By Christian Wihtol
Brisk wage and employment growth in Oregon are generating record state revenues that could send an unprecedented $3.4 billion back to taxpayers in 2024, the state’s latest economic forecast said.
At the same time, the Oregon Office of Economic Analysis said the chance of a recession is a “coin flip.”
“The outlook is essentially a coin flip between the soft landing and a recession,” the office said. “For now, our office is keeping the baseline, or most probable outlook, as the soft landing and continued economic expansion.”
In its forecast this spring, the office predicted that Oregon taxpayers would receive a $3 billion kicker in 2024. The state issues personal income tax rebates – a kicker – every two years when the revenues collected exceed official projections by 2%. Wednesday’s forecast, which analyzed current economic conditions and estimated state revenues through the current two-year budget cycle, which ends June 30, 2023, said the next “kicker” could reach $3.4 billion.
Taxpayers would get the refund as a credit when they file their tax return in 2024. How much a taxpayer would get depends on how much tax they paid. The median – or midpoint — rebate would be $700 to $800, said Josh Lerner, an economist with the economic analysis office.
That’s nearly double what taxpayers received this year. The personal income kicker this year totaled $1.9 billion.
Kickers are also calculated on business revenue. The forecast predicts the corporate tax kicker would total $1.1 billion in 2024, up from this spring’s forecast of $931 million. Businesses don’t get that money back, however. The corporate kicker is kept by the government and used for educational spending.
But at some point during the next couple of years, Oregon’s economy will sag as consumer spending and employment growth sour, the forecast warned. Just when and how severe that downturn would be remains a matter of debate, the forecast said.
The economic analysis office said the risk of recession remains “uncomfortably high.”
Rising inflation can drive a recession. Forecasters said if inflation persists, Oregon could experience a recession by the third quarter of 2023, prompting job losses, income stagnation and weakened consumer spending and corporate profits.
For the complete story, see the Oregon Capital Chronicle.
