PORTLAND, Ore. (KATU) — Oregon’s latest revenue forecast increased by $345 million, even as economists warned that rising oil prices and slowing economic growth could weigh on the outlook in 2026.
State Chief Economist Carl Riccadonna and Senior Economist Michael Kennedy presented the updated economic outlook and revenue forecast Wednesday to the Senate Interim Committee on Finance and Revenue and the House Interim Committee on Revenue.
The Department of Administrative Services’ Office of Economic Analysis said legislative action during the 2026 session drove the higher revenue forecast.
A summary of the Q2 Revenue Forecast is included below.
Lawmakers approved measures disconnecting the state from several provisions in the 2025 federal tax cuts package, known as the One Big Beautiful Bill Act (H.R. 1). Economists said those changes helped offset weaker-than-expected tax collections and broader economic softness. Without the legislative changes, the forecast would have declined by $23 million, according to the report.
Economists said the national economic outlook has weakened since the start of the year. Earlier forecasts anticipated faster U.S. economic growth in 2026 and an improving labor market after stagnant conditions in 2025. However, the Iran War triggered sharp increases in energy prices, raising costs for consumers and businesses.
The higher oil prices prompted economists to downgrade growth expectations for next year.
Despite the weaker economic outlook, the state forecast benefited from strong financial markets and resilient corporate profits, which helped balance employment-related weakness.
OREGON LEADERS REACT
Oregon Gov. Tina Kotek:
“Oregonians are feeling the financial pressure from high fuel prices and escalating inflation driven by the Trump administration’s conflict with Iran, so I’m thankful that Oregon is maintaining a balanced budget to protect core services. My focus is on driving solutions for families struggling to make ends meet and strengthening Oregon’s economic foundation to reduce harmful impacts of unstable federal policies.”
Oregon Senate Republican Leader Bruce Starr:
“Heating your home in the winter, cooling your home during a heat wave, and driving to and from work are not optional expenses Oregon families can simply cut out of their budgets. They deserve action from the Legislature to lower their costs, and our side of the aisle is willing to take that action. But if Democrats continue doubling down on policies that have driven costs higher for more than a decade, families should expect prices to keep rising.”
Oregonians overwhelmingly rejected the transportation tax and fee increase referendum in yesterday’s primary election by a 4-to-1 margin. Voters sent a clear message that they are exhausted by rising costs and want leaders to focus on making life more affordable.
The primary also set the stage for November’s general election, with Republicans nominating Christine Drazan to challenge Tina Kotek, and strong Republican candidates advancing to face many incumbent Democratic legislators across the state. Voters will ultimately choose between candidates with vastly different approaches to Oregon’s cost of living, taxes, and energy policy.”
Oregon House Majority Leader Ben Bowman:
“The Trump Administration’s policies – entering a deeply unpopular war and recklessly jacking up tariffs – are harming Oregon’s economy and making life more expensive for working families. This forecast makes that clear.
These choices are driving up gas prices. That makes groceries more expensive. It makes summer vacations more expensive. It even makes interest rates higher for people trying to buy a home. Every time Trump makes an impulsive decision, it hits working people hardest.
We have to focus on lowering costs and creating jobs. That’s what Oregon Democrats are doing.”