NEWS UPDATE FROM STATE REPRESENTATIVE DAVID GOMBERG: A Tepid Forecast

By Representative David Gomberg, House District 10

5/19/2025

For several weeks I have been writing about the May revenue forecast.

Before we can leave Salem at the end of June, the state constitution requires us to complete a balanced two-year budget. In order to know how much to spend, we first need to know how much money we have. That answer came in a formal report presented this past week.

State economists now say they expect Oregon will have around $500 million less to spend in the 2025-27 budget cycle than anticipated just three months ago. The drop is largely due to reductions in projected personal income taxes as Oregonians’ employment rates, wage growth and capital gains decline.

Economists said the rest of 2025 will be characterized by sluggish economic growth due to existing tariffs and uncertainty around the future of tariffs, especially in the manufacturing and construction sectors. Tariffs disproportionately hurt coastal states and states with large ports like Oregon.

This is a reduction but not a huge one. And even with the reductions, the state is expected to have billions more to spend in the next two-year budget than it did for the current one.

But like your own household budget, the state is looking at higher costs that offset higher income.

We’ve spent the past months of session reviewing agency budgets and preparing targeted reductions. News this week likely won’t be enough to force large additional cuts at state agencies. That means we can soon start to move budgets for larger state agencies that have already been studied and trimmed.

Still in question are potential investments proposed by Governor Tina Kotek that include more than $800 million to bolster housing and homelessness, $246 million for the state’s behavioral health system, and $200 million for education. And Oregon, like other states, is waiting to see whether congressional Republicans will push through proposed cuts to Medicaid. That could drastically reduce federal money the state uses to provide health care to low-income people.

The weak forecast could also doom many bills introduced by individual legislators that have been on hold in the Capitol. That includes low-cost proposals like my suggestions to get more Oregon seafood into school lunch programs, improve emergency water and generator fuel storage at our hospitals, or create an Animal Trust to raise funds for low-income veterinary services and spaying and neutering of dogs and cats across Oregon.

The revised forecast is a reflection of a national economy that is grappling with uncertainty because of ongoing trade tensions, and is now growing far more slowly than many economists had anticipated. That impacts corporate and business income taxes, which are leading drivers of the state’s general fund budget.

Taxpayers can also expect a smaller “kicker” tax refund as a result. The rebate — triggered when actual revenues come in at least 2% higher than what lawmakers budgeted for — has been revised to $1.64 billion, a $87.5 million decrease.

The quarterly forecasts take into account all of Oregon’s major revenue sources, including personal and corporate income taxes — which make up the bulk of the state’s general fund — as well as lottery revenues and the Corporate Activity Tax.

Here are more specifics:

Revenue Outlook: 2025-27 Net General Fund revenue is $35.6 billion, down $337.1 million from the March 2025 forecast. The 2025-2027 General Fund net resources are now $37.4 billion versus March projected net estimate of $38.2 billion, a decrease of $755.7 million. Lottery revenue for the 2025-27 biennium is down $42.3 million from the March 2025 forecast.

Reserve accounts as of March were $978 million (Education Stability Fund) and $1.76 billion (Rainy Day Fund). The projected ending balances for the 2023-25 biennium reserve account are as follows: Education Stability Fund: $1.01 billion and Rainy-Day Fund: $1.91 billion. The Rainy-Day Fund is projected to receive $334.7 million following the end of the 2023-2025 Biennium.

Kicker Outlook: A personal kicker of $1.639 billion is projected for 2025. Corporate tax revenue of $915.9 million is projected to be dedicated to K-12 education spending in 2025-2027.

Economic Outlook: The overall economic forecast reflects sluggish national growth and a mild deceleration in Oregon’s labor market. Oregon’s employment fell short of expectations in Q1 2025, and the unemployment rate rose to 4.6%, up from 4.1% a year ago. Personal income growth also came in below forecast, with Q1 income data down 0.8% from March projections.

Looking ahead, population growth is expected to remain modest, averaging 0.5% annually through 2035. While labor market conditions remain relatively stable, the forecast notes a heightened risk of recession and continued uncertainty tied to national trade and fiscal policy.

Corporate Activity Tax (CAT) Projections: Anticipated revenues for the current biennium (23-25) are down $21.8 million to $2.74 billion. For 2025-27, projected revenue is now $3.07 billion, down $44.4 million from March.

Forecast Documents:

Federal uncertainty has led to Oregonians being more cautious about spending hard-earned dollars and a slow-growth business economy. The uncertainty is slowing the economic activity that fuels state revenue in normal circumstances.

