OR revenue forecast: $2.3 billion increase, bigger rebate
SALEM, Ore. (AP) — Increased tax revenues are now predicted to deliver a record kicker rebate of $3 billion to taxpayers in 2024.
The Oregonian/OregonLive reports that Economist Mark McMullen on Wednesday called the latest revenue outlook for the state’s two-year budget cycle “nothing short of shocking.” The size of the kicker is likely to fluctuate before it is finalized in summer 2023.
“We really never could have imagined the sort of stuff we’ve seen in the last couple months,” McMullen said.
Oregon’s income tax receipts this filing season mean a $2.3 billion increase in general fund revenue compared with just three months ago, but the unique kicker tax rebate would return much of the money to taxpayers. The expected size of the kicker tripled since February.
There will be $427 million more for state lawmakers to spend in the 2023-2025 budget, but only if the Legislature holds onto the money until then. Oregon’s current two-year general fund and lottery budget is $29.3 billion, according to the Legislative Fiscal Office.
Lawmakers and Gov. Kate Brown have so far given no indication they want to approve additional spending this year, which would require a special session.
Economists said rising wages in the tight labor market are helping to drive the revenue increases, but so is taxpayer behavior including wealthy individuals selling assets that yield capital gains.
Oregon’s unique kicker rebate is triggered when tax revenues for a biennium come in more than 2% above economists’ forecast from the start of the budget cycle, in this case the May 2021 revenue forecast. The state must return the full amount above the forecast to taxpayers.
Personal income taxpayers already received a kicker rebate totaling $1.9 billion when they filed their returns this year. Taxpayers will get their share of the kicker forecasted Wednesday to be $3 billion in 2024 in the form of a tax credit or tax refund when they file their 2023 income taxes that spring.