The Takeaway

One of the most common terms used this session — and in the world generally right now — is "uncertainty." Federal spending cuts, tax law changes, and an escalating global trade war have all created substantial instability as Oregon lawmakers work to craft the next state budget. While volatility may be rooted in global events, Oregon’s state and local governments have been busy creating plenty of their own.

On Thursday, April 3 — the same day markets roiled over the announcement of steep tariffs — Oregon lawmakers unveiled a long-awaited draft framework for a transportation funding plan. The proposal, which includes increases to the state gas tax, vehicle registration fees, and a number of product- or service-specific sales taxes, would raise more than $2 billion per year once fully implemented. While road and highway repairs are vital to a thriving economy, these taxes fall directly on the movement of commerce at a time when that activity is already running on fumes amid national and global economic pressures.

The legislature has no shortage of tax proposals this session — some flashy and easily folded into a campaign message, others easier to miss. Oregon has long prided itself on being one of only five states without a retail sales tax. Still, lawmakers are pressing to impose new sales taxes on everything from tires to alcohol and other beverages. The legislature is also moving swiftly — and haphazardly — to decouple the state income tax from the federal tax code ahead of expected Congressional law changes later this year, injecting a fresh dose of complexity into tax politics ahead of next year’s short session.

Oregon’s economy is deeply connected to international markets, especially through its export of agricultural products, apparel, semiconductor, and advanced manufacturing goods. The state’s Office of Economic Analysis has long cautioned that escalating trade tensions, tariffs, and global uncertainty could place downward pressure on Oregon’s economy. While the state has no control over federal trade policy, it does control its own tax posture. Imposing new and uncertain tax burdens on businesses and their supply chains risks amplifying the very pressures lawmakers are trying to navigate. In this environment, Oregon would be wise not to add fuel to the fire.

The legislature is not alone in incubating local uncertainty. Earlier this month, three members of the Portland City Council proposed increasing the city’s gross receipts tax rate by 33 percent — without a public vote. Billed as a solution to the city’s structural budget shortfall following the loss of one-time revenues, the measure would raise a tax that falls directly on the price of goods and services. Notably, the City Charter does not authorize the Council to materially change or impose a new tax without voter approval — making the proposal an effort to test the bounds of the City Council's governing authority.

While Oregon leaders are quick to decry the uncertainty emanating from the federal government, the state and local politics of late seem to be adopting the same Trumpian style of governance — abrupt policy shifts, governance through press releases, and a willingness to push legal boundaries. While the style is notable, it is the substance — and its economic consequences — that should raise concern. These proposals are landing at a time when Oregon families and businesses are already facing rising costs, inflation, and economic fragility. The result is a homegrown uncertainty — one that is harder to blame on someone else.

What We're Reading

• Oregon Business & Industry, the largest statewide business association, released its list of "job killer" and "job creator" bills.
• After talks over limiting bill introductions from rank-and-file legislators floundered, a new effort is starting to hold back the torrent of measures in future sessions.
• Wildfire funding seemingly stalls in the legislature, but lawmakers are still eying new taxes, surcharges, and even pulling money away from the kicker.
• The Oregon Department of Transportation acknowledged errors in its economic study determining road usage between different types of vehicles, which influences the state's tax on trucking companies.
• Oregon Public Broadcasting's Politics Now podcast featured a discussion on the impact of tariffs and the global trade war on local businesses trying to navigate the challenging landscape.
• Washington Governor Bob Ferguson (D) criticized a package of large tax increases announced by legislative Democrats as "unsustainable."