds expect stagnant or declining wages.
- Two-thirds say it would be difficult to find a similar job if they left their current one.
- Over half say they would consider leaving Oregon for a new job.
- Over half say they would likely explore relocating to another state to find work.
“This is why Oregonians have shown up in huge numbers throughout 2025, pleading with this legislature and this governor not to pass a $4.3 billion tax hike,” Starr added. “People are struggling. Our economy will recover not through higher taxes and more regulation, but by investing in policies that help our state grow and innovate.”
