State
Blue Mountain Eagle
Wednesday, February 21, 2018
A9
Legislators wary of optimistic revenue forecast
By Claire Withycombe
Capital Bureau
Oregon is expected to have
about $99 million more in net
general and lottery fund re-
sources than state economists
projected a few months ago.
The state’s quarterly rev-
enue forecast, presented to
lawmakers Friday morning,
is a key development of the
short February session.
Lawmakers are working to
ensure the state’s current two-
year budget is on track and to
deal with the implications of
recent sweeping changes to
the federal tax code.
The net increase of about
$99 million in available
money is due to higher than
expected beginning fund bal-
ances, personal income tax
collections and lottery rev-
enues. However, corporate
tax collections are projected
to be lower than expected in
late November, when the last
quarterly forecast was re-
leased.
State economists are still
trying to pin down the im-
pact of the federal tax reforms
passed in late December.
In response to the federal
Tax Cuts and Jobs Act, some
state lawmakers are pressing
on with efforts to change Ore-
gon’s tax code to mitigate the
projected negative revenue ef-
fects. A bill passed last week
by the Oregon Senate would
allow Oregon to tax over-
seas profits that companies
are expected to bring back to
the U.S. through a provision
in the tax bill called repatri-
ation. It has been referred to
the House Revenue Commit-
tee for consideration.
‘Future is
uncertain’
Gov. Kate Brown said that
the forecast was “good news”
for the state, but warned that
the state needed to demon-
strate fiscal discipline and was
critical of a second tax bill be-
fore the Legislature.
The bill would change how
certain types of businesses are
taxed. It was sent back to the
Senate Finance and Revenue
committee by Senate Presi-
dent Peter Courtney, D-Sa-
lem, on Thursday.
Senate Republican Leader
Jackie Winters said the fore-
cast was evidence that it isn’t
necessary for lawmakers to
pass new revenue measures in
File photo
Good news Friday of nearly $100 million more in state
resources met with skepticism as Oregon lawmakers
wrestle with potential budget impact of federal tax
changes.
the ongoing short session.
“This revenue forecast
shows that Oregon’s econ-
omy continues to prosper,
eliminating the need for any
new revenue package during
this 35-day short session,”
Winters said. “Providing tax
relief for small business and
taxpaying Oregonians, while
growing Oregon’s economy,
is our priority.”
State Rep. Greg Smith,
R-Heppner, the longtime vice
chairman of the Joint Com-
mittee on Ways and Means
— the bicameral budget-writ-
ing committee — told fellow
lawmakers he was “nervous”
despite the positive economic
and revenue outlook.
“While today we’re up ap-
proximately $100 million af-
ter the information that’s been
shared with us, keep in mind
the future is uncertain, as was
also just shared with us, and
we have many priorities that
we’re going to want to con-
tinue to fund in the future,”
Smith said.
He said legislators have
two options: revenue reform
or controlling spending.
“One of those conversa-
tions has to occur,” Smith
said. “Because being at $100
million up, it’s going to be
very easy for us to be $2 bil-
lion down in the near future.”
Senate Majority Leader
Ginny Burdick, D-Portland,
called the new numbers “good
news,” but said she didn’t be-
lieve it would last.
“I continue to have con-
cerns about how the federal tax
changes will affect our state’s
revenues over time,” Bur-
dick said in a statement. “We
should chart our own course
by detaching from the federal
tax code in key areas. That will
protect the middle class and
low-income Oregonians.”
Budget gap
still there
Oregon’s budget leans
heavily on income taxes, a
source of chagrin for state
lawmakers who claim that it
makes for unstable budgets
and dramatic deficits in reces-
sionary periods.
Some lawmakers have also
voiced concerns about the
state’s property tax system,
altered by a series of ballot
measures in the 1990s. State
economist Mark McMullen
concurred, saying that struc-
tural revenue issues weren’t
going anywhere.
“That budget gap is still
there, it’s real,” McMullen
said. “This report changes that
not at all.”
And although most eco-
nomic indicators are pointing
in the right direction, McMul-
len said, there’s a higher risk
of a recession than there was
a year ago.
The state has worked to
build its reserves since the last
economic recession. But the
size of the structural budget
deficit in future budget cy-
cles is larger than the state’s
reserve funds, said State Rep.
Phil Barnhart, D-Eugene.
House Majority Leader
Jennifer Williamson, D-Port-
land, also alluded to lon-
ger-term budget concerns in a
post-forecast statement.
“The bad news is, Oregon
continues to struggle with
the long-term, structural im-
balance between our existing
revenue streams and the ris-
ing cost of funding schools,
health care, public safety and
other critical services for our
growing state,” Williamson
said.
L EGISLATIVE B RIEFCASE
Carbon sequestration proposed
as ‘cap-and-trade’ alternative
Oregon’s forestry and environmental regula-
tors would study “sequestering” carbon as a pos-
sible alternative to penalizing emissions under a
bill before the House Agriculture Committee.
Lawmakers are currently debating a contro-
versial and prominent “cap-and-trade” proposal
under which companies that exceed a ceiling on
carbon emissions could buy credits from those
that fall below it.
Timber companies and several lawmakers are
advocating for a less publicized carbon-related
bill that would require the Department of Envi-
ronmental Quality and Department of Forestry
to evaluate using “natural ecosystems” to absorb
and store carbon while promoting economic de-
velopment, as well as using tax incentives for
companies to reduce carbon emissions.
Under House Bill 4109, the study would also
examine “regional approaches” to reduce carbon
emissions “other than adopting or participating in
a greenhouse cap-and-trade system.”
Oregon’s annual wildfires emit more car-
bon monoxide, nitrous oxide, fine particulates
and volatile organic compounds than industri-
al sources or vehicles, said Rep. David Brock
Smith, R-Port Orford, the bill’s chief sponsor.
Supporters of HB 4109 argue it would encour-
age discussions about thinning over-stocked feder-
al lands that are prone to catastrophic forest fires.
Ballot referral making health
care a ‘right’ passes House
The Oregon House of Representatives vot-
ed along party lines last week to ask voters
to amend the Constitution to make access to
cost-effective and affordable health care the
right of all state residents.
The proposal now heads to the Senate and if
passed, would stand on the November general
election ballot. All 35 Democrats in the House
voted for the measure, while the 25 Republicans
opposed it.
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