By Representative David Gomberg, House District 10
As we continue to struggle with the uncertainties of the pandemic, employment, schools, and fires, I’ve been working to better understand the economic consequences just over the horizon.
Surprisingly, Oregon’s economy is doing relatively well. More about that in a moment. First I want to talk about the economy in our part of Oregon.
Oregon’s job losses have been steepest on the coast where restaurants, hotels, and entertainment venues have shut down or severely reduced operations to contain the coronavirus. The state has lost 25% of all leisure and hospitality jobs this year. New state funds are available to help local business owners. But the question remains, how many of our local small businesses will survive?
The effect of the Echo Fires similarly raises difficult questions. In a region where workforce housing is already in desperately short supply, losing 300 more homes may be crippling. How many people will re-build? How long will it take? And what will it cost??
County assessors are already surveying the damage and should reach out to owners of affected property on how they can have their tax assessment adjusted. But when they re-build, it seems horribly unfair that they may be subject to higher tax rates. In one example I discussed with Lincoln County Assessor Joe Davidson, a long depreciated manufactured home assessed at $50,000, replaced with a new home of the same size, would now be listed at $130,000. I’m already working with Representative Pam Marsh of Ashland whose district lost 1500 homes to make needed changes in our taxation statutes.
Whenever we find ourselves facing disasters, the most important issues aren’t economic in nature, they’re social and human. The lost lives, health concerns, and societal impacts are paramount. But we need to look at jobs, revenue for schools and local government, and services as well.
A million acres in Oregon have burned. There will be impacts on tourism and the timber industry. Tourism concerns tend to be short-lived as travel rebounds fairly quickly in the months following disasters. On the other hand the timber industry impacts may be longer lasting as fires may reduce the potential of harvest levels for years to come.
What is different about the fires this year is the mounting physical destruction of property and evacuation of populated areas. In recent years much of our focus has been on the traditional impacts of natural disasters. But now we are getting the worst combination of these in Oregon. The fires aren’t just burning forests and filling our lungs with smoke. They are also destroying homes, businesses, and forcing large numbers of our friends and families to evacuate or be ready to do so at any moment. Additionally many major north-south and east-west connections through Oregon have been and/or continue to be closed, disrupting untold supply chains.
Between COVID and fires, we’re already seeing sparsely stocked shelves in local stores and grocers.
Late in September, the State Economist released an updated Revenue Forecast. The labor market is in bad shape, but not as bad as we first feared.
- The original forecast was a 21% job loss and a four year recovery. We’re seeing an actual job loss of 14% and a forecast for a 3 year recovery.
- Oregon benefitted from $14 billion in federal stimulus checks, unemployment benefit increases and CARES dollars. That helped a lot! But those are one-time increases unless another stimulus is approved by Congress.
- The revenue forecast is up about $2 billion from the June forecast which will help the current 2019-20 budget. For 2021-22, the forecast projects a $2.8 billion deficit between revenues and current service levels.
- The forecast obscures the painful impacts being felt by low-income Oregonians who have been disproportionately affected. Most of the additional revenue comes from the state’s highest earners and corporations who waited until July to make their tax payments.
Let me say all that another way.
Oregon’s 2019-20 state budget is approximately $25 billion and the latest revenue forecast predicts general fund and lottery revenue will be more than adequate to fund that. The problem will come in future budgets, including the 2021-2022 budget which Governor Kate Brown’s administration and legislative budget writers are now planning. Economists do not expect tax and lottery revenues will grow fast enough to keep pace with spending levels necessary to maintain current government services. Already we are making cuts and saving cash to prepare for that.
Why are we seeing so much revenue when we know the underlying economy is not healthy? According to State Economist Mark McMullen, part of the reason is that lower income employees such as restaurant and personal services workers have disproportionately borne the pain of COVID-19 economic shutdowns and changes in consumer behavior. People at the top of the economic ladder in Oregon and the rest of the country earn so much, McMullen said, that their income growth can hide the income losses for those closer to the bottom.
Translation: We’re bringing in more and also spending more to help people who are hurting.
Things will get worse if we do not get additional federal support. I’ve been disappointed by the lack of urgency from Congress to pass additional COVID-19 relief. It is critical for our state to have a swift recovery and that the federal government act quickly to pass additional relief measures.
The combined effect of COVID, unemployment, and fires have hit us harder than other parts of the state. And recovery may be slower here as well.
I’ve been working this past year through the Emergency Board to bring benefits here. As I once famously said during a Board meeting, we need to apply our limited resources not where there are the most people, but where there is the most pain. I will prioritize helping all those affected by wildfires and the COVID-19 crisis as we work to aid this economic recovery.
That’s what I’m doing in Salem. You can help here at home by spending locally whenever you can.
If every household in our district shifted just $40 of the discretionary spending they already pay online or out of the area to a local business, roughly $20 million in additional funds, $8 million in additional wages, and over 200 jobs could be brought into or remain here. Keep in mind that the $40 is per household, not per person.
Yes, we have challenges ahead. I know we are up to them. Thanks as always for reading my newsletters and for all you do to help and support this special part of Oregon.
Representative David Gomberg
House District 10
address: 900 Court St NE, H-471, Salem, OR, 97301