Oregon State Economist Mark McMullen is stepping down next month, after serving in the politically fraught role for more than a dozen years.

McMullen submitted a resignation letter to Gov. Tina Kotek’s office last week, he said in an interview Thursday. On June 1 he’ll begin a new role as vice president of policy and research at Common Sense Institute Oregon, a nonpartisan, business-oriented research organization that expanded to Oregon earlier this year.

“A great opportunity came up and I decided to take a shot,” McMullen said. Josh Lehner, another economist in the state’s Office of Economic Analysis, will serve as acting state economist when McMullen departs, he said.

The role of state economist is considered one of the trickiest positions in Salem — so much so that a 2018 legislative resolution referred to the job as “the least enviable in all of state government.”

The reason: It’s the state economist’s job to appear before lawmakers every three months to offer up an estimate of how much tax revenue the state will collect in coming months and years.

The forecasts offer foundational data that lawmakers rely on as they set a two-year budget in odd years. They also serve as a signpost for whether the state will ultimately take in enough money to pay for that budget — data that can spur legislators to cut costs or plan for expanded spending, depending on which way the outlook leans.

State economist on Oregon’s economic outlook

Oregon’s tax code is highly reliant on income taxes, which can swing wildly as the economy ebbs or flows. That makes guessing how much money Oregon will bring in over a two-year period exceedingly tough.

But the state economist’s job is made especially tricky by the “kicker,” the unique Oregon policy that refunds excess tax revenues to taxpayers when they come in at least 2% above what economists predicted.

The kicker refund has been triggered — in greater and greater amounts — every budget for the last decade. The $5.6 billion refund headed out to taxpayers this year is by far the largest Oregon has ever seen, accounting for roughly one-sixth of the state’s general fund.

Oregon’s massive kicker is spurring a fresh look at the state’s unique tax rebate law

Many experts in state budgeting don’t fault McMullen for the string of errant forecasts that led to those kickers — particularly given the economic novelties brought on by the COVID-19 pandemic that made revenues especially hard to predict.

But some groups have pushed for McMullen’s ouster. Oregon’s largest labor union, Service Employees International Union Local 503, circulated a memo last year that suggested Oregon’s forecasts had gone off the rails under McMullen. “Forecast errors should be expected, but consistently underestimating revenue is evidence of systematic biases and inaccurate assumptions,” the document said. “This has a real impact on the legislative and budget process and ultimately harms Oregonians and the services they rely on from the state.”

McMullen says he is leaving on his own terms, after spending more time in the job than anyone in state history. Willamette Week first reported the planned departure.

“In my 14 years with the Office of Economic Analysis, I have gained invaluable experience,” he wrote in a resignation letter to Gov. Tina Kotek dated April 19. “However, after preparing 54 quarterly economic and revenue forecasts under four different governors, it is time for me to move on to a new challenge.”

Oregon taxpayers could see nearly $4B ‘kicker’ next year as economic outlook improves

Prior to his job at the state, McMullen worked as consulting director for Moody’s Analytics, an influential financial services firm.

He now moves to CSI Oregon, an offshoot of a business-oriented research group that began in Colorado in 2010, and has since expanded to Arizona. The organization launched its Oregon chapter in January, billing itself as a “non-partisan research organization dedicated to the protection and promotion of Oregon’s economy.”

Board members include former Republican Speaker of the Oregon House Lynn Snodgrass, along with leaders from a variety of business organizations. Former GOP gubernatorial candidate Christine Drazan was announced as a founding member of the organization’s board when it launched, but no longer appears on its website.

News Source : https://www.opb.org/article/2024/04/25/oregon-state-economist-mark-mcmullen-step-down/