Tom Potowski and Josh Harwood from the Office of Economic Analysis present their forecast to the Joint Revenue Committee
BY SARAH ROSS
SALEM- Oregon’s leaders were caught by surprise Tuesday morning upon learning that the State now must endure a $560 million budget shortfall for the current biennium.
A presentation by Tom Potowski and Josh Harwood from the Office for Economic Analysis showed that the state’s revenues are short $560 million for the 2009-2011 biennium.
Before unveiling the large budgetary gap, Potowski urged the committee to see the positive signs that his office found.
“I’ve just given you a picture that I think is hopeful in that we’re starting to see the recovery and moving forward,” said Potowski. Yet, he acknowledged the disconnect between those signs and the reported shortfall.
The most noticeable difference between this forecast and the one given at the end of February was the decrease in personal income tax revenue by $798.1 million, adding to an overall decrease of $876.5 million for General Fund revenue.
Harwood added that the State’s Capital Gains income tax went down in 2009 by almost half, going from just under $4 billion to under $2 billion.
“We are not alone. All the states have seen this sort of situation where the final payments in the April period were down much farther then what they actually expected,” said Potowski.
He added that Oregon differs from other states in that it has not been able to cushion its decline, as many other states have with their sales taxes. He went on to say that Oregon’s situation therefore may look worse than other states because it is so dependent on the very volatile personal income tax.
Legislative leaders were taken aback by this news which, according to Senate President Peter Courtney, they didn’t see coming.
“This has been a sobering morning for us,” said Senate Revenue Committee Chairwoman Ginny Burdick, D-Portland. “We can’t put ourselves through this anymore and it really is time to do kicker reform.”
The shortfall will add an additional $200 million to the 2011-2013 projected budget shortfall of $2.6 billion, projected in the March forecast.
In Tuesday’s press conference, House Speaker Dave Hunt reinforced that the shortfall would be even greater if the tax measures 66 and 67 had not passed.
However, Hunt’s declaration did not stop House Minority Leader Bruce Hanna from issuing his own statement blaming the shortfall on Legislative leadership.
“Rather than working with the private sector to encourage job growth, Oregon’s businesses have been stifled by job-killing taxes and mandates. It’s no surprise that April’s tax collections were ‘dismal,’ because the Democratic supermajority has done nothing to improve our private sector economy,” wrote Hanna.
