OREGON
Saturday, November 20, 2021
East Oregonian
Higher wages drive state revenue
A9
By JULIA SHUMWAY
Oregon Capital Chronicle
SALEM — Higher wages
are driving up Oregon’s
projected tax revenue, but
most middle-class work-
ers won’t feel the benefits
of larger paychecks over the
next year because of infl a-
tion, state economists said
Wednesday, Nov. 17.
A quarterly economic
forecast from the state
Department of Administra-
tive Services predicted that
Oregon will recover from a
pandemic-induced recession
much more quickly than it
did from the Great Recession.
Higher wages, especially
for low-income workers,
are making up for expiring
federal aid, according to the
forecast.
But labor shortages and
supply chain disruptions are
driving prices up and eating
into families’ budgets. And
the Portland area, which
contains roughly half the
state’s population and jobs,
is lagging behind the rest of
Oregon in recovering from
the pandemic.
With Oregonians earn-
ing more money, the state is
collecting more income tax
revenue than expected when
the current budget cycle
started in July. Oregonians
who fi led taxes in 2020 and
2021 are already expected
to receive $1.9 billion next
year in “kicker” tax cred-
its triggered when the state
collects more in taxes than
it budgeted, with a credit of
$420 for the median taxpayer.
Forecasters now predict the
state will refund $558 million
in 2024 as well.
A rosy forecast for
state government revenue
presented to Oregon’s House
and Senate fi nance commit-
tees came as other legislative
committees heard dire warn-
ings about a coming wave of
evictions as tenants struggle
to aff ord rent.
“It’s still really quite
something to grasp that we’re
in a situation with a revenue
forecast where we’re seeing
additional revenue over what
had been forecast; things
look really rosy that way,”
said Rep. Nancy Nathan-
son, a Eugene Democrat who
chairs the House committee.
“There are other legislative
committees hearing very
troubled information about
people who are in danger of
losing their homes and other
types of challenges for some
of Oregon’s businesses and
individuals. How can this be
EO Media Group, File
Oregon drivers will pay 2 cents more on every gallon of
gasoline beginning on Jan. 1, 2022, as the state’s fuel tax
rises to 38 cents per gallon.
Tim Gruver/The Center Square, File
The Oregon Pioneer stands atop the Oregon Capitol in Salem. A quarterly economic forecast
from the state Department of Administrative Services predicted Oregon will recover from
the pandemic-induced recession more quickly than it did from the Great Recession. Higher
wages, especially for low-income workers, are making up for expiring federal aid, according
to the forecast.
true at the same time?”
Wage gap narrows,
infl ation hits
Across the board, wages
adjusted for infl ation are up
about 8% since the start of
the pandemic in Oregon in
March 2020. Workers making
less than $20 an hour saw the
most signifi cant increases,
while those making more
still saw raises but they didn’t
keep pace with infl ation.
Normally, infl ation would
hit low-income workers the
hardest, state economist Josh
Lehner said. If you’re living
paycheck to paycheck, higher
prices mean those paychecks
don’t go as far. Workers who
earn more and don’t routinely
spend everything they earn
might need to decrease the
amount they save, but they
also stand to benefit from
rising returns on their invest-
ments.
On average, low-in-
come workers in Oregon are
increasing their standard
of living, while middle-in-
come workers are beginning
to struggle with the erosive
eff ects of infl ation.
“Basically, if you’re more
than $20 an hour you’re
seeing wage gains, but not
as fast as infl ation, so you’re
seeing some real wage
declines,” Lehner said. “From
a broader societal economic
perspective, maybe some
reduction in wage inequal-
ity would have some broader
benefits, even in a high
inflation environment, but
of course, when the typi-
cal worker seeing real wage
declines, and you’re paying
more at the pump, more at the
store, that really starts to hit
your budget.”
For the most part, econ-
omists expect higher prices
to begin to subside as supply
catches up to demand for
products that were manu-
factured at much slower
rates than normal during the
pandemic. For instance, used
car prices are up roughly
40% since the start of the
pandemic because of a short-
age of semiconductor chips
needed for new cars, but
those prices are expected to
decrease as manufacturing
ramps up.
Other areas, including
rising costs to buy or rent
homes, are more concern-
ing, state economist Mark
McMullen said.
“We’re seeing a tremen-
dous amount of inflation
there, but unlike what we’re
seeing in terms of a lot of
the other durable goods, we
can’t expect a huge supply
response that’s going to come
and save the day and bring
down house prices and bring
down rents going forward,”
he said. “So that’s something
where there may be a role for
policymakers.”
If infl ation doesn’t cool,
Oregon could be back in a
recession by 2023, under an
alternative forecast. That
scenario predicts that more
than 130,000 people would
lose their jobs and the state
wouldn’t fully recover until
2028.
Rural recovery
outpaces Portland
Counties in Easter n
Baker City feedlot hopes to expand
By LYNNE TERRY
Oregon Capital Chronicle
BAKER CITY — A
Baker City feedlot that
manages fewer than 3,000
head of cattle is seeking
permission from the state to
expand to 15,000.
The expansion would
require approval of a new
confined animal feeding
operation permit through the
Oregon Department of Agri-
culture. CAFO permits spec-
ify the number of animals a
company can have in one
location and requires a plan
for managing manure.
