March 5, 2025
GRB Revenue Sources
The 2025-27 budget assumes a beginning balance of $2.8 billion. It maintains a diversified revenue structure, with the General Fund contributing $35.4 billionxii, federal at $41.1 billion, and “other funds” reaching $59.6 billion. Key revenue streams include:
- Personal income tax remains the largest General Fund source, projected at 85% of total General Fund revenues.
- Corporate income tax now accounts for 9% of the total revenue amount. The Corporate Activity Tax is expected to generate $3.3 billion, continuing its upward trajectory.
- Lottery revenues, projected to be, $1.9 billion, remain a minor, stable source.
- Federal funds remain a crucial funding source, supporting a significant share of Oregon’s healthcare and human services programs, including Medicaid.
The Governor’s Key Priorities for 2025-27
The 2025-27 Oregon budget is designed to tackle the state’s biggest challenges, from housing and healthcare to education, public safety, and infrastructure. Key areas of investment as identified by the administration are outlined below, but the legislature, which includes many new members, will have their own priorities.
1. Housing and Homelessness
- More funding to expand shelters, prevent evictions, and help people move into stable housing.
- Support for first-time homebuyers and efforts to preserve affordable housing.
- Investment in new affordable housing projects to ease Oregon’s housing crisis.
2. Healthcare and Behavioral Health
- Strengthening Medicaid and the Oregon Health Plan so more people can access care.
- Expanding mental health and addiction services, with a focus on treatment facilities and support programs.
- Improving the Oregon State Hospital to enhance mental health services and address staffing shortages.
3. Education and Workforce Development
- More funding for K-12 schools, making sure students have the resources they need.
- Increased support for college financial aid and job training programs to prepare Oregonians for the workforce.
- Expanded early learning and childcare programs to support working families.
4. Public Safety and Justice Reform
- Investing in law enforcement, emergency response, and community safety programs.
- Expanding justice reform efforts, including programs that provide alternatives to incarceration.
- Modernizing public defense services to ensure fair access to legal representation.
5. Climate and Infrastructure
- Funding for wildfire prevention, disaster response, and climate resilience efforts.
- Investments in roads, highways, and public transportation, including support for electric vehicle infrastructure.
- Support for rural and coastal communities to strengthen local economies and infrastructure.
The 2025-27 GRP reflects Oregon’s commitment to tackling its most pressing challenges through strategic investments in housing, healthcare, education, public safety, and infrastructure. By prioritizing affordable housing, expanded healthcare access, workforce development, justice reform, and climate resilience, the budget aims to foster long-term economic stability and social equity across the state. These initiatives are designed to enhance quality of life for all Oregonians, ensuring that communities, whether urban, rural, or coastal, receive the resources needed to thrive. As Oregon moves forward, these targeted investments will help build a stronger, more resilient, and more inclusive future for the state.
Conclusion
Over the past 20 years, Oregon’s budget has shifted dramatically, both in revenue composition and expenditure allocations. The declining relative share of the General Fund, alongside the rise of federal and “other funds,” has reshaped how Oregon finances key programs.
Federal funding now plays an outsized role in sustaining Oregon’s healthcare system, particularly through Medicaid expansion, while dedicated revenue streams have reshaped the state’s revenue model. The changing spending allocations — with human services now comprising the largest share of the budget — reflect the increasing financial demands of healthcare, housing, and social support programs.
The final 2025-27 budget will likely reinforce these long-term trends by prioritizing investments in housing, health, and education. However, over the long-run, slowing income revenue growth, an aging workforce, growing pension liabilities, and uncertainty in federal allocations present long-term fiscal challenges that will require strategic planning and revenue adjustments.
Looking ahead, Oregon faces a critical balancing act: expanding essential services while ensuring revenue sustainability. Policymakers must navigate these shifts with a long-term strategy to maintain fiscal resilience, address economic uncertainties, and continue meeting the needs of Oregon’s residents.
[i] Oregon Department of Administrative Services,
[ii] 2025-2027 Governer’s Budget
[iii] Net of Other Funds and Federal Funds beginning balance.
[iv] A breakdown of revenue changes, comparing 2001-03 and 2023-25 budget cycle, is available in Appendix.
