The increase in projected tax revenue will also result in a sharp increase in the one-time state tax credit that taxpayers will receive when they file taxes next year: $5.5 billion, up from $3.9 billion received last year Forecasts were expected just three months ago, according to the economists’ presentation to state lawmakers on Wednesday.
“The available resources are growing exponentially, not just today but for the foreseeable future,” said State Economist Mark McMullen.
economists warned last year that Oregon could slip into a mild recession by the end of the year. Still, Oregon received $310 million more than expected in income taxes in the first quarter of the year. Additionally, McMullen said that he and fellow government economist Josh Lehner made methodological changes to their forecasting model to better account for inflation and the fact that it has the highest marginal tax rate in the country. The state is fixed and not indexed to inflation, so rising wages are pushing Oregon workers more into the top tax bracket. These changes have improved the state’s income prospects.
“It’s not that the threat of a recession isn’t real,” Lehner said. However, there are signs that inflation may be easing, and the Federal Reserve is considering further rate hikes “that would eventually push the economy into recession,” Lehner said. He said economists are “still very concerned about the risk of a recession,” but that risk seems a long way off, perhaps as early as 2024. Income tax breaks. The haircut will be triggered if tax receipts for a two-year period exceed economists’ forecasts since the start of the more than two-year fiscal cycle.The state must reimburse taxpayers for the entire amount in excess of the forecast.
Better-than-expected tax receipts and revenue forecasts could pave the way for the Democrat-controlled Legislature to increase spending in the next biennium, which they have until June 25 to pass.