The grim forecast, presented by State Economist Carl Riccadonna and Senior Economist Michael Kennedy to legislative revenue committees, attributes the $888 million revenue shortfall primarily to the "One Big Beautiful Bill" – the Republican tax and spending cut law signed by President Trump in July. Oregon’s unique tax code, which automatically mirrors federal tax changes, means the state will feel the full impact of federal cuts unless lawmakers intervene.
"The situation is worse for manufacturing, trade, transportation, professional and business services, construction – categories that you would expect to bear the brunt of an escalating trade tension situation," Riccadonna told legislators, noting that Oregon has lost 25,000 jobs over the past year, a stark reversal from the 25,000 jobs gained the previous year.
Governor Tina Kotek’s office estimates the state faces a total $15 billion shortfall in federal funding over the next several years due to cuts to health insurance, food assistance, education, and other services. "More Oregon families are experiencing tougher financial situations — not by chance, but because of the economic uncertainty coming straight from the Trump Administration," Kotek said in a statement.
Republicans pushed back on the assessment. Senate Minority Leader Daniel Bonham (R-The Dalles) argued that Oregon’s challenges are "Oregon-grown," pointing to state-level policies on housing, business regulations, and education.
Economists also noted that Trump’s tariffs, while now stabilized around 18-19% on most imported goods, continue to slow Oregon’s labor market. The state now faces a 27% chance of recession in the next 12 months – up from 25% in May and well above the typical 10-15% risk.
Some losses are being offset by capital gains taxes from record-high financial markets, but the overall outlook remains uncertain as the state grapples with the direct fiscal impact of federal decisions.