Lawmakers will likely have $350 million more general fund dollars, or about 1% more than previously forecast, to spend in the next budget cycle, state experts wrote in a document posted Feb. 26.

That’s a tiny amount in the scope of a projected $38.2 billion general fund.

But, for context, it is large enough to cover at least one of the budget items lawmakers are expected to tangle over this session: mitigating against and fighting wildfire, a need on which a state-appointed work group has proposed spending nearly an additional $300 million each biennium.

Of course, there’s no telling how lawmakers could decide to spend that money or if it will for certain materialize. Elected officials have four more months to fight over the particulars of the budget. And the final 2025-27 budget will be based on the next revenue forecast, to be made in May.

Economists also predicted Oregon’s kicker rebate will decline just a smidge — down to a total of $1.726 billion, a roughly 4% reduction from the $1.792 billion economists predicted in December.

Despite very hazy and fast-moving changes in the federal outlook in the still-nascent second term of President Donald Trump, national economic forecasts are predicting 2% growth in gross domestic product in 2025, like they were at the December revenue forecast, Oregon’s economist Carl Riccadonna told lawmakers.

While Riccadonna is keeping a close eye on potential headwinds from possible trade wars or federal cutbacks, “it’s still too early to tell” how those may affect the state forecast, he told lawmakers.

Viewpoints on the economic picture differ depending on who you speak to, however, he said. Consumer sentiment toward the economy has deteriorated according to survey data, Riccadonna said, but CEO confidence is at a three-year high.

Oregon had a rough 2024, losing ground relative to the nation in terms of economic growth, Riccadonna said.

“That puts us on a softer footing, a weaker footing as we’re potentially entering a period where tariffs and these economic headwinds will be impacting the state,” he said.

Oregon has a larger share of the economy dedicated to manufacturing and exports than most states and is trade-sensitive, Riccadonna said.

But after a dismal first two quarters, Oregon’s growth picked back up toward the end of the year, Ricadonna said. And the unemployment rate for the state has been level.

Lawmakers react

In a statement, Senate President Rob Wagner cautioned that despite a positive revenue forecast, lawmakers will still have to make “cautious budgetary decisions.”

“Oregon’s workers and small businesses continue to drive our economy with steady growth and strong revenues,” he wrote, “but the upcoming budget cycle remains tight.”

House Speaker Julie Fahey of Eugene largely echoed that view. Legislators need to prepare for possible cuts to critical federal funding for services like Medicaid, she said.

“Our state’s available resources for the coming years are projected to be slightly higher than previously expected, which is good news, but we must continue to budget responsibly,” she said in a statement. “We need to be prepared for economic headwinds created by the federal administration’s actions.”

Oregon’s long-term economic outlook is sensitive to population change, Riccadonna told lawmakers, and the state is growing more slowly than the national average. Oregon lost population during the pandemic, and while that’s starting to bounce back, that recovery is lethargic. Limited population gains will hamper economic growth, Riccadonna said.

Senate Republican Leader Daniel Bonham of The Dalles wrote in a statement that “Oregon is raking in tax dollars, but the foundation of our economy is weakening. If we keep losing working-age Oregonians and making it harder for businesses to thrive, this won’t be sustainable in the long run.”