[v] Oregon’s public universities became more autonomous primarily due to governance reforms enacted between 2011 and 2014. These reforms transitioned the universities away from the centralized Oregon University System (OUS) and allowed them to establish their own governing boards, gaining greater control over financial and operational decisions.
[vi] 2023-2025 Legislatively Adopted Budget Detailed Analysis, State of Oregon Fiscal Office
[vii] rising just 0.28%from 545,915 students in 2001-03 to 547,424 in 2023-24
[viii] Oregon Statewide Report Card, Oregon Department of Education
[ix] Oregon’s Free Enterprise Report: 2025 Edition
[x] Appropriations increased from $8.56 billion in 2001-03 to $54 billion in 2023-25, a 530.5% growth.
[xi] State of Oregon Legislative Fiscal Office, 2023-25 Budget Highlights Update,
[xii] A beginning balance of $2.8 billion is anticipated
Appendix
Revenue Source Breakdown
|
Revenue Source |
2001-03 Share of Budget |
2023-25 Share of Budget |
Key Changes |
|
General Fund |
33.4% |
26.4% |
Declined due to growth in Federal and Other Funds; increased reliance on corporate activity taxes (CAT) and dedicated revenue sources. |
|
Federal Funds |
19.9% |
31% |
Growth driven by Medicaid expansion, federal stimulus programs, and pandemic-related aid, increasing reliance on federal sources. |
|
Other Funds |
44.9% |
41.3% |
Expansion of healthcare provider taxes, rising university tuition, and increased transportation-related revenue, including motor fuel and weight-mile taxes. |
|
Lottery Funds |
1.8% |
1.3% |
Declining as a share of total budget despite modest revenue growth; primarily allocated to education, economic development, and natural resource programs. |
State Spending Trends by Category
|
Spending Category |
2001-03 Share of Budget |
2023-25 Share of Budget |
Key Changes |
|
Education |
32.0% |
17.8% |
Declining due to increased human services costs and funding shifts, despite nominal funding growth. |
|
Human Services |
25.1% |
44.8% |
Significant growth due to Medicaid expansion, behavioral health investments, and housing initiatives. |
|
Public Safety |
5.3% |
6.8% |
Steady increase with investments in corrections, justice reform, and mental health interventions. |
|
Economic Development |
12.0% |
7.5% |
Shift from broad-based stimulus to targeted small business and workforce programs. |
|
Infrastructure |
3.8% |
2.7% |
Greater reliance on user-based fees like gas taxes and utility surcharges rather than General Fund allocations. |
|
Administrative Costs |
11.8% |
13.8% |
Increase due to regulatory expansions, IT modernization, and cybersecurity investments |
Appropriations Breakdown: How the Budget is Allocated in 2025-27 Governer’s Budget
Appropriations Breakdown: How the Budget is Allocated
|
Program Area |
2025-27 Allocation |
% of Total Budget |
Key Priorities |
|
Education |
$23.3 billion |
17.1% |
Early literacy, K-12 funding, college affordability, school infrastructure |
|
Human Services |
$62.2 billion |
45.6% |
Medicaid, behavioral health, Oregon State Hospital, housing support |
|
Public Safety |
$7.5 billion |
5.5% |
Law enforcement, justice system reforms, addiction and community safety, Oregon State Police funding |
|
Economic and Community Development |
$11.4 billion |
8.4% |
Infrastructure investment, workforce development, broadband expansion |
|
Natural Resources |
$3.8 billion |
2.8% |
Wildfire prevention, environmental conservation, water resource management |
|
Transportation |
$7.3 billion |
5.4% |
Roads, bridges, public transit, EV infrastructure |
|
Consumer and Business Services |
$1.2 billion |
0.9% |
Financial regulation, workplace safety, insurance oversight |
|
Administration |
$17.8 billion |
13.0% |
Government operations, IT modernization, cybersecurity, employee compensation |
|
Legislative Branch |
$0.3 billion |
0.2% |
Legislative operations, state audits, oversight |
|
Judicial Brach |
$1.1 billion |
0.8% |
Court system funding, public defense services, judicial infrastructure |