PORTLAND, Ore. (KOIN) — Oregon will have $845.5 million less than previously expected in its general fund for the next two years.
State economists presented their latest revenue forecast to legislators on Wednesday, which included the impact of recently passed federal legislation, H.R. 1.
Oregon faces $15 billion loss in federal funding for health and food programs
The legislature ended its 2025 session with $472.8 million in available funds. Economic changes, adjustments to the kicker credit, and the passage of H.R.1 are expected to reduce state revenue by $888.2 million over the next two years, according to the Oregon Department of Administrative Services. The new forecast puts the state’s balance at negative $372.7 million.
“Ultimately, the state will have to balance its books,” Chief Economist Carl Riccadonna told KOIN 6 News.
The drastic change in revenue forecast is not the result of economic deterioration, but because of Oregon’s connection to federal tax law, he said.
“A tax cut at the federal level becomes a tax cut at the state level,” he said. “A tax cut means there’s less revenue. The size of that hole is $888 million.”
The most significant change to Oregon’s economic forecast is the passage of H.R.1, otherwise known as the President’s “One Big Beautiful Bill.” The legislation contains nearly 115 provisions that affect taxation, according to the state forecast.
Nationwide, the economy has slowed over the last year but has not fallen into a recession. In Oregon, the state has consistently underperformed the national economy, the unemployment rate increased nearly a full percentage point, and employment conditions are deteriorating across a broad array of industries, according to the report.
Economists expect the state could still avoid an overall recession as long as the national economy holds up, but warn that employment declines could be warning signs of sector-specific recessions.
“Vital economic statistics ranging from truck traffic to retail activity to filings for unemployment insurance indicate that the current environment is better categorized as slow and choppy as opposed to recessionary,” according to the report.
The state is also expected to continue facing a number of risks, including trade tensions with countries like China, Canada and Mexico. According to the report, this poses risks to the state’s semiconductor industry and agricultural sector, among others.
“Given Oregon’s export-reliant economy, trade restrictions or retaliatory tariffs could have an outsized impact,” the report said.
Large-scale deportations of undocumented immigrants could also strain the state’s agriculture, construction, hospitality, timber, and food processing industries.
Oil prices, drought conditions and wildfires were also included as potential risks to economic conditions throughout the state.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
For the latest news, weather, sports, and streaming video, head to KOIN.com.
Comments