Proposed Budget - Fiscal Years 2026-2027
On December 18, Oregon Governor Tina Kotek released a recommended budget for the fiscal 2026-2027 biennium. Over the next two years, the governor’s budget calls for $137.7 billion in spending from all funds, a 10.5 percent increase from the enacted biennial budget for fiscal 2024-2025. This includes $37.4 billion in general fund spending (a 13.8 percent increase from the fiscal 2024-2025 biennium) and $1.9 billion from lottery funds (a 12.2 percent increase). Federal fund expenditures are also projected at $36.8 billion, an 8.5 percent increase compared to the prior biennium. The general fund budget is based on a beginning balance of $2.1 billion (after adjustments) and projected general fund revenue of $35.3 billion for the fiscal 2026-2027 biennium after proposed revenue changes – including extending various personal income tax credits. General fund revenue for the next biennium is forecasted to grow 26.7 percent compared to the fiscal 2024-2025 biennium (in part due to a $5.6 billion kicker credit issued for tax year 2023). After adjusting for the impact of Oregon’s “kicker” law, general fund revenues are expected to increase 11.5 percent in the fiscal 2026-2027 biennium compared to the prior biennium. The budget projects a $9.2 million balance in the general fund at the end of the fiscal 2026-2027 biennium. The state estimates that the combined balance in the Rainy Day Fund and the Education Stability Fund will be $2.9 billion at the end of the fiscal 2024-2025 biennium, and the governor’s budget proposes to retain these reserve levels over the next biennium.
Key Budget Highlights
The governor’s “Building on Progress” recommended budget continues to invest in Oregonians’ top priorities, including addressing homelessness, increasing housing supply, building behavioral health treatment capacity, and supporting children and youth. Budget highlights in these areas include:
Addressing Homelessness
- Maintains the statewide system of coordinated shelters.
- Maintains current efforts to transition Oregonians out of homelessness and into housing.
- Maintains services to prevent Oregonians from becoming homeless in the first place.
Housing Supply
- Creates new bond authority to build more affordable housing and meet the state’s housing production goals.
- Establishes a new housing infrastructure program to fund water, sewer, stormwater, and transportation infrastructure linked to new housing development.
- Continues efforts to support first-time homebuyers.
Behavioral Health
- Backfills American Rescue Plan Act (ARPA) investments in behavioral health capacity building and behavioral workforce capacity with general fund dollars.
- Continues deflection services to help individuals struggling with addiction to find treatment and avoid legal consequences.
Children and Youth
- Increased funding to strengthen the State School Fund Current Service Level.
- Additional targeted funding towards early literacy and summer learning.
- New targeted investments in youth behavioral health services.
Other Priorities
- Targeted investments to protect and increase access to reproductive health care.
- Funding for climate change and resilience projects, including the Community Renewable Energy Grant Program.
- New investment for reentry demonstration project to improve health care for formerly incarcerated individuals.
- New investments in initiatives to improve public safety outcomes, including efforts to reduce traffic fatalities.
- Specific investments to eliminate health inequities.
- Additional funding for natural disaster readiness, including redirecting funds from going into state reserves to instead be appropriated to pay for wildfire suppression costs.