Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the State Revenue Forecasting topic
No spam. Unsubscribe anytime.
OEA briefs Senate Finance and Revenue on updated revenue forecasting methods
Summary
The state Office of Economic Analysis told the committee it relies on a Standard & Poor's national forecast and then tailors models for Oregon; the office described how personal income tax forecasting works, identified capital gains as a key source of volatility, and said it has incorporated the kicker into its internal methodology.
The Senate Committee on Finance and Revenue received an informational briefing from the Oregon Office of Economic Analysis (OEA) on March 10, 2025, explaining the office's revenue-forecast methodology and recent methodological updates. OEA staff described their reliance on a 10-year national forecast from Standard & Poor's, how that forecast is translated to Oregon-specific outcomes, and why components such as capital gains make personal income tax receipts particularly volatile.
OEA officials said their economic forecast feeds the revenue forecast used for the governor's budget and legislative projections. Carl Ricadano, the state's chief economist, said OEA translates the S&P national outlook into an Oregon model and consults advisory groups, including the Governor's Council of Economic Advisors, to adjust for state-specific factors. "We take an S and P forecast for the national economy," Ricadano said, "and then translate that into a view for the state of Oregon." He added that the national–state linkages have tightened over recent decades, making Oregon more sensitive to national cycles in some industries.
Jordan Macias, an OEA economist, explained that the office produces a bottom-up forecast by industry and emphasized the importance of timely data. Michael Kennedy summarized the revenue modeling approach and walked committee members through the personal income tax methodology, which is the largest general-fund source. OEA models personal income tax receipts by forecasting components of taxable income (wages, dividends, interest, capital gains, pass-through income) on a tax-year basis, estimating tax liability via an historical effective tax rate, and converting liability into expected monthly cash receipts.
Kennedy said a key methodological change in recent years was bringing the state's “kicker” (the constitutional excess-revenue mechanism) inside OEA's modeling framework rather than keeping it outside the forecast. He also highlighted that capital gains and business-related pass-through income are the most variable components and the greatest source of forecast error. OEA officials said they plan to publish updated methodology papers on their website and that existing personal and corporate tax documentation was last published in 2011.
Committee members asked about unique features of Oregon's system. In response to a question, Ricadano said Oregon remains the only state with the kicker mechanism; Michael Kennedy noted Colorado's TABOR as a different, spending-limit regime rather than a direct analogue. Committee members raised trade- and tariff-related risks; OEA staff said they are monitoring developments and would incorporate changes if the national forecast or key variables materially change.
OEA also described the timing and information availability that affects forecast certainty: early in a tax year there are only a few months of withholding data, while full returns (including capital gains and pass-through details) only become available after the extended filing season and are critical to understanding why receipts behaved as they did. OEA said this data timing explains why forecasts become more accurate in successive quarterly updates and why the May forecast typically offers substantially more information than the March update.
The briefing was informational; no committee action was taken. Chair Meek thanked OEA staff and said the committee may call OEA back for further technical questions during the session. The committee's next meeting and forecast cycles were noted by staff.
