Oregon March forecast trims current biennium, raises next biennium; tariffs, manufacturing and demographics cited as risks

The Office of Economic Analysis presented the March 2025 Economic and Revenue Forecast to the Senate Committee on Finance and Revenue on Feb. 26, projecting a $89 million reduction in revenue for the current biennium, a $551 million increase for the next biennium and an overall increase in available resources of roughly $350 million compared with the December forecast.

The forecast matters because the revenue picture determines the state’s available resources for the 2025–27 budget, affects the projected kicker refund and guides planning for reserves amid heightened uncertainty. Michael Kennedy, senior economist with the Office of Economic Analysis, told the committee: "For the current biennium, we're reducing revenues by 89,000,000." Kennedy also said new tax return data raised next-biennium revenue projections. Carl Rickadonna, chief economist for the state of Oregon, described the broader economic backdrop and risks, saying the "distribution of risks has widened" even though consensus forecasts hold at about 2% national growth for 2025.

The most immediate accounting changes driving the numbers: a larger-than-expected wave of refunds and tax processing in late 2024 reduced current-biennium receipts by about $275 million relative to the December forecast, the presenters said. Separately, recently received tax-return data showed stronger-than-expected growth in taxable wages and salaries for 2023–24 (the forecast team raised its wage-growth estimates into the mid-6% range), a more persistent source of taxable income that pushed the next-biennium revenue estimate up by $551 million. Because the December special session…