The Oregon Office of Economic Analysis released the latest quarterly economic and revenue forecast to the Governor and Legislature on February 19, 2015. Included are an overview of current economic conditions in the state, an outlook for employment and the General Fund and Lottery Fund forecasts for the state.

1. OFFICE OF ECONOMIC ANALYSIS
Economic and Revenue Outlook:
March 2015
February 19th, 2015 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. OFFICE OF ECONOMIC ANALYSIS
Office of Economic Analysis
2

3. OFFICE OF ECONOMIC ANALYSIS
OEA: Primary Forecasting
Responsibilities
• Economic and Revenue Forecast
• Quarterly by Statute (March, May/June, Sept, December)
• Next Forecast: Thursday, May 14th
• Demographic and Population Outlook (Jan)
• Adult Prison Population and Youth Authority
• April, October
• Lottery Forecast (Quarterly)
• Other Forecasts: Cigarette and Tobacco, Criminal Fines
and Court Fees, Secretary of State Fees, Other Funds
Report
• Highway Cost Allocation Study, DHS Forecast Advisory
3

4. OFFICE OF ECONOMIC ANALYSIS
Economic and Revenue Forecast
OREGON PRELIMINARY
ECONOMIC FORECAST
OREGON FINAL ECONOMIC FORECAST
PERSONAL INCOME
TAX MODELS
CORPORATE INCOME
TAX MODELS
Forecaster Judgement
LEGISLATIVE & POLICY CHANGES
FINAL REVENUE ESTIMATE
U.S. Economic
History and Forecast
(Global Insight, Inc.)
Oregon Economic
History
Oregon Corporate
Income Tax History
Oregon Personal
Income Tax History
Governor’s Council
of Economic
Advisors
DAS Advisory
Committee
OREGON ECONOMIC MODEL
Governor’s Council of Economic
Advisors “Pre-Meeting”
Council of Revenue
Forecast Advisors
Non-income tax
revenue projections

5. OFFICE OF ECONOMIC ANALYSIS
Guiding Principles
• Current-law GF forecast, updated quarterly.
• Unbiased, most-likely forecast given prevailing economic
conditions and assumptions.
• Stability of forecast over time.
• Continue to refine models, develop new data sources,
employ expert input to improve forecast accuracy.
• For every forecast, provide users with a measure of the
potential for actual revenues to deviate from projections.

6. OFFICE OF ECONOMIC ANALYSIS
Close of Session of Forecast
• COS forecast for the upcoming biennium is the mid-
May forecast plus legislative changes during the
remainder of session.
• Usually released with the September forecast in
odd-numbered years.
• COS forecast used for budgeting the upcoming
biennium and is the base for kicker calculations.

7. OFFICE OF ECONOMIC ANALYSIS
Economic Outlook
7

8. OFFICE OF ECONOMIC ANALYSIS
U.S. Growth Picking Up
8
0%
1%
2%
3%
2011 2012 2013 2014 2015
Job Growth
Year-over-Year Percent Change, 3 MMA
Oregon
U.S.
Source: BLS, Wall Street Journal, OED, Oregon Office of Economic Analysis
WSJ Consensus Forecast
for Next 12 Months

9. OFFICE OF ECONOMIC ANALYSIS
Energy Prices as Stimulus
9
2%
4%
6%
8%
10%
1960 1980 2000 2015
Energy Expenditures
Share of Disposable Personal Income
Source: BEA, Oregon Office of Economic Analysis
Current: 4.5%

10. OFFICE OF ECONOMIC ANALYSIS
Oregon’s Deeper Labor Market
Recovery
10
-2%
-1%
0%
1%
2%
3%
4%
2011 2014 2011 2014 2011 2014
Returning to Normal
Oregon Labor Market Dynamics
Jobs Wages Labor Force
Year-over-Year change, 6 month average. Wages are inflation-adjusted average QCEW wages.
Source: BEA, OED, Oregon Office of Economic Analysis

