Revenue Forecast Mildly Improved but Cuts Likely

November 2025 Interim Days

State economists announced their updated revenue predictions during the Oregon Legislature's interim days. The earlier estimate of a $327 million decline has been adjusted to an estimate of just a $63 million decline (from the end of Session estimated -- June 2025 – starting point). This, however, does not include potential cuts in federal Medicaid/Public Safety/Grant funding which could be on the way.In anticipation of needed cuts to the General Fund, committees asked agencies to prepare and present 2.5% and 5% cuts. Agencies tried to show how they are already cutting administrative and travel costs, and how challenging a 5% cut to their budgets would be. This is the starting point for reductions. Ultimately the Joint Committee on Ways and Means will decide how agency budgets are cut, and by how much during the February Session.The Business Tribune reported that lawmakers might tap the Rainy Day and Education Stability Fund to balance the budget. It also covered what a 5% cut would mean to housing, public safety and other critical areas.

The Legislature is preparing for the "Short" Session, which starts on February 2 and must end by March 10. Legislators will meet once more before then, for more interim days on January 13-15. We will see bills "drop" in bill tracking systems by January 16. The short session bill limits mean that we should see around 360 bills introduced this Session, less than 10% of last Session's total.

Are More Job Cuts Coming?

Buried in the economic forecast was a chart indicating an upward trend in "WARN" job layoff notices being submitted by private employers in Oregon.

Is this a sign that upcoming forecasts could show a larger budget hole developing?

Or, could increased Capital Gains tax revenue from the recent stock market gains provide an unexpected boost to state receipts? That has happened before.

We'll have to wait and see.

In either event, Legislators believe that the long term trends are heading in the negative direction, and WM Leaders are telling advocates to prepare for a tight budget in this biennium and in the 2027-2029 budget cycle.

Capitol Remodel Nears Finish Line

After 11+ years and close to $1.72 billion in total expenditures, the Capitol Seismic Remodel is nearing completion.

By February, the basement and all hearing rooms, as well as the Rotunda and front entrances, should be fully open and publicly accessible. The remodel adds three hearing rooms on the bottom floor, a shiny new cafeteria, new stairwells and skylights, and a modern look to the nearly 100 year old building.

The completion will also bring events and receptions back into the building, for the first time since 2019. Plan to come take a look and lobby the Legislature during the 2026 "Short" Session.

Left picture is new Hearing Room 30 in the basement, middle is the brightly lit basement hallway with offices for the media, the lobby center, and more hearing rooms, and right is

a stairwell down to the basement and the entrance into the new cafeteria.

Transportation Update

The Joint Transportation Oversight committee heard an update from ODOT on its megaprojects (view the presentation here). Co-Chair Khanh Pham (D-Portland) noted her concern about ODOT's debt service. Oregon is spending $60-70 million a biennium for the next decade to pay for these projects, and we don’t have enough money for basic upkeep. “We can’t both keep our taxes low, maintain our city streets and also fully build all of these projects. Something is going to have to give,” she said. 

I-205 Phase 2 was expected to rely on toll revenue, which will not be collected. ODOT does not have a funding plan going forward. The state does not have a plan to raise new revenue for the Rose Quarter project either, an plan which has more than quadrupled in price in the last four years.

Also this month, ODOT Director Kris Strickler announced his retirement, effective the end of this year. There is no word about a permanent successor at this point. The Governor has appointed Oregon Parks and Recreation Director Lisa Sumpton to replace him on an interim basis. Strickler is the 4th senior ODOT official to depart in the past two months. ODOT Turmoil.I-205

Meanwhile, more than 170,000 signatures appear to have been gathered to place the Transportation funding package on the November 2026 ballot. That number is nearly twice the number required by the Secretary of State, so it is a foregone conclusion that the measure will qualify, and the funding package will likely be suspended until after the vote. It is possible that the 2026 Session vote to place the measure on the May ballot instead of November. In a long shot, the Legislature could repeal last September's bill, and instead try to come up with an alternative that would be less likely to be referred. That's been discussed, but is highly unlikely.

Health Care Updates

A huge hole could develop in the Medicaid budget if the federal Administration follows through on their plan to eliminate the state's "enhanced" reimbursement rates because of a dispute over funding Oregon's "Healthier Oregon Plan." "HOP" uses state general fund to pay for care for undocumented individuals through the federal Medicaid plan. The bill to create the program was established in 2021, and was expected to be capped at $100 million. But state general fund support for the program has now grown to nearly $1.5 billion over just three years. A federal cut could suspend as much as $1.2 billion a biennium in federal reimbursement for the Oregon Medicaid program, and Legislators are scrambling to determine how to respond. Other states have taken action, but nothing has been introduced yet in Oregon.

The House Health Committee will introduce legislation suspending the financial penalties against providers in the health care cost growth program. Oregon is experiencing some of the highest cost growth in the country. Providence testified that the program is "trying to hold payers and providers accountable for things we can't control."

Meanwhile, the Senate Health Care Committee plans on introducing a bill to address bad actors in hospice care, likely by requiring a certificate of need to operate a hospice organization in the state.

Some good news: OHA is on track to transition to open enrollment for the 2027 program for a state-based marketplace. After a failed first attempt to create a state-based marketplace, Oregon has now partnered with "Get Insured," which helped Idaho and California set up their state-based marketplaces. The scheduled “go live” date is Nov. 1, 2026.

And the Oregon Health Authority is finally moving forward with behavioral health workforce funding opportunities. If you are interested in learning more, let us know.



How to Prepare for the Short Session

Relationships with Legislators remain important because the next Session is right around the corner. If you haven't already this fall, use December and January to schedule meetings (holiday coffee and cocoa?) and tours, and invite Legislators to learn more about your programs and hear about your priorities for 2026.