September 2017 Economic & Revenue Outlook. Oregon Office of Economic Analysis Mark McMullen Josh Lehner

Transcription

1 September 2017 Economic & Revenue Outlook August 23 rd, 2017 Mark McMullen Josh Lehner

2 Economic Update and Outlook

3 Economy Still Expanding 3

4 4

5 Recessionary Buffer Shift to the Public Sector During Recessions Demand For Public Services Increased Caseloads for Need-Based Healthcare and Income Maintenance Programs (e.g. Medicaid, SNAP, TANF and UI) Increased Enrollment at Public Colleges & Universities Very Large Cyclical Declines in Key Private Rural Industries (Manufacturing, Construction & Ag) Delayed Funding Losses Use of Budget Reserves, Fund Sweeps and other Revenue Enhancements at State and Local Level Increased Federal Funds via Automatic Stabilizers and Stimulus Spending Property Taxes Are Often Divorced From the Business Cycle (Fundamentals and M50) Income Tax Declines Lag Job Losses Time Lag For Infrastructure and Other Large Capital Projects 5

6 Issue: Income Revisions 6

7 Issue: Tight Labor Market 7

8 Participation is Rising 8

9 How Much More? 9

10 10

11 How Much More? Pt 2 11

12 Outlook: Continued Gains 12

13 Revenue Update and Outlook

14 Big End to the Tax Year Table B.8 Track Record for the May 2017 Forecast (Quarter ending June 30, 2017) Personal Income Tax (Millions of dollars) Actual Revenues Forecast Comparison Latest Forecast Percent Difference Withholding $1,769.4 $1, % $1, % Dollar difference $69.9 $134.6 Estimated Payments $450.2 $ % $ % Dollar difference $27.4 $26.4 Prior Year Percent Change Final Payments $919.2 $ % $ % Dollar difference $20.2 $106.1 Refunds -$ $ % -$ % Dollar difference -$0.5 $107.7 Total Personal Income Tax $2,683.9 $2, % $2, % Dollar difference $117.0 $374.8 Corporate Income Tax (Millions of dollars) Actual Revenues Forecast Comparison Latest Forecast Percent Difference Prior Year Percent Change Advanced Payments $195.4 $ % $ % Dollar difference -$10.7 -$7.4 Final Payments $81.8 $ % $ % Dollar difference $8.6 $11.4 Refunds -$57.7 -$ % -$ % Dollar difference $21.9 $23.7 Year/Year Change Year/Year Change Total Corporate Income Tax $219.5 $ % $ % Dollar difference $19.8 $

15 Pushes Us Over the Kicker Threshold 15

16 No Longer a Check in the Mail 16

17 What Is Your Cut? Income Group Adjusted Gross Income* Rough Estimate of Kicker Size** Bottom 20% < $10,700 $5 Second 20% $10,700 - $25,300 $35 Middle 20% $25,300 - $46,400 $98 Fourth 20% $46,400 - $85,500 $205 Next 15% $85,500 - $172,500 $441 Next 4% $172,500 - $389,400 $1,090 Top 1% > $389,400 $4,902 Average $59,700 $227 Median $30,000-$35,000 $89 * Based on 2015 actual tax returns ** Based on 2015 actual tax returns, PIT kicker amount ($464 million) and the forecast for tax liability 17

18 Wonky Detour 18

19 Slowdown Pt 1 19

20 Slowdown Pt 2 20

21 Stable Outlook for BI

22 General Fund Forecast Summary Table R General Fund Forecast Summary (Millions) 2017 COS Forecast May 2017 Forecast September 2017 Forecast Change from Prior Forecast Change from COS Forecast Structural Revenues Personal Income Tax $17,147.4 $17,146.9 $17, $25.3 -$25.8 Corporate Income Tax $1,077.0 $1,071.5 $1, $26.0 -$31.5 All Other Revenues $1,327.6 $1,198.4 $1,325.1 $ $2.5 Gross GF Revenues $19,551.9 $19,416.8 $19,492.1 $75.2 -$59.9 Offsets and Transfers -$75.5 -$75.5 -$71.8 $3.7 $3.7 Administrative Actions 1 -$21.5 -$21.5 -$21.5 $0.0 $0.0 Legislative Actions -$ $ $180.1 $0.6 $0.0 Net Available Resources $20,055.7 $19,863.1 $20,094.3 $231.3 $38.6 Positive Factor Ending Balances Legislative Changes Lottery Interest Earnings Negative Factor Personal Income Taxes Corporate Excise Taxes Insurance Taxes Confidence Intervals 67% Confidence +/- 8.7% $1, % Confidence +/- 17.4% $3,391.6 $17.80B to $21.19B $16.10B to $22.88B 1 Reflects cost of cashflow management actions, ex clusiv e of internal borrow ing. 22

23 Estate Taxes 23

24 Lottery: Small Casino Impact Since May 17 Forecast ($ millions) + $64.5 Video Lottery + $32.4 Admin Actions + $4.0 Traditional Lot. + $4.0 Reversions +$105.0 Available Resources Relative to Close of Session Forecast Ending Balance +$46m 24

25 Marijuana: No Real Changes SB 1057 Net -$7.8 million in resources Eclipse August sales bump (+10%) Ending Balance +$1.2 million relative to COS 25

26 Forecast Changes Difference from May Forecast, $ millions $ Personal $150 $ Corporate Lottery Other $50 $ Total $50 -$

27 Biennial Revenue Growth 25% 20% 15% 10% 5% 0% -5% -10% -15% Personal Income Taxes Total Net Revenue

28 Reserves Gen. Fund Ending Balance Educ. Stability Fund Rainy Day Fund $3.0 Forecast --> 12% $2.5 10% $2.0 $1.5 $1.0 $0.5 $0.0 Oregon Budgetary Reserves (billions) Percent of General Fund --> 8% 6% 4% 2% 0% Effective Reserves ($ millions) Aug 2017 End ESF $384.2 $602.0 RDF $393.1 $635.0 Reserves $777.3 $1,237.0 Ending Balance $235.5 $235.5 Total $1,012.9 $1,472.5 % of GF 5.2% 7.6% Source: 28

29 Contact (503) (503)