11. OFFICE OF ECONOMIC ANALYSIS
Total Employment Gap:
Oregon is Halfway Back
11
-2%
0%
2%
4%
6%
8%
10%
Jan-07 Jan-10 Jan-13 Jan-16
Oregon Total Employment Gap
Full-Time Equivalent Jobs Relative to Full Employment
Unemployment Gap Participation Gap Underemployment Gap
Source: IMF, Oregon Employment Department, IPUMS-CPS, Oregon Office of Economic Analysis
Dec '07
1.0%
Dec '09
8.7%
Dec '14
4.3%
Forecast -->

12. OFFICE OF ECONOMIC ANALYSIS
Participation Rates Down
12
58%
60%
62%
64%
66%
68%
70%
72%
Jan-75 Jan-85 Jan-95 Jan-05 Jan-15
Oregon Labor Force Participation Rate
Share of Population 16+ with a Job or Looking for a Job
Source: BLS, Oregon Office of Economic Analysis
Forecast
Actual
Demographically
Adjusted

13. OFFICE OF ECONOMIC ANALYSIS
Regional Performance Varies
13
0%
1%
2%
3%
4%
5%
6%
7%
8%
Bend Corvallis Eugene Medford Portland Salem Coast Eastern Gorge Southern
Metro Areas Rural
Oregon Employment Growth
1982-89 1992-00 2003-07 Current
Coast: Clatsop, Lincoln, Tillamook Eastern: Baker, Crook, Grant, Harney, Jefferson, Malheur, Morrow, Umatilla, Union, Wallowa
Gorge: Gilliam, Hood River, Sherman, Wasco, Wheeler Southern: Coos, Curry, Douglas, Josephine, Klamath, Lake
Data: QCEW | Source: Oregon Employment Department, Oregon Office of Economic Analysis

14. OFFICE OF ECONOMIC ANALYSIS
Demographics are a Mixed Bag
14
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
44%
46%
48%
50%
52%
54%
56%
1975 1985 1995 2005 2015 2025
Oregon Working Age Population
25-64 Years Old
PPT Change, rhs Share of Total Population, lhs
Source: Oregon Office of Economic Analysis
Forecast -->
0
10,000
20,000
30,000
40,000
50,000
60,000
0 10 20 30 40 50 60 70 80
NumberofOregonians
Single-Year Age
Oregon Population by Age, 2015
Source: Oregon Office of Economic Analysis
Millennials
(1981-2000)
1,065,796
27%
Boomers
(1946-64)
983,708
25%
Gen Z
(2001+)
714,772
18%
Gen X
(1965-80)
870,869
22%
Silent
421,004
11%

15. OFFICE OF ECONOMIC ANALYSIS
As Good as it Gets?
15
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Jan-60 Jan-70 Jan-80 Jan-90 Jan-00 Jan-10 Jan-20
Oregon Nonfarm Employment Growth
Year-over-Year Percent Change
Expansion
Average
Forecast

16. OFFICE OF ECONOMIC ANALYSIS
Revenue Outlook
16

17. OFFICE OF ECONOMIC ANALYSIS
A Very Big December for PIT
17
0%
2%
4%
6%
8%
10%
12%
14%
Oct Nov Dec Jan
2014
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan
2015
Recent Personal Income Tax Collections
% change over year ago, 3 month moving sum
Preliminary

18. OFFICE OF ECONOMIC ANALYSIS
Forecast Evolution
18
$14.2
$14.3
$14.4
$14.5
$14.6
$14.7
$14.8
$14.9
$15.0
Dec'10
Mar'11
May11
Sep'11
Dec'11
Mar'12
Jun'12
Sep'12
Dec'12
Mar13
May13
Sep'13
Dec'13
Mar'14
Jun'14
Sep'14
Dec'14
Mar15
Billions
Forecast Release
2013-15 BN Personal Kicker Base
<--2% Kicker Threshold
Special Session
$87 million
<--COS Forecast
$58.7 million

19. OFFICE OF ECONOMIC ANALYSIS
A Refresher
19
94
96
98
100
102
104
106
May '13 Close of Session Mar '15
Personal Kicker
Stylized Example
Legislative Changes
Enacted During
Regular Odd-Year Session
Kicker Threshold 2%
Everything Above Close of
Session Returned to Oregonians
Not Just Above 2% Threshold
Forecast for Personal Income Tax
Kicker Base
(All GF ex. corporate taxes, central service fees
and Gain Share payments to counties)

