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. OFFICE OF ECONOMIC ANALYSIS
Economic and Revenue Outlook:
September 2015
August 26th, 2015 Oregon Office of Economic Analysis
Mark McMullen
Josh Lehner

2. OFFICE OF ECONOMIC ANALYSIS
Recent Economic
Performance
2

3. OFFICE OF ECONOMIC ANALYSIS
Expansions Do Not Die of Old Age
3
0 2 4 6 8 10 12
1945
1949
1954
1958
1961
1970
1975
1980
1982
1991
2001
2009*
Expansion Length, Years
Postwar U.S. Expansions
* Current expansion through August 2015
Source: NBER, Oregon Office of Economic Analysis
Post WWII Avg
58 Months
Last 3 Expansion
Avg 95 Months
-2%
0%
2%
4%
6%
Jan-80 Jan-90 Jan-00 Jan-10
Expansions End After Overheating
Percentage point difference between actual
unemployment rate and full employment rate
Source: BLS, CBO, Oregon Office of Economic Analysis
Full Employment

4. OFFICE OF ECONOMIC ANALYSIS
Slower Chinese Growth, At Best
(Global growth slowing as well, not just China)
4
0%
2%
4%
6%
8%
10%
12%
14%
16%
2000 2005 2010 2015 2020
Chinese GDP Growth
Inflation-adjusted, annual
Source: IMF, Oregon Office of Economic Analysis
Forecast -->

5. OFFICE OF ECONOMIC ANALYSIS
Terms of Trade Make Oregon/US
Products More Expensive
5
70
80
90
100
110
120
130
140
150
160
170
Jan-95 Jan-00 Jan-05 Jan-10 Jan-15
Trade-Weighted Dollar Indexes
1996 = 100
Source: Federal Reserve, Oanda, Oregon Office of Economic Analysis
Oregon
U.S. Major Currency

6. OFFICE OF ECONOMIC ANALYSIS
Stocks and Capital Gains
6
1
2
3
4
5
6
7
8
9
10
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
Oregon Realizations of Capital Gains, $ billions
September 2015 Forecast May 2015 Forecast

7. OFFICE OF ECONOMIC ANALYSIS
Oregon Economy
7

8. OFFICE OF ECONOMIC ANALYSIS
Traditional Advantage Regained
8
-8%
-6%
-4%
-2%
0%
2%
4%
6%
1985 1995 2005 2015
Total Nonfarm Employment
Year-over-Year Percent Change
Oregon
U.S.
Source: BLS, Oregon Employment Department, Oregon Office of Economic Analysis

9. OFFICE OF ECONOMIC ANALYSIS
Oregon Continues to Improve
(Even with Unemployment Rate Wiggles)
9

10. OFFICE OF ECONOMIC ANALYSIS
Significant Progress Being Made
10

11. OFFICE OF ECONOMIC ANALYSIS
Incomes Rising as a Result
11

12. OFFICE OF ECONOMIC ANALYSIS
Yet Participation Gap Remains Large
12

13. OFFICE OF ECONOMIC ANALYSIS
Rural Recovery is Real, Albeit Slow
13
-10%
-8%
-6%
-4%
-2%
0%
2%
07 09 11 13 15
Oregon and the Great Recession
Employment Change From Peak
Urban
Oregon
Rural Oregon
Data: Seasonally-Adjusted, 3 Month Average, Latest data point: June 2015
Source: Oregon Employment Department, Oregon Office of Economic Analysis

14. OFFICE OF ECONOMIC ANALYSIS
Outlook: Near-Term Strong,
Long-Term Weak
14
-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

