Economic and Revenue Outlook: March 2016 February 10 th, 2016 Oregon Office of Economic Analysis Mark McMullen Josh Lehner
Recent Performance 2
U.S. Economy Still in Expansion 3
Best Leading Indicator 4
Industrial Production is Weak Date # Neg. Nov 74 17 May 80 14 Dec 81 16 Feb 91 17 Apr 01 15 Jul 08 15 Dec 15 7 5
Oregon: Not Immune to Global Issues 6
Oregon s Labor Market 7
Traditional Advantage Regained 8
Most Regions Full Throttle 9
Translates into Stronger Income Gains Wage Gains Broad Based, Not Due to Composition Effects 10
Participation: Mostly Structural 11
Businesses Casting Wider Net 12
Economic Outlook 13
Revenue Trends 14
Personal Income Tax Collections Remain Healthy 15
Corporate Taxes Turn Down $700,000 Net Corporate Taxes ($ Mil, 12 month sum) $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 16
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 Herein Lies the Problem 12 10 8 6 Stock Prices and Oregon Taxable Capital Gains March 2016 Wilshire 5000 Stock Price Forecast (Right) Dec 2015 Wilshire 5000 Stock Price Forecast (Right) March 2016 Cap Gains Forecast ($ bil) Dec 2015 Cap Gains Forecast ($ bil) 30,000 25,000 20,000 15,000 4 10,000 2 5,000 0 0 17
Here Comes April Tax Year Dec-Jan Estimated Payments ($ mil) % change Non-Labor Income* (% change) Q2 Final PIT Payments (% change) 2008 268-28.4% -35.4% -45.4% 2009 227-15.2% -22.2% -2.8% 2010 253 11.5% 10.9% 17.9% 2011 268 5.6% 0.9% 3.3% 2012 345 28.8% 36.0% 25.1% 2013 346 0.5% -5.2% -7.0% 2014 416 20.0% 23.4% 15.9% 2015 455 9.4% 12.2% 8.5% Forecast 18
Jackpot! 14,000,000 PB_SALES Oregon Weekly Powerball Sales 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 19
Surprising Cigarette Sales 20
Revenue Outlook 21
Billions 2015-17 Forecast Evolution 2015-17 General and Lottery Fund Resources Evolution by Forecast Release Date Forecast Including Tax Law Changes at Close of Session $19.8 $19.6 $19.4 $19.2 $19.0 $18.8 $18.6 $18.4 $18.2 $18.0 $17.8 $17.6 Dec '10 May 13 Mar '16 22
March 2016 General Fund Forecast Summary Table R.1 2015-17 General Fund Forecast Summary (Millions) 2015 COS Forecast December 2015 Forecast March 2016 Forecast Change from Prior Forecast Change from COS Forecast Structural Revenues Personal Income Tax $15,713.5 $15,712.4 $15,692.1 -$20.3 -$21.4 Corporate Income Tax $1,100.0 $1,134.7 $1,134.3 -$0.4 $34.3 All Other Revenues $1,184.6 $1,182.0 $1,179.9 -$2.1 -$4.7 Gross GF Revenues $17,998.1 $18,029.1 $18,006.3 -$22.8 $8.3 Offsets and Transfers -$42.8 -$43.0 -$43.2 -$0.2 -$0.4 Administrative Actions 1 -$20.2 -$20.2 -$14.0 $6.2 $6.2 Legislative Actions -$158.9 -$158.9 -$158.3 $0.6 $0.6 Net Available Resources $18,309.1 $18,283.6 $18,319.6 $36.0 $10.5 Positive Factor Lottery Sales Estate Taxes Criminal Fines Spending Adjustments Negative Factor Personal Income Taxes Liquor Court Fees Confidence Intervals 67% Confidence +/- 6.4% $1,144.9 95% Confidence +/- 12.7% $2,289.8 1 Reflects cost of cashflow management actions, ex clusiv e of internal borrow ing. $16.86B to $19.15B $15.72B to $20.30B Full Impact: $36.0 Net Increase Less $16.0 Additional Spending Plus $24.8 Lottery Funds 23
Forecast Changes Difference from December Forecast, $ millions $100 $50 Personal Corporate Lottery Other Total 27.6 $0 -$50 1.8-4.7 -$100 -$150 -$200-165.7-152.0 2015-17 2017-19 2019-21 2021-23 2023-25 24 24
Reserves Gen. Fund Ending Balance Educ. Stability Fund Rainy Day Fund $1.6 Forecast --> 8% $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2 $0.0 Oregon Budgetary Reserves (billions) Percent of General Fund --> 99-01 01-03 03-05 05-07 07-09 BN BN BN BN BN Source: Oregon Office of Economic Analysis 09-11 BN 11-13 BN 13-15 BN 15-17 BN 17-19 BN 6% 4% 2% 0% Effective Reserves ($ millions) Feb 2016 End 2015-17 ESF $257.5 $375.5 RDF $212.4 $386.5 Reserves $469.9 $762.1 Ending Balance $319.0 $319.0 Total $788.9 $1,081.0 % of GF 4.4% 6.0% 25
Biennial Revenue Growth 25% 20% 15% 10% 5% 0% -5% -10% -15% Personal Income Taxes Total General Fund 26 26
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 27