20. OFFICE OF ECONOMIC ANALYSIS
Which Straw?
COS Kicker Threshold
=$100 Million
$10.8 billion
In the Door
$4.3 billion
Still to Come

21. OFFICE OF ECONOMIC ANALYSIS
The Incredible Shrinking Kicker
21
2015-17 Resources
Change Relative to Dec ’14 Forecast
Beginning Balance
Kicker
GF Forecast Changes
Lottery Changes
Net Change
+$88 million
-$329 million
+$205 million
+$15 million
-$21 million
2013-15 -$329m
2015-17 -$18m
2017-19 -$2m
Total -$349m

22. OFFICE OF ECONOMIC ANALYSIS
22
Capital Gains: Boom and Bust
0
5000
10000
15000
20000
25000
30000
35000
0
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
12,000,000,000
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
Wilshire 5000 Stock Price Index (Right)
Oregon Capital Gains Realizations (Left)

23. OFFICE OF ECONOMIC ANALYSIS
Estimated Income Tax Payments: A Sign of
Things to Come?
Tax Year
Dec-Jan
Estimated
Payments
($ mil) % change
Non-Labor
Income*
(% change)
Q2 Final PIT
Payments
(% change)
2008 268 -28.4% -35.1% -45.4%
2009 227 -15.2% -21.4% -2.8%
2010 253 11.5% 11.0% 17.9%
2011 268 5.6% 0.6% 3.3%
2012 345 28.8% 35.6% 25.1%
2013 346 0.5% -5.4% -7.0%
2014 416 20.0% 20.2% 26.2%*
* Interest, Dividends, Business, Capital Gains, S-Corp/Rental
* March 2015 Forecast

24. OFFICE OF ECONOMIC ANALYSIS
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Personal Income Tax Collections (March 2014 Forecast)
PIT Collections Excluding Kicker
PIT Collections (December 2014 Forecast)
24
Personal Income Tax Forecast
$ billions, 4 quarter moving sum
2013-15
$81.4
(million)
2015-17
-$147
2017-19
$214.3
2020-21
$181.1
2021-23
$46.8

25. OFFICE OF ECONOMIC ANALYSIS
25
Estate Taxes: Upward Trend?
$0
$5
$10
$15
$20
$25
Jul-01 Jul-03 Jul-05 Jul-07 Jul-09 Jul-11 Jul-13 Jul-15
Millions
Oregon Estate Taxes
Estate Tax Collections Qtr Avg

26. OFFICE OF ECONOMIC ANALYSIS
Corp Collections: Real or Memorex?
26
100
150
200
250
300
350
400
450
500
550
600
Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15
Millions
Net Corporate, 12 Month Sum

27. OFFICE OF ECONOMIC ANALYSIS
Corp Collections: Wait and See
27
100
200
300
400
500
600
700
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
March 2015 Forecast
December 2015 Forecast
Single Sales
Apportionment
Factor Enacted
M67 Minimum Tax
& Credit Sunsets
Enacted
Tax Haven
Legislation
M67 Minimum
Tax Reforms &
Small Business
Tax Cut
Approximate
Peak in BETC
Credits Taken
Corporate Excise Taxes, $ millions, 4 QTR Sum

28. OFFICE OF ECONOMIC ANALYSIS
28
March 2015 General Fund
Forecast Summary
Positive
Factor
Negative
Factor
Personal
Income Tax:
Recent
Advanced
Payments
Court Fees
Estate
Taxes
Criminal
Fines
Video
Lottery
Sales
(Millions)
2013 COS
Forecast
December 2014
Forecast
March 2015
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $13,558.2 $13,832.9 $13,914.3 $81.4 $356.1
Corporate Income Tax $1,056.6 $1,060.4 $1,060.9 $0.5 $4.3
All Other Revenues $1,027.9 $1,019.1 $1,025.8 $6.6 -$2.1
Gross GF Revenues $15,642.6 $15,912.4 $16,000.9 $88.5 $358.3
Offsets and Transfers -$120.8 -$73.2 -$74.1 -$1.0 $46.7
Administrative Actions1
-$18.2 -$3.3 -$3.3 $0.0 $14.9
Legislative Actions -$136.9 -$136.7 -$136.7 $0.0 $0.2
Net Available Resources $15,910.1 $16,174.8 $16,262.4 $87.6 $352.2
Confidence Intervals
67% Confidence +/- 1.6% $256.0
95% Confidence +/- 3.2% $512.0
1 Reflects cost of cashflow management actions, exclusive of internal borrowing.
2013-15 General Fund Forecast Summary
$15.74B to $16.26B
$15.49B to $16.51B
Table R.1

