Tim Nesbitt: A good economy is a terrible thing to waste

Tim Nesbitt: A good economy is a terrible thing to waste

By Tim Nesbitt

Another legislative session, another budget-balancing challenge for state lawmakers -- despite the fact that our economy is strong and state revenues are at record highs. What's going on?

The short-term answer is that President Trump and Republicans in Congress have handed Oregon lawmakers a package of tax changes that threaten to undo our delicately balanced budget. That's not a huge problem. Oregon's anti-Trump sentiment should make it easier for Democrats to block ill-conceived business tax giveaways. And, with some smart adjustments to how we handle other federal tax changes, Oregon can maximize tax benefits for working families and still come out ahead on the revenue side.

So far, so good. But the long-term picture remains daunting. Even with revenue-saving patches to the Congressiional tax deal, Oregon lawmakers foresee another billion-dollar-plus deficit in 2019 just to pay for current programs.

Meanwhile, we keep finding more things to like in our economy. As State Senior Economist Josh Lehner recently observed, "Oregon's average wage, while still lower than the U.S. overall, is at its highest relative point today since the mills closed in the 1980s. Furthermore, Oregon's per capita personal income ... is at its highest relative point today since the dotcom crash."

So the question remains: With our economy doing so well, why can't our lawmakers balance the state budget?

True to partisan form, Democrats blame business interests for not paying their fair share to support public services, while Republicans blame Democrats for failing to curb the rising costs of government programs. There's truth in both assertions, but we could learn more from a little history.

Throughout most of the 1990s, Oregon enjoyed an even stronger economy than we are experiencing today. But a long-ignored imbalance in our tax system fueled a property tax revolt that forced a massive diversion of state revenues to shore up funding for K-12 schools. As a result, we ended the decade in worse fiscal shape than we started.

Then the 2000s delivered two recessions. We cycled through a pattern of cutting and restoring services, while deferring costs that accumulated but were never properly addressed. We ended the decade with a balanced budget but an unbalanced future.

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