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Oregon’s budget outlook has shifted dramatically after an unexpected influx of corporate tax revenue sharply reduced the state’s projected deficit. What had been a $373 million shortfall just days ago has shrunk to $63 million, driven largely by revised corporate income tax filings from major Oregon companies and modest gains in other revenue streams.
State economists Carl Riccadonna and Michael Kennedy described the windfall as “found money,” noting that corporate tax restatements are volatile and reflect accounting adjustments rather than broader economic health. The state has collected $309.5 million more than forecasted in August, when a previous surplus flipped into a deficit following the passage of the federal GOP tax-and-spending megabill.
The new forecast arrives amid a murky economic picture. A 43-day federal government shutdown has delayed key employment data, leaving forecasters “flying blind.” Early indicators suggest Oregon has lost roughly 18,000 jobs over the past year, though wage gains have softened the blow for some workers.
Gov. Tina Kotek emphasized the importance of protecting households facing rising living costs, while Republican leaders argued the improving outlook shows now is not the time for new taxes. With six more forecasts to come before the next budget cycle begins in July 2027, economists expect moderate economic improvement in 2026 as interest rates decline.
Still, risks loom. A pending Supreme Court ruling on the legality of President Trump’s tariff policy could dramatically reshape national and state economic conditions. Economists warn that eliminating tariffs—effectively an 18% tax cut on affected goods—would boost consumers but blow a hole in the federal budget, with potential global financial repercussions.
For now, Oregon’s fiscal picture is brighter, but the path ahead remains uncertain.
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