29. OFFICE OF ECONOMIC ANALYSIS
2929
Forecast Changes
Difference from December Forecast, $ millions
100.7
-108.9
220.4 208.5
74.4
-$150
-$100
-$50
$0
$50
$100
$150
$200
$250
2013-15 2015-17 2017-19 2019-21 2021-23
Personal Corporate
Lottery Other
Total

30. OFFICE OF ECONOMIC ANALYSIS
30
10-Year Forecast
Table R.2
General FundRevenue Forecast Summary (Millions of Dollars, Current Law)
Forecast Forecast Forecast Forecast Forecast Forecast
2011-13 % 2013-15 % 2015-17 % 2017-19 % 2019-21 % 2021-23 %
Revenue Source Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg
Personal Income Taxes 12,118.2 15.8% 13,914.3 14.8% 15,489.7 11.3% 17,359.3 12.1% 19,228.8 10.8% 21,181.5 10.2%
Corporate Income Taxes 883.9 6.8% 1,060.9 20.0% 1,102.9 4.0% 1,045.5 -5.2% 1,103.6 5.6% 1,182.4 7.1%
All Others 1,153.9 -5.9% 1,025.8 -11.1% 1,003.7 -2.1% 1,036.2 3.2% 1,112.6 7.4% 1,178.5 5.9%
Gross General Fund 14,156.0 13.1% 16,000.9 13.0% 17,596.3 10.0% 19,441.0 10.5% 21,445.1 10.3% 23,542.4 9.8%
Offsets and Transfers (12.0) (74.1) (104.9) (101.9) (40.7) (43.7)
Net Revenue 14,144.0 13.0% 15,926.8 12.6% 17,491.4 9.8% 19,339.1 10.6% 21,404.4 10.7% 23,498.7 9.8%
Other taxes include General Fund portions of the Eastern Oregon Severance Tax, Western Oregon Severance Tax and Amusement Device Tax.
Commercial Fish Licenses & Fees and Pari-mutual Receipts are included in Other Revenues

31. OFFICE OF ECONOMIC ANALYSIS
3131
Biennial Revenue Growth
-12%
-8%
-4%
0%
4%
8%
12%
16%
20%
24%
PIT TOTAL

32. OFFICE OF ECONOMIC ANALYSIS
Tax Structure: Volatility
32
-20%
-10%
0%
10%
20%
1995 2013
State Revenue Growth
General Fund Approximation
(Severance, Estate, Corporate, Personal, General Sales,
Alcohol and Tobacco Taxes, Corporate and B&O Licenses)
Source: Census, Oregon Office of Economic Analysis
Oregon
Median
State
AK
AZFL
GA
ID
LA
MA
MD
MI
NC
NM
NV NY
OK
Guess Who?
VA
WY
Median
State
-
1
2
3
0% 20% 40% 60% 80%
OverallRevenueVolatility Personal Income Taxes, Share of General
Fund Approximation (1995-2013 Average)
Revenue Volatility and Tax Structure
Volatility Measure = Standard Deviation of Growth / Average Growth
Source: Census, Oregon Office of Economic Analysis

33. OFFICE OF ECONOMIC ANALYSIS
Tax Structure: Risk vs Return
33
1.5%
1.7%
1.9%
2.1%
2.3%
2.5%
1990 1995 2000 2005 2010 2015
Eroding Tax Base
All States Tax Collections as Share of Personal Income, 4 Qtr Avg
Source: Census, BEA, Oregon Office of Economic Analysis
Personal Income Tax
General Sales Tax

34. OFFICE OF ECONOMIC ANALYSIS
34
For More Information
Standard Contact:
155 Cottage Street NE
Salem, OR 97301
(503) 378-3405
oea.info@state.or.us
www.oregon.gov/das/oea
Social Media:
www.OregonEconomicAnalysis.com
@OR_EconAnalysis