At the same time, lawmakers are weighing 鈥� with the potential for new taxes or fees 鈥� and proposals from Gov. Tina Kotek to ,
Taken together, some lawmakers concede the financial pressures could make it a difficult year to pass legislation that affects the state revenue.
鈥淚鈥檝e been very clear with legislators: Don鈥檛 bring us anything bright and shiny and new,鈥� Rep. Tawna Sanchez, D-Portland, co-chair of the Joint Committee on Ways and Means, told OPB Tuesday.
Despite a from the new state economist in November, lawmakers say they are taking a conservative approach and caution that they will not have a full understanding of the state鈥檚 budget until May.
But potential federal funding cuts could punch a hole in budget plans, affecting how the Legislature addresses everything from schools to veterans services to infrastructure. Sen. Kate Lieber, D-Portland, who is the co-chair of the Joint Committee on Ways and Means, called the Trump administration proposals around federal funding 鈥渞eally catastrophic鈥� if they鈥檙e fully implemented.
At the same time, Oregon鈥檚 elected officials are seeing bills filed that would cut into state revenue, such as those with one-time payments for projects or proposals to repeal the corporate activity tax, establish an income tax credit for volunteer firefighters and grant a higher property tax exemption to veterans with disabilities.
鈥淏asically all these other things out there are good ideas and might actually help people,鈥� Sen. Kim Thatcher, R-Keizer, said. 鈥淏ut in light of everything else, in context with the whole universe we鈥檙e dealing with, I think there鈥檚 less of a chance this time than there was last time.鈥�
Lawmakers are strategizing how they would respond to federal cuts, including the possible need to backfill state agency budgets.
鈥淭his year in particular is even more murky at this point in session because of what the federal government is saying they may or may not do,鈥� Lieber said.
Oregon鈥檚 most recent biennial budget included nearly . That鈥檚 compared to nearly $31.9 billion from the state鈥檚 general fund.
鈥淎ny type of loss of revenue, how do we make up the difference?鈥� said Sen. Mark Meek, D-Gladstone. 鈥淏ecause every dollar we give, we鈥檙e going to be potentially taking out of health care, Department of Human Services, housing.鈥�
In November, Oregon鈥檚 economist predicted the state will see nearly $950 million more in revenue in the current two-year budget period than previously estimated and an extra $1.3 billion in the 2025-27 budget cycle. Because of this, taxpayers are expected to receive a nearly $1.8 billion 鈥渒icker鈥� tax rebate in early 2026.
Meek, who is the chair of the Senate Committee on Finance and Revenue, said losing federal dollars would only make things harder at a time when inflation has ramped up costs on state priorities such as road maintenance and housing production. He said lawmakers are 鈥渧ery concerned鈥� and are looking at 鈥渂elt tightening.鈥�
鈥淲e pay our federal taxes. Our Congress has dedicated these funds to these programs,鈥� Meek said. 鈥淭he executive branch should honor those, and I鈥檓 hoping that the judicial branch holds our executive branch accountable.鈥�
Even bills with bipartisan support are facing dim prospects. For a third legislative session, Thatcher is cosponsoring a bill with Democrats to give military retirees a tax break. It aims to encourage veterans younger than 63 to live and work in Oregon while also providing relief to military retirees living on their pensions.
But Thatcher and Meek, who is also supporting the legislation, said its chances of passing this year are slimmer than its last time before lawmakers in 2024.
鈥淚 think the likelihood that we get this across the finish line again, unfortunately, is very slim, and I鈥檓 very disappointed and frustrated to have to say that,鈥� said Meek, who made similar comments about legislation to reform Oregon鈥檚 estate tax.
Should the federal government鈥檚 cost cutting come to fruition, Democrats warned, the state could have a harder time addressing some of its major priorities. Lieber added, 鈥淲e can鈥檛 just go down and be fearful of everything that may or may not happen.鈥