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Projections boost state coffers by nearly $200 million

New revenue figures could drop Oregon's projected budget shortfall to $1.6 billion

SALEM — The state is projected to collect about $92 million more in revenue than expected in the next two-year budget cycle, according to state economists.

A projected $102 million increase in the state's beginning balance compared to December estimates also means that the state's projected budget shortfall could be $195 million smaller than expected earlier.

That will make budgeting easier but is still a relatively small fraction of the looming shortfall.

Leaders of the legislative budget-writing committee estimated in late January a $1.8 billion gap between how much it costs to maintain current services and how much the state would realize. With Wednesday's forecast, that could go down to about $1.6 billion.

While the budget gap for state government services is significant, Oregon's economy is doing well, said state economists Mark McMullen and Josh Lehner.

Overall job growth rates for the state are projected to outpace the nation, for example. However, some rural areas of the state have not regained all of the jobs lost during the recession and may fall behind national and state growth rates in years to come.

The new budget biennium begins July 1, about 10 days before the legislative session ends, and lawmakers must balance the state's budget.

Revenue committees have been discussing different tax options as the session rounds out its third week, with special attention on business taxes.

According to Speaker of the House Tina Kotek, D-Portland, labor and business groups — the two factions at odds during the election battle over a ballot measure to raise state revenues about $6 billion per biennium by creating a corporate sales tax — are continuing talks to find common ground.

However, legislative leaders are not participating in those discussions.

Democrats said last Wednesday that both cuts and changes to the state's revenue structure were needed.

"Despite today's good news, we're still $1.7 billion away from just funding our schools and and basic services at their current levels," said House Majority Leader Jennifer Williamson, D-Portland. "In order to minimize cuts to K-12 classrooms, in-home care for seniors, and health care services for struggling families, we need a serious conversation about finding efficiencies and reforming our revenue system."

Republicans saw it differently, saying that the forecast called for belt-tightening.

"This forecast is good news," said House Minority Leader Mike McLane, R-Powell Butte. "Now let's pass a balanced budget by matching our spending with our revenues."