15. OFFICE OF ECONOMIC ANALYSIS
Revenue Outlook
15

16. OFFICE OF ECONOMIC ANALYSIS
$402 Million Kicker: What Is Your
Cut?
16
* Based on 2013 actual tax returns
** Based on 2013 actual tax returns, PIT kicker amount ($402 million) and the
Oregon Office of Economic Analysis’ forecast for tax liability
Income
Group
Adjusted Gross
Income*
Rough Estimate
of Kicker Size**
Bottom 20% < $10,200 $10
Second 20% $10,200 - $23,800 $55
Middle 20% $23,800 - $43,800 $125
Fourth 20% $43,800 - $79,900 $235
Next 15% $79,900 - $157,100 $469
Next 4% $157,100 - $336,400 $1,073
Top 1% > $336,400 $4,614
Average $53,900 $244
Median $30-35,000 $124

17. OFFICE OF ECONOMIC ANALYSIS
2015-17 Forecast Evolution
17

18. OFFICE OF ECONOMIC ANALYSIS
Filing Season Was Not As Big As It
First Appeared
18
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Jan
2014
Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan
2015
Feb Mar Apr May June July
Recent Personal Income Tax Collections
% change over year ago, 3 month moving sum

19. OFFICE OF ECONOMIC ANALYSIS
Corp Collections Flatline…
19
-50%
-25%
0%
25%
50%
75%
100%
125%
150%
Jan
2014
Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan
2015
Feb Mar Apr May June July
Corporate Excise Tax Collections
% change year ago, 3 month moving sum

20. OFFICE OF ECONOMIC ANALYSIS
…but Remain Inflated
20
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Net Corporate Taxes ($ Mil, 12 month sum)

21. OFFICE OF ECONOMIC ANALYSIS
Lottery: Consumers Feeling More
Confident with Disposable Income?
21
-10% -5% 0% 5% 10%
Atlantic City
Pennsylvania
New York Racinos
Ohio Casinos
Colorado Casinos
Rhode Island
Las Vegas Strip
Downtown Vegas
Oregon Video Lottery
Gaming Revenues Increasing
2015q2 Year-over-Year Growth in Slots/Video Lottery
Source: Oregon Office of Economic Analysis

22. OFFICE OF ECONOMIC ANALYSIS
2222
Forecast Changes
Difference from May Forecast, $ millions
-56
186.7
66.8
-75.4
-93.8
-$150
-$100
-$50
$0
$50
$100
$150
$200
$250
2013-15 2015-17 2017-19 2019-21 2021-23
Personal
Corporate
Lottery
Other
Total

23. OFFICE OF ECONOMIC ANALYSIS
23
10-Year Forecast
Table R.2
General FundRevenue Forecast Summary (Millions of Dollars, Current Law)
Forecast Forecast Forecast Forecast Forecast Forecast
2013-15 % 2015-17 % 2017-19 % 2019-21 % 2021-23 % 2023-25 %
Revenue Source Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg Biennium Chg
Personal Income Taxes 13,958.3 15.2% 15,718.2 12.6% 17,575.9 11.8% 19,404.5 10.4% 21,364.8 10.1% 23,329.9 9.2%
Corporate Income Taxes 1,116.5 26.3% 1,095.5 -1.9% 1,096.1 0.1% 1,110.0 1.3% 1,141.7 2.9% 1,287.6 12.8%
All Others 1,030.2 -11.4% 1,186.6 15.2% 1,075.2 -9.4% 1,152.3 7.2% 1,211.8 5.2% 1,264.7 4.4%
Gross General Fund 16,105.0 13.7% 18,000.2 11.8% 19,747.2 9.7% 21,666.8 9.7% 23,718.3 9.5% 25,882.3 9.1%
Offsets and Transfers (74.2) (43.5) (73.6) (76.4) (80.1) (79.2)
Net Revenue 16,030.8 13.3% 17,956.6 12.0% 19,673.6 9.6% 21,590.4 9.7% 23,638.3 9.5% 25,803.1 9.2%

24. OFFICE OF ECONOMIC ANALYSIS
2424
Biennial Revenue Growth
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Personal Income Taxes Total General Fund

25. OFFICE OF ECONOMIC ANALYSIS
25
For More Information
Standard Contact:
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Salem, OR 97301
(503) 378-3405
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