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Oregon economists predict $10.5 billion in lost revenue over next 5 years

The official revenue forecast, released Wednesday, predicts a $2.7 billion loss for the current budget cycle and another $7.8 billion through 2025.
Credit: Andrew Selsky
The State Capitol in Salem, Oregon.

PORTLAND, Ore. — Oregon is expected to lose $10.5 billion in revenue over the next five years, according to the official revenue forecast released by the state on Wednesday.

Earlier this month, Oregon Gov. Kate Brown estimated a $3 billion revenue shortfall for the current two-year budget cycle and directed state agencies to prepare for a 17% reduction for the upcoming fiscal year, which begins July 1.

RELATED: Gov. Brown estimates Oregon is seeing $3 billion shortfall amid pandemic

The number from Wednesday's report came in below Brown's prediction with a projected revenue loss of $2.7 billion for the current budget cycle. State economists forecast another $7.8 billion in revenue loss through 2025 (see slide 15 below).

"While this recession is extremely severe — the deepest on record in Oregon with data going back to 1939 — it is expected to be shorter in duration than the Great Recession. The economy should return to health by mid-decade," economists wrote in Wednesday's report.

The coronavirus pandemic has led to massive losses in the business, travel and private sectors in Oregon. Nearly 400,000 people have filed unemployment claims in the past two months and the state's unemployment rate soared to a record 14.2% in April.

RELATED: Oregon unemployment rate soars to record 14.2% in April

A revenue projection like the one released Wednesday could lead to cuts in state spending for education, health care, law enforcement and other programs.

"The latest forecast for state revenue makes it clear that we have tough choices ahead," Brown said in a statement released Wednesday. "We will need to tighten our belts. I am working with legislative leaders to preserve critical state services, find efficiencies, and prepare for potential budget cuts."

Brown also called on President Trump and Congress to provide more financial support for states.

"As a state, we took action to shutter our economy in order to save lives in the middle of a once-in-a-century crisis," Brown said. "Now it’s time for Congress and the President to step up and provide once-in-a-century support for important state services, including schools, health care, and public safety."

Oregon has $1.6 billion that has built up over the past decade in the state's Rainy Day Fund and Education Stability Fund, which would help the state weather the revenue downturn.

READ: Oregon Economic and Revenue Forecast, June 2020

Read Gov. Brown's full statement on the revenue projection:

From the outset of this pandemic, it has been clear that the need for critical state services would far outstrip our resources as a state. Working Oregon families are counting on us to deliver COVID-19 emergency response efforts, while also ensuring public health, public safety, housing assistance, food assistance, unemployment insurance, and so many more essential state government functions continue uninterrupted.

The latest forecast for state revenue makes it clear that we have tough choices ahead. We will need to tighten our belts. I am working with legislative leaders to preserve critical state services, find efficiencies, and prepare for potential budget cuts.

Make no mistake, the budget gap created by this pandemic is too large to bridge without additional Congressional action. I am thankful for the work of our congressional delegation to secure federal funding for Oregon in the relief packages Congress has passed so far. But those funds only address a fraction of our current need, especially since we are not permitted to use the funding we have received so far to address state budget shortfalls.

As a state, we took action to shutter our economy in order to save lives in the middle of a once-in-a-century crisis. Now it’s time for Congress and the President to step up and provide once-in-a-century support for important state services, including schools, health care, and public safety.