By SARAH ROSS

SALEM, Ore.- Salem lawmakers faced more bad news from the Office of Economic Analysis Wednesday morning, with news that state revenues for 2011 to 2013 fell another $35.1 million.

The decrease adds to the previously reported budget gap, totaling $342 million less in revenue than what legislators budgeted for last June.

Revenue projections for the 2013 to 2015 budget cycle also fell by nearly $16 million.

Since the legislative budget was passed at the close of the last legislative session in June, news of the $342 million gap has forced lawmakers to make more cuts to the state budget during the current legislative session.

Cuts to public safety, community colleges and senior services, among other programs, are expected to be made due to the revenue shortfall.

The Office of Economic Analysis said in its report of the revenue forecast that the decrease mostly resulted from lower income tax payments.

The office stated that many high-income households filed for extensions and paid more in taxes than they owed to avoid paying late fees in 2010. However, when their taxes were officially filed later that fall, they qualified for refunds, which the OEA said “drained state coffers.”

“Encouragingly, 2010 personal income tax returns have now been largely processed, and cannot do any further damage to collections,” said the OEA report.

The report also said that tax collections grew by 12 percent in 2011, but this growth is likely to be cut in half in 2012 and 2013.

Lawmakers expressed some concerns with the forecast, saying it showed a greater need for a state emergency savings fund.

“Forecasts like this one are ‘exhibit A’ for why we need a robust state savings account that forces lawmakers to set aside funds when things are good,” said State Senator Frank Morse, R- Albany, a member of the Senate Finance and Revenue Committee. “Until that happens, Oregonians will continue to suffer from tax increases and cuts to core services.”

“I don’t think there is anything more important for this legislature to deal with than establishing a state emergency fund,” said Morse.

House Democratic Leader Tina Kotek, D-Portland, echoed similar sentiments in a statement to the press shortly following the forecast.

“Economists encouraged us today to have a contingency plan in place in the event of another downturn,” said Kotek. “We should make the Rainy Day Fund available for use in an emergency so we can protect against future cuts or layoffs in public schools and avoid a costly and disruptive special session.”

Some lawmakers saw the forecast as a sign of encouragement of a steady economic recovery, but most of the legislative leaders expressed a need to help small businesses in Oregon and to create jobs.

“I appreciate the hard work put into keeping our budget balanced, and am grateful for the safety net of our Rainy Day Fund and remaining ending fund balance,” said House Co-Speaker Bruce Hanna, R-Roseburg. “Prudent budgeting helped prepare us for this ongoing trend.”

“But balancing the budget isn’t enough,” he said. “Our focus must be on job creation. It’s that simple.”