Oregon’s budget hole just got a bit shallower.

As lawmakers wrestle with a deficit that is all but certain to require state service cuts, a revenue forecast made public Wednesday suggests they can plan for about $100 million more in the state’s general fund than they’d previously expected.

The prediction makes the Legislature’s job easier, but not by much.

Lawmakers gaveled into this year’s five-week session on Monday figuring they’d need to find about $750 million to balance the state’s general fund and leave money aside for emergencies. Now they’re looking at a gap that is closer to $650 million.

Still in question is how legislators will fill the hole. On Tuesday evening, budget writers took hours of testimony from Oregonians who’d signed up to vouch — often passionately — for programs that had been offered up as potential cuts by state agencies. Not all of their causes will be spared.

Democrats are also hoping to generate more money by ensuring some of the federal tax cuts approved by congressional Republicans last year don’t make their way into state tax returns. H.R. 1, the so-called One Big Beautiful Bill Act, is expected to reduce Oregon’s general fund revenue by about $888 million this budget, and is one major reason for the state’s budgetary stress.

A Democratic proposal unveiled Monday would reclaim nearly $300 million by severing the state from three tax breaks included in the federal bill.

Lawmakers have until March 8 to piece together a balanced budget.

The revenue forecast issued Wednesday was sedate compared to previous reports that had shown wild swings in what the state might expect. The forecast issued in August 2025 showed H.R. 1 had blown a hole in Oregon’s newly passed budget. Three months later, an expected surge in tax revenues had closed some of that gap.

The latest forecast shows a jump in expected corporate taxes of $95 million that more than offsets personal income taxes now projected to come in $42 million lower than they were three months ago.

Other revenue sources that trickle into the general fund are projected to be up $52 million. In total, the state’s general fund revenues are up $106 million from the previous forecast.

The report also reflects unspent money not accounted for in the last report. State agencies had until Dec. 31 to spend funds from the previous two-year budget. They wound up spending $147 million less than previously expected. That money was known to legislative budget writers ahead of Wednesday’s forecast, however, and so it already figured into their budget planning.

Lawmakers can also plan for around $50 million more from the Oregon Lottery and the state’s corporate activity tax on business sales. Both will help boost school funding.

The improved revenue picture arrives as Oregon’s leaders fret about the state’s struggling economy. Rising unemployment, a restive business climate, and slow population and economic growth have given rise to worries the Beaver State is headed for trouble.

But Carl Riccadonna, the state’s chief economist, offered a relatively hopeful picture Tuesday evening. National economic growth has continued to outpace expectations, despite ongoing sluggishness in the job market.

“We have fiscal stimulus from tax cuts. We have monetary stimulus with the Fed lowering interest rates,” he said. “On top of that we have a lot more clarity on the tariff situation.”

Riccadonna told reporters he had downgraded the chances of Oregon slipping into a recession in the next year to 20%, down from 25% in his last forecast.

But economists noted a major test of his predictions for state revenues lies ahead, as Oregonians prepare to file their 2025 taxes.

“We forecasted that tax filing season,” said Michael Kennedy, an economist at the state’s Office of Economic Analysis. “To the degree we are right or wrong, that’s going to change significantly how much money the state has for this biennium.”

News Source : https://www.opb.org/article/2026/02/04/revenue-forecast-oregon/