|Contrary to popular belief, June revenue forecast is up|
by Kent Hunsaker, Executive Director
I just returned from the June State Revenue Forecast at the Capitol. The news is about as good as it can get given what is happening across the nation. For the 07-09 biennium, the projection is for an increase in revenue of $91.2 million from the March 2008 forecast. If you recall the March forecast was down about $200 million from the previous forecast. If you compare this revenue forecast with the Close of Session forecast, there is a slight decline of $46.9 million. The state ending fund balance was used to balance the last forecast and now the state’s ending balance has grown to $143 million. This is a very good sign as if there is a small decline in future forecasts, the ending balance can be used as a buffer.
The projection for revenues in 09-11 is holding pretty steady at a 20.7% increase!! The reason for the large bump in 09-11 is due to the state having to write a kicker check in 07-09 for $1.4 billion. This revenue carries into the 09-11 biennium and results in a big jump. We continue to believe that the 2009 session represents a big opportunity for K-12 education to receive a large increase in funding. This is especially true since PERS is projecting a 4% decrease in PERS rates for 09-11. If you combine the possibility of a large revenue increase with the decrease in PERS rates, it looks like a great scenario for our school districts.
There are a group of school districts who have bonded for their PERS debt and currently have a very low PERS rate or a rate of zero. These districts will not experience the 4% drop in PERS but their side accounts will experience large increases. We are continuing our effort to develop legislation that will provide some flexibility in the use of these large side accounts. I have a meeting next week with a coalition of folks representing superintendents, business managers, and some of our coalition partners to continue the discussion about how to write this legislation. We will keep you posted as we make progress.
I also wanted to make you aware that the state’s rainy day fund continues to grow. At the end of the 07-09 biennium the reserves in the rainy day fund ($340.9 million) and the Education Stability Fund ($396 million) will total $736.9 million. The rainy day reserves in these 2 areas are expected to grow to $1.076 billion at the end of the 09-11 biennium!! The state’s rainy day fund needs to be higher to protect state government from a recession like we had in ’02, but it is better than it has ever been and will protect us from moderate drops in revenue.
I know that many of you have been worried about the economic conditions that our nation and state are experiencing including rising fuel prices (which is also affecting the prices of other goods and services), decline in the housing industry and defaults on home loans, rising unemployment, etc. This forecast is a good indication that Oregon is weathering the storm quite well.
If you would like to look at the details of the revenue forecast, you can get to it by using this link: http://www.das.state.or.us/DAS/OEA/revenue.shtml#Most_Recent_Forecast
If you have questions or comments, you are welcome to post them for others to see. It's always good for us to share questions/answers and comments.
|This page was last updated on Thursday, May 29, 2008 .|