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EXECUTIVE SUMMARY <br />As has been chronicled in headlines <br />nationally, Oregon's economy also appears to <br />be confronting very significant headwinds. <br />The string of 19 consecutive quarters of job <br />gains .ended in the second quarter of 2008, a 4 <br />3/4-year span going back to the third quarter of <br />2003. This pales, somewhat unfortunately, to <br />the very long-lived boom covering 39 <br />consecutive quarters that occurred in the 1991 <br />- 2000 period. <br />In the macroeconomic backdrop used for this <br />forecast, weak job markets nationwide are <br />expected to endure for at least eight quarters <br />through the fall of 2009. Having been in <br />decline since December .2007, this will mark <br />one of the most severe recessions in the post- <br />war period. <br />Oregon's economy, while a little late to the <br />current "recessionary party;" tends to .swing <br />somewhat more than the national economy in <br />both downturns and upturns. Thus, .our job <br />losses are now expected to be far more than <br />proportional to those incurred nationally. <br />However, iri the recovery phase, our job <br />markets are .also somewhat more resilient. <br />Unless net-migration into the state is <br />materially affected by the current economic <br />malaise, these patterns are expected to be <br />preserved. <br />Presumably with the effective implementation <br />of economic stimulus initiatives- and judicious <br />monetary policies/coor_dnaton,__tbe state's <br />economic and job growth should get back on <br />track in the 2010 timeframe. <br />As we would expect, a sharp economic <br />downturn in jobs and -real personal incomes <br />does not bode well for .the outlook for <br />transportation revenues. For those Highway <br />iv <br />Fund revenues that are linked to the pace of <br />economic activity (fuel and weight-mile taxes <br />largely), the impacts are pronounced <br />compared to the prior forecast in June 2008: <br />• Motor fuels usage taxes are lower on <br />average. by $17.4 million per year over the <br />FY09-FY15 period; almost 4 percent <br />lower than before. Ethanol blending in <br />gasoline props revenues up a bit, <br />otherwise the drop off would be worse. <br />• .Weight-mile use taxes decline on average <br />by nearly $16 million annually; about 4.8 <br />percent lower than in the prior forecast. <br />For fee revenues not tied as closely to the <br />usage rates on the highway and roads system, <br />the revenue impacts are slightly more muted: <br />• DMV yearly revenues are down on <br />average by $8.4 million per year, or about <br />minus 3.7 percent from the previous <br />forecast. It is noteworthy that with the <br />depressed new .car market, new titles and <br />new registration fee revenues are <br />reflecting more sensitivity to the economy <br />than has routinely been the case for the <br />past several decades. <br />The outlays and investment spending by <br />ODOT that are necessary to maintain, <br />preserve, and modernize the State Highway <br />System will. not materially change.. with <br />weaker travel. demands going forward, <br />however. With these costs being largely fixed, <br />' ~`~N <br />~- <br />