Baker City Cattle Feed-
ers operates under a CAFO
permit that allows up to
3,499 cattle. The next step
is a Large Tier II permit,
allowing 3,500 cows and
more.
The Agriculture Depart-
ment notified the public
earlier this year about the
proposed change. A spokes-
person said the depart-
ment has no position on
the request. The public can
comment on the request
by emailing Janet.Short@
ODA.Oregon.gov, calling
503-986-4792 or faxing
503-986-4730.
Such permits can be
controversial, especially
if neighbors are worried
about manure running into
waterways. A plan for a
large chicken operation for
3.5 million animals a year
to be sold to Foster Farms
has sparked criticism, with
dozens of people comment-
ing on the proposal. It would
be located near the Santiam
River near Scio.
The Baker City proposal
has yet to draw much atten-
tion from advocates for
small farms.
John Hepton, who oper-
ates the feedlot, told the
Capital Chronicle in an
email that all of the manure
from the cattle will be sold
to local farmers.
“We have more demand
for the organic nutrients in
our manure than we could
ever produce with the expan-
sion,” Hepton wrote.
He said the feedlot
receives recently weaned
calves and feeds them
through the fall, winter and
into the spring to “develop
replacement heifers for local
farmers and ranchers.”
There are currently 70
ranches, dairy farms, feed-
lots and other operations in
Oregon with CAFO Tier I
permits. They allow up to
nearly 125,000 chickens,
nearly 40,000 sheep and up
to about 30,000 pigs depend-
ing on the weight. Another
35 companies have Tier II
permits.
Oregon far outpaced the rest
of the state and most of the
country in income growth
during the past year, mostly
because many families there
had low incomes, McMul-
len said. Stimulus checks,
changes to child tax credits
that resulted in guardians
receiving monthly payments
and increased federal unem-
ployment payments were
more meaningful in counties
with lower average incomes.
Portland, meanwhile, is
trailing the rest of the state in
recovery. Other large metros
around the country also are
recovering slower from the
pandemic than rural and
suburban areas, which the
economists said demon-
strates a diff erence between
the pandemic-induced down-
turn and the Great Recession.
After that recession,
metro areas led the rest of the
country. But cities thrive on
crowds and in-person activ-
ities, and people aren’t yet
fl ocking to cities for shopping
and events.
“What’s impacting all
large urban areas is the lack
of in-person activity,” Lehner
said. “People aren’t going out
to shows, aren’t going out
to eat quite as much in the
urban cores as they are in
the suburbs and in our rural
communities.”
Lehner and McMullen
wrote in their report that they
expect Portland will remain
an attractive place to live and
will recover fully, but it’s
unclear whether the city will
regain its perch as one of the
most attractive destinations
for workers.
Oregon’s fuel tax
rises again, even as
drivers buy less gas
By ZANE SPARLING
Oregon Capital Insider
SALEM — Gas prices
are up. They’re about to get
even higher.
Oregon drivers will
pay 2 cents more on every
gallon of gasoline begin-
ning on Jan. 1, 2022, as the
state’s fuel tax rises to 38
cents per gallon.
The pump price jump
was baked into House
Bill 2017 — the omnibus
$5.3 billion transportation
package passed by state
lawmakers that year —
which included three previ-
ous price hikes and a fi nal
two-cent increase set for
2024, at which point driv-
ers will be paying 10 cents
more per gallon in tax.
There’s also a separate
10-cent per gallon fuel tax
collected by the city of
Portland, plus an 18.4 cent
federal gas tax, meaning
Rose City consumers are
paying roughly 64 cents
in taxes on every gallon of
gas.
Oregon Department of
Transportation data shows
state fuel tax revenue has
recovered somewhat from
the COVID-19 slump, even
though drivers are buying
less gas.
As virus restrictions
emptied public spaces
and converted most white
collar commuters into home
workers, gross tax revenue
dropped from $620 million
in calendar year 2019 to
$589 million in 2020.
According to ODOT
Budget Manager Daniel
Por ter, the state has
collected $486 million in
fuel tax revenue through
September, about $20
million more than this
time in 2019, with the fi nal
quarter of revenue yet to be
tabulated. But the number
of gallons of gasoline sold
is lagging previous years,
with 1.357 billion gallons
sold through September of
this year compared with
1.38 billion in September
2019.
All told, some 1.829
billion gallons of gas passed
through the pump in 2019,
compared with just 1.645
billion last year.
“Annual comparisons
on revenue wouldn’t quite
be apples to apples,” said
ODOT spokesperson Shel-
ley M. Snow. “If you look
at gallons sold we’re still
about 2% off of where we
were in 2019.”
Lawmakers have consid-
ered proposals to ditch
Oregon’s fuel tax in favor of
a tax on every mile traveled,
which would return electric
vehicle users to the tax base,
but so far it’s just an idea.
Statewide, the average
price for regular unleaded
gas is $3.78 per gallon,
according to the Ameri-
can Automobile Associa-
tion. That’s nearly a buck
and a quarter more than the
average unleaded gas cost
of $2.59 a gallon from this
time last year, though still
less than the price peak
recorded in 2008, per AAA.
O regon D r iver &
Motor Vehicle Services
fees charged when drivers
renew their vehicle tags,
apply for a trip permit or
vehicle title also will rise
about 3% next year.
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