PAGE A20, KEIZERTIMES, MARCH 25, 2022
Land use policy, cautious investments could
help Oregon weather economic uncertainty
BY JULIA SHUMWAY
Oregon Capital Chronicle
Conservative
investments
and
decades of policies aimed at reduc-
ing dependency on cars could insulate
Oregon from the worst effects of an eco-
nomic crisis sparked by Russia’s inva-
sion of Ukraine, but state leaders and
their advisers say much is still uncertain.
The state and national economy
rebounded rapidly after the initial shock
of the Covid pandemic and widespread
shutdowns in 2020. Higher wages and
more business transactions boosted
Oregon’s tax revenue so much higher
than anticipated this year that state legis-
lators had a surplus to spend this session.
They had budgeted more than $25
billion for the two-year budget cycle that
ends in July 2023. They ended up with
more than $1.4 billion extra. Oregonians
are likely to receive large rebates on their
taxes in two years because of a state law
that sends money back to taxpayers if tax
collections exceed the amount budgeted.
However, inflation was hitting
Oregonians hard before Russia invaded
Ukraine, and it’s likely to get worse. A
report from state economists in February
noted that inflation-adjusted wages have
declined for most workers, with inflation
at a 40-year high in the U.S.
After Russia invaded Ukraine, gas
prices skyrocketed. That has ripple
effects on other commodities that travel
by truck at some point.
Gov. Kate Brown told the Capital
Chronicle she expects to meet soon with
her council of economic advisers to talk
about the war in Ukraine and potential
impacts on struggling Oregon families.
She believes recent legislation that will
pour millions of dollars into workforce
training, housing and child care will help,
along with a plan to send $600 payments
to low-income Oregonians.
Oregon Capitol Building
“We’re obviously watching the mar-
kets very closely and looking for ways
to help Oregonians make ends meet,”
Brown said.
Joe Cortwright, chair of Brown’s
council of economic advisers, said the
most obvious direct impact on Oregon’s
economy is higher gas prices. Not much
can be done in the short term at the state
level to address rising gas prices and
related costs, he said.
“The bigger issue is just all the uncer-
tainty that it creates,” he said.
The Republican governors of
FILE PHOTO
Georgia and Maryland temporarily sus-
pended state gas taxes last week, and
the Democratic governors of Colorado,
Michigan, Minnesota, New Mexico,
Pennsylvania and Wisconsin have asked
congressional leaders to suspend the fed-
eral 18-cents-per-gallon gas tax through
the end of the year. Federal legislation
to suspend gas taxes remains stalled in
Congress.
Brown has no plans to push for a sus-
pension of Oregon’s 38-cents-per-gallon
gas tax, her spokesman said last week.
Oregon’s long-term planning means
the state is better situated to withstand
fluctuations in gas prices than others,
Cortwright said.
The average American drives about 25
miles per day, but the average Oregonian
only drives about 20 miles per day, he
said.
“We spend less money on cars and
gasoline, so when the price of gaso-
line goes up in Oregon, it hurts us a lot
less than it does the typical American,”
Cortwright said.
Residents of sprawling cities like
Oklahoma City or Dallas, Texas easily
spend twice as much on driving than the
average Oregonian, he said.
Oregon cities don’t sprawl to the same
extent because of a 1970s law requiring
urban growth boundaries, lines that limit
where and how cities can expand. Cities
need state approval to expand their
urban growth boundaries, and state land-
use laws require them to prioritize build-
ing up, not out.
Over the long run, that means fewer
subdivisions proliferating on the far
edges of towns and more development
in the core area of a city, and Oregonians
who live in cities don’t have to drive far to
reach most services. That insulates res-
idents from some of the worst effects of
inflation over the past year, which espe-
cially affected fuel prices and car prices,
Cortwright said.
“The price of those things is going
to fluctuate,” he said. “What we could
do locally is reduce our dependence on
those things so that we don’t have to
spend a bigger fraction of our income.”
As prices at gas pumps went up, the
stock market fell. That’s not a worry for
the roughly $135 billion Oregon invests,
said state Treasurer Tobias Read.
Oregon’s investments, the bulk of
which are tied to the retirement fund for
government employees, are designed
to weather economic insecurity. That
means Oregon’s pension fund won’t see
the same massive gains in good mar-
kets that Oregonians might see in their
own investments – but the public funds
also are designed not to plummet in bad
markets.
“We are in a volatile time for a lot
of reasons, but Oregonians should feel
pretty confident about where we are at
Treasury, being prepared, being prudent,
finding the right opportunities and keep-
ing our investments safe,” Read said.
The state is still in the process of
dumping about $137 million in Russian
assets, a complicated process. Oregon
and other states rely on outside invest-
ment managers to handle some invest-
ments, and Russian bonds, currency and
public equity were included in portfo-
lios. Government and private investors
are trying to dispose of their Russian
investments, but doing so is complicated
because of U.S. sanctions.