Coastal states can feel the brunt of tariffs enacted at the federal level because of Oregon’s trade-heavy economy and our shipping container ports. Our state’s economy relies more on manufacturing and trade than most states, and it is especially impacted by tense trade relationships with countries like China.

There are also deep concerns for families afraid of losing long-term care for aging parents, federally funded preschool for their children, and special education funding for students in our K-12 public school system. Domestic violence and sexual abuse centers rely heavily on federal funding to help survivors seek safety through shelter, counseling, and support services. These are real people, with real, immediate needs.

The positive news is that Oregon has done a good job of funding our reserves with about $2.5 billion in the Education Stability Fund and Rainy Day Fund. I’ve been asked why we don’t use these accounts to offset agency cuts to transportation costs. The answer is that emergency accounts are for one-time expenses and not ongoing expenditures.

Where we are today will require us all to work together for solutions and priorities to give Oregonians across this state assurance that together we will prevail, no matter if in Burns or Beaverton. We must continue to collaborate, plan for the real possibility of additional revenue decline, and keep Oregonians informed, aware, and engaged on the process.

Federal chaos leaves Oregon’s economic outlook sluggish, uncertain, short hundreds of millions • Oregon Capital Chronicle

Oregon’s economic outlook sours, leaving state lawmakers with millions less to spend than previously expected – oregonlive.com

Oregon’s revenue forecast shows economic slowdown – OPB Politics Now

If you have not yet returned your May Election Ballot, I urge you to take a few minutes and do so. You have until 8 p.m. on election day, Tuesday, May 20^th.

You can use ballot box drop sites or postal mail. If you choose to mail your ballot, it must be sent before the last pickup on Tuesday. A hand-stamped date by the Postal Clerk is recommended.

The election this month is focused on local funding and levy questions, school and community college boards, and service districts.

Our local colleges support communities, students, and local economies. School boards make key decisions that impact 197 districts and more than half a million students across the state. Parents, staff and taxpayers all have a stake in these elections, if nothing else, because our tax money pays for public education.

Oregon school and college board positions are unpaid and voluntary. Members serve four-year terms and are elected every odd-numbered year to these nonpartisan public bodies. Terms overlap, so not every position is on the current ballot.

This OPB article suggests several things Oregonians should think about as they vote in local education races:

Tip #1: Understand the role of the board. Broadly speaking, boards are responsible for three key things. They hire and evaluate a superintendent or college president, adopt an annual budget, and set big-picture goals for the district with their priorities and policy decisions. Boards usually meet only once or twice a month on a regular basis. In between, policies passed by the board serve as a message to the administrator and district staff on what the board expects. The big takeaway on what boards do not do is control day-to-day operations.

Learn more at the web pages of your local school districts:

Tip #2: Be an informed voter. These races do not garner the attention or the money of legislative or statewide campaigns. The good news is that there is less advertising and material in your mailbox. The bad news is that less information is available to help you decide. Read the candidates’ statements in the voters’ guide. Some candidates are running for re-election, some are challengers, and some are competing for open seats. Political parties, unions, and activist groups will often make endorsements. Some candidates bring a business background. Some are longtime parent-activists. Some have an educational background. Voters can reflect on how experience can contribute to the board role.

Tip #3: There is a broader political context. A lot of changes are happening at the state and federal levels right now, leaving parents, students, teachers, and administrators unsure about the future. “Woke.” “Parental rights.” “Back to basics.” “Union friendly.” These are examples of phrases from both sides of the political spectrum that voters might hear from campaign materials or the candidates themselves. Different voters will perceive and weigh each of these phrases differently.

Tip #4: Ask a lot of questions. What is your role as an individual board member? What’s the role of the board? What’s the board’s responsibility with regard to students? How does this position affect the community, the results we want, or the taxes we pay?

Other questions you can ask include:

What would success look like in your term?
What are the specific steps you plan to take to get there?
How do you plan to navigate political divides in your community and among board members?
Most boards, at one time or another, will have to deal with cutting the budget. How would you prioritize what to pay for and what to cut?

And lastly, remember throughout this process that each candidate is just that — one person. If elected, these individuals will be responsible for working together to serve the entire district.

Please remember to return your ballots by 8 p.m. on election day, May 20^th.

May is Wildfire Awareness Month — a time to consider how we can be proactive to keep our communities safe. Sadly, the majority of Oregon’s wildfires are human-caused. After a record-breaking fire season in 2024, it is important that we act now to reduce risks and stay prepared.

The top cause of human-caused fires in our state is debris burning that gets out of control. Before you burn, be sure to check in with your local fire agency and understand wind and weather conditions. By staying informed and refraining from risky behavior, we can mitigate the impact of wildfires and protect our homes and communities.

Learn more about ways to prepare by visiting the Oregon State Fire Marshal website.

Last year, Oregon had one of the most destructive wildfire seasons in its history — 1.9 million acres burned, communities were tested, and lives were changed. But amid the devastation, there were also stories of resilience and homes that stood strong because they had defensible space.

To be clear, I’m not advocating you pull every azalea out from the beds under your windows. But I do urge Coast Range residents to landscape wisely and to keep loose combustibles away from buildings. Susan and I live in the woods. We maintain open spaces along with our gardens. And I’m absolutely convinced that the wide walking trails we created under the trees saved our home when the Labor Day fires raged through our neighborhood.

With the possibility of another challenging fire season ahead, preparing your home could make all the difference.

“For the last several years, we’ve been proactively working to boost staffing at local fire agencies, modernizing response equipment, and investing in wildfire resiliency projects across the state,” State Fire Marshal Mariana Ruiz-Temple said. “But we can’t do it alone. We need every Oregonian to rise to this challenge. Creating defensible space around your home is one of the most effective ways to protect your property and your community.”

Start with small changes that have a big impact:

Space and prune trees to prevent fire from climbing into canopies.
Remove leaves, pine needles, bark mulch, and other debris within 100 feet of structures or up to your property line.
Clean roofs and gutters of flammable debris.
Move combustible materials — like mulch and firewood — away from your home.
Keep plants trimmed and clear of dead material, especially near the house.
Avoid planting directly under eaves; leave at least a five-foot buffer.

For a detailed guide on how to create defensible space, check out www.oregondefensiblespace.org.

As you clean up your yard, be mindful about disposal. Consider chipping, composting, or recycling. If burning is necessary, always follow local rules. Debris burns that get out of control are the leading cause of human-caused wildfires in Oregon.

This May, the Oregon State Fire Marshal — alongside fire service partners — is calling on everyone to get ready, stay aware, and believe in fire safety. Together, we can reduce wildfire risk and protect what matters most.

Find tips, resources, links to our partner agencies, and more at the OSFM’s Wildfire Awareness Month webpage or preventwildfires.oregon.gov.

Across our district, creative people are making cool stuff!

I’m thinking dog treats from dried fish skin, art, lamps and doormats made from used crab pot lines, custom surfboards, medical splints crafted from aluminum and foam rubber, and of course, world-class beer, wine, chowder, almond cakes and German potatoes.

Oregon Business & Industry, in partnership with Here is Oregon, has announced the third annual Coolest Thing Made in Oregon contest, a search for the coolest thing manufactured in the Beaver State.

The contest begins with nominations. Anyone, from consumers to legislators, can nominate a product manufactured in Oregon. To do this, visit Here is Oregon’s Coolest Thing Made in Oregon page and enter a few pieces of information.

After the nomination period closes in July,16 products will be chosen to participate in a bracket-style competition. Through four rounds of online voting, Oregonians will narrow the list of finalists, and on October 22, the winner will be revealed at OBI’s Vision Oregon Event.

To learn more about the contest, visit OBI’s Coolest Thing Made in Oregon web page, which will feature all updates.

To qualify for the contest, products must be manufactured substantially within Oregon and be legal to buy in all 50 states.

Tuesday night, I trekked up to Portland and the Oregon Historical Society for a presentation on the voyages of Captain Cook, who named Cape Foulweather during his North Pacific voyage in 1778. I have long been interested in British maritime history and remain convinced that Sir Francis Drake visited Lincoln County in 1579.

Thursday evening, I was at BB 360 Camp (formerly the B’nai B’rith Camp) on Devil’s Lake to help raise funds for local students to attend summer learning camp. The Camp has been host to local events like our Siletz Bay Music Festival, hosts local students for their programs, and has delivered over 350,000 meals to fire survivors and food-insecure residents over the past five years.

Saturday, I was at the Oregon Coast Aquarium to thank donors and celebrate their success in completing wildlife rehabilitation services and new displays. Those exhibits include the Washed Ashore Project, which tells the story of saving oceans and waterways from plastic marine debris, and Art to Save the Sea.

Finally, Saturday, May 17, was Armed Forces Day — a time to honor the brave men and women currently serving in our military. Whether at home or abroad, their commitment to protecting our freedoms and keeping our nation safe is something we should never take for granted.

Please join me in thanking our active-duty service members for their sacrifice and dedication. We owe them — and their families — a debt of gratitude not just today, but every day.

It is Monday, and I’m back in Salem doing the people’s work. With the revenue forecast in hand, the session end is in sight. Let’s all hope for a productive conclusion.