Oregon in 2020 and 2021 resembled other Western states: crisis on crisis. COVID, the COVID recession, forest fires and ice storms, and polarized politics dominated the news. Despite these challenges, the state’s fiscal situation turned out very positively. President Biden’s American Rescue Plan and the bipartisan Infrastructure Investment and Jobs Act signed in November 2021 provided many billions to the state for 2021 and will cover diverse infrastructure needs over the next five years. This paper analyzes the surprisingly strong general fund and federal fund situations created by the COVID era and considers the political implications of the state’s fiscal situation.

The political and budget landscape of Oregon once again can be characterized by incivility and polarization as exemplified by the 6-week walkout of Senate Republicans denying the chamber a quorum to conduct business including the 2023-25 budget. Eventually the Republicans returned, and a budget was passed after the Democrats made concessions on abortion, gender affirming care, and gun bills. The 2023 economic forecast was surprisingly positive given the Federal Reserve’s reaction to persistent inflation, the governor and legislature chose three very difficult issues as their priorities: (1) homelessness and housing affordability, (2) mental health and addiction services, and (3) improved early literacy and K-12 education outcomes. There have been major state leadership changes in 2022 and 2023, although the shifts featured familiar faces in new positions more than any deep change. As the 2022 elections demonstrated, the rural-urban split festers. Meanwhile, the federal spigot from COVID funding slowly dries out, although federal infrastructure and economic development programs advance. In sum, the state’s steadiness could be on thin ice, especially with Oregon’s infamous “kicker” law returning a record $5.6 billion of tax revenue back to taxpayers.

The 2018 midterm elections strengthened the Democrats’ control of Oregon’s state government. Governor Kate Brown won re-election with 50percent of the vote defeating moderate Republican Knute Buehler with 46.6percent of the vote.  Democrats also increased their seats in both the House and Senate, leading to super majorities in both houses. Governor Brown and the Democrats in Salem have taken fairly strong progressive policy stances in 2017 and 2018, particularly opposing President Trump’s immigration and marijuana policies, reinforcing the West Coast carbon-reduction pattern, and strongly supporting health care coverage expansion. With a booming economy and unemployment at record lows, the state seems to be able to deliver on its progressive agenda for the 2017-19 biennium, but funding progressive policies in the future will be a challenge for the governor for a variety of reasons. The fate of this progressive vision depends on five elements: (1) the continuation of the favorable economy and the corresponding revenue growth in the approaching budget cycle; (2) the ability to manage the ongoing taxing and spending structures that include major obligations for the Public Employees Retirement System (PERS); (3) the constraints of ongoing dependency on income taxes; (4) the vicissitudes of Trump era politics and policy with declining federal funds; and (5) continued public support for expansive public policies.

The 2014 Oregon Legislative short session was a highly partisan affair where majority Democrats in the House and Senate pursued contentious issues to Republicans including marijuana legalization, gun control, the Columbia River Bridge Crossing, and the huge implementation problems of Oregon’s dysfunctional health plan exchange (“Cover Oregon”).  The economic picture in the state featured a modest recovery and urban job growth providing an increase in state income taxes, while other revenue sources such as cigarette taxes, estate taxes