New Oregon Forecast Warns of Nearly $900 Million Revenue Drop as Trump Tax Law Hits State Finances

August forecasts from the Department of Administrative Services, presented Wednesday to the state’s legislative committee on finance and revenue, show a sharp decline in Oregon’s General Fund outlook for the 2025-27 budget.

The balance, once projected as a $472.8 million surplus, has now dropped to a $372.7 million deficit following a $621.1 million adjustment tied to economic changes, Trump’s HR1, and reductions in kicker credits.

Oregon’s August Budget Forecast Shows Effects Of Adjustments, HR1, And Kicker Reductions

Oregon’s Chief Economist, Carl Riccadonna, and DAS Office of Economic Analysis (OEA)

Senior Economist Michael Kennedy, presented quarterly updated forecasts to the Legislative Committee on Finance and Revenue.

The revenue forecasts, which publicly share details of the state’s expected revenues, are used to guide state budgeting. It is a review of the legislatively approved budget working from prior projections as a baseline.

This quarter’s forecast included the potential effects of federal legislation, HR 1.

The 2025 legislature session ended with $472.8 million in available funds intended to provide a buffer against economic changes, but officials indicate that  HR1 is expected to significantly reduce the state’s revenues over the 2025-27 biennium.

In the revised forecast:

• Mainly due to changes in federal tax law, Oregon’s revenue is expected to be $888 million less over the next two years than initially projected.
• Because Oregon’s tax code has a “rolling conformity” with the federal system (most federal tax changes are automatically incorporated into state law), President Donald Trump’s HR1 is estimated to reduce Oregon’s personal income tax collections by $586 million and corporate tax collections by $300 million.
• Economic adjustments of $621.1 million reduce the General Fund due to changes in economic conditions, federal legislation, and adjustments to the kicker credit. The fund moves from a previously projected $472.8 million surplus to a negative $372.7 million.
• A smaller kicker is likely. Oregon’s June revenue forecast projected the state’s kicker to be about $1.6 billion for the 2023-25 biennium. However, state economists told lawmakers on Wednesday that tax collections came in $225 million lower than forecast in June, reducing the projected kicker to approximately $1.41 billion.