The new Economic and Revenue Forecast released today by the state economist shows that “Oregon’s schools, public safety, and human services programs will starve in the years ahead unless the Legislature and the Governor put taxes on the table to protect them,” according to the Oregon Center for Public Policy.

“There’s little the state can do to raise revenue for the rest of the current budget period, but there are many options for addressing the revenue shortfall for the next biennium,” said Jeff Thompson, an economist and policy analyst with the Oregon Center for Public Policy. The Forecast shows that General Fund revenues in the upcoming biennium will be $468.6 million lower than expected when the Governor proposed his budget and the Legislature convened last month. This adds to the approximately $2 billion shortfall for continuing programs approved by the 2001 Legislative Assembly.

According to the new Economic and Revenue Forecast, Oregon’s economy is growing slowly and is expected to pick up even more in 2004 and 2005. However, revenues will not recover enough to provide the levels of funding from the 1999-01 biennium until after 2007-09. “We’re not in a recession, but revenue growth is at a snail’s pace,” noted Thompson.

According to an analysis by the Silverton-based public policy research institute, adjusting for inflation and population, General Fund revenues will remain below 1999-01 levels until after the 2007-09 budget cycle. Adjusting only for inflation, General Fund revenue will remain below 1999-01 levels until the 2005-07 budget period.

Even in 2007-09, General Fund revenues will not be as high as 1999-01 levels as a share of personal income. In 1999-01, General Fund revenues accounted for 10.7 percent of Oregon’s total personal income, but by 2007-09 they will be just 9.6 percent of personal income.

“Today’s forecast shows that the economy is growing, albeit slowly. Even after several more years of growth, however, state revenue will still be short of what is needed to fund state programs that Oregonians enjoy,” said Thompson.

“Today’s forecast reveals a simple truth: current taxes are not high enough to fund needed state programs through the rest of this decade,” Thompson said. “Unless the Legislature and the Governor put taxes on the table, they will starve Oregon’s schools, public safety, and human services programs for several years.”

“Those who want to ignore raising taxes should explain how shorter school years, increased university tuition, increased use of emergency rooms by those without insurance, crumbling bridges with road detours, and fewer state police patrols are supposed to make Oregon an attractive place to do business,” said Thompson. “The one thing state government can do to improve the business climate is raise revenues to provide the public services businesses need to thrive.”

“There are a variety of options to solve the long-term shortfall outlined in today’s forecast,” said Thompson. “Oregon could update its antiquated corporate tax system that allows two-thirds of Oregon’s corporations to get away with a mere $10 tax payment. The state could close tax loopholes that don’t produce results or make Oregon’s income tax more progressive.”

The Oregon Center for Public Policy uses research and analysis to advance policies and practices that improve the economic and social prospects of low- and moderate income Oregonians, the majority of Oregonians.

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