Presentation to the Oregon Legislature on the latest economic and revenue outlook for the State of Oregon. Overview of the U.S. and international economic landscape in addition to what is happening in Oregon. Tax revenue tracking and outlook for personal income taxes, corporate income taxes and Lottery sales.

1. March 2017 Economic &
Revenue Outlook
February 22nd, 2017 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. Economic Update and
Outlook

3. Oregon Office of
Economic Analysis
3
Good News: Better
Manufacturing Data

4. Oregon Office of
Economic Analysis
4
The Slowdown Is Here

5. Oregon Office of
Economic Analysis
5
Truly Statewide Growth

6. Oregon Office of
Economic Analysis
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•Fiscal Policy
General Impact Larger OR Impact
Taxes Trade Wars
Infrastructure ACA
Deregulation Federal Lands
Immigration
•Monetary Policy
•Rising Interest Rates
Risk: Federal Policy

7. Oregon Office of
Economic Analysis
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Risk: International Migration

8. Oregon Office of
Economic Analysis
8
Risk: Global Supply Chains

9. Oregon Office of
Economic Analysis
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Risk: Medicaid Expansion

10. Oregon Office of
Economic Analysis
10
Risk: Federal Lands

11. Oregon Office of
Economic Analysis
11
Economic Outlook

12. Revenue Update and
Outlook

13. Oregon Office of
Economic Analysis
13
Personal Income Taxes
Remain Healthy
2
3
4
5
6
7
8
9
10
11
12
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Personal Income Taxes Shrug Off the Kicker
Personal Income Taxes, $ billions, 4 QTR Sum
May 2015 Forecast
March 2017 Forecast
Forecast ->

14. Oregon Office of
Economic Analysis
14
Corporate Taxes Improve
in Recent Months
100
200
300
400
500
600
700
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Corporate Taxes Are Expected to Stabilize
Corporate Excise Taxes, $ millions, 4 QTR Sum
May 2015 Forecast
March 2017 Forecast
Forecast ->

15. Oregon Office of
Economic Analysis
15
IT System Replacement Is
Going Well, Why Do You Ask?

16. Oregon Office of
Economic Analysis
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Final 2015 Tax Return Data
16
-15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Dividends
Interest
Pensions
Total Income
Wages
Tax After Credits
IRAs
Social Security
Business
Cap Gains
Schedule E
Matched Returns, Full Year Filers, % change
2015 2014 2013

17. Oregon Office of
Economic Analysis
17
Tea Leaves: Looking
Forward to April
17

18. Oregon Office of
Economic Analysis
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Estate Tax Issues, Again

19. Oregon Office of
Economic Analysis
19
Follow-Up on Vice Taxes
Marijuana
Unit 2016q1 Avg Price Name Brand Generic Name Brand Generic
Unit Price $8.76 / gram $6.55 / pack $4.40 / pack $6.85 / can $5.35 / can
Taxes $1.49 - $1.75 $2.33 $2.33 $1.87 $1.87
Federal $0.00 $1.01 $1.01 $0.09 $0.09
State $1.49 $1.32 $1.32 $1.78 $1.78
Local $0 - $0.26 $0 $0 $0 $0
Effective Tax Rate 17-20% 56% 115% 38% 54%
Marijuana (25%)
Total $60.1
General Fund $0
Moist SnuffCigarettes
Oregon Effective Vice Tax Rates, A Stylized Example
State Revenues, CY 2016 (millions)
$31.9
$59.2
$34.8
$208.9
Other Tobacco ProductsCigarettes

20. Forecast Changes

21. Oregon Office of
Economic Analysis
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General Fund Forecast Summary
(Millions)
2015 COS
Forecast
December 2016
Forecast
March 2017
Forecast
Change from
Prior Forecast
Change from
COS Forecast
Structural Revenues
Personal Income Tax $15,713.5 $15,678.4 $15,709.8 $31.4 -$3.6
Corporate Income Tax $1,100.0 $1,103.7 $1,136.2 $32.5 $36.2
All Other Revenues $1,184.6 $1,225.7 $1,264.6 $39.0 $80.0
Gross GF Revenues $17,998.1 $18,007.7 $18,110.6 $102.9 $112.5
Offsets and Transfers -$42.8 -$44.2 -$44.4 -$0.2 -$1.6
Administrative Actions1
-$20.2 -$14.0 -$14.0 $0.0 $6.2
Legislative Actions -$158.9 -$158.3 -$158.3 $0.0 $0.6
Net Available Resources $18,309.1 $18,320.0 $18,422.7 $102.7 $113.6
Confidence Intervals
67% Confidence +/- 1.6% $290.1
95% Confidence +/- 3.2% $580.3
2015-17 General Fund Forecast Summary
$17.82B to $18.40B
$17.53B to $18.69B
Table R.1
Positive
Factor
Negative
Factor
Personal
Income Taxes
Court Fines,
Fees &
Assessments
Corporate
Excise Taxes
Video
Lottery
Estate Taxes
Liquor

22. Oregon Office of
Economic Analysis
22
Forecast Changes
Difference from December Forecast, $ millions
22
22
102.6 92.6
117.5
97.8
266.4
-$50
$0
$50
$100
$150
$200
$250
$300
2015-17 2017-19 2019-21 2021-23 2023-25
Personal Corporate Lottery Other Total

23. Oregon Office of
Economic Analysis
23
Biennial Revenue Growth
23
23
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total Net Revenue

24. Oregon Office of
Economic Analysis
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Reserves
Effective Reserves ($ millions)
Jan
2017
End
2015-17
ESF $356.7 $383.2
RDF $374.4 $388.1
Reserves $731.1 $771.2
Ending
Balance $348.1 $348.1
Total $1,079.2 $1,119.3
% of GF 6.0% 6.2%
0%
2%
4%
6%
8%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
99-01
BN
01-03
BN
03-05
BN
05-07
BN
07-09
BN
09-11
BN
11-13
BN
13-15
BN
15-17
BN
17-19
BN
Oregon Budgetary Reserves (billions)
Gen. Fund Ending Balance Educ. Stability Fund Rainy Day Fund
Forecast -->
Percentof
General Fund-->
Source:Oregon Office of Economic Analysis

25. Oregon Office of
Economic Analysis
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Contact
mark.mcmullen@oregon.gov
(503) 378-3455
josh.lehner@oregon.gov
(503) 378-4052
www.OregonEconomicAnalysis.com
@OR_EconAnalysis