(Pendleton) East Oregonian May 28
In the words of State Economist Mark McMullen, Oregon’s economy “is still pretty hunky-dory.”
The current period of economic growth is on its way to becoming the longest on record, with little chance of a recession within the next year. As a result, the state is collecting far more in taxes than previously projected.
But if any legislators and other state officials are making plans for spending that extra dough, forget about it. Here are three reasons:
First, the most obvious is Oregon’s unique kicker law. It could result in more than $550 million being returned to taxpayers as rebates on their 2019 personal income taxes.
The kicker remains popular with taxpayers, although a strong argument can be made that voters eventually should funnel that money into government rainy-day reserves instead. Historically, some Oregon recessions came on the heels of big kicker payouts.
Second, we know good economic times cannot last forever, which is why economist McMullen referred to Oregon being in a “pre-crisis” mode.
It appears the state will enter the 2019-21 budget period with $1.2 billion to $1.8 billion in reserves, which might be unprecedented. “However,” says the Oregon Economic and Revenue Forecast issued this week, “such reserves would barely be sufficient to withstand a typical recession’s impact on state revenues, let alone account for the increase in public services and programs during downturns.”
Third, our state government still has no overall strategy of economic, educational, environmental, social and related goals; or, how financial decisions — taxing and spending — can most effectively achieve those priorities. Instead, the state budgets incrementally — department by department, program by program, crisis by crisis. What is urgent overwhelms what is most important.
Meanwhile, the global pace of change intensifies each day. Oregon lags in affordable housing; an adequate, timely transportation network; worker retraining in the face of inevitable automation; and other areas. Each of those will have an economic impact, pro or con.
It’s long past time for the Legislature, state leadership and the public to set long-term strategies to ensure prosperity for the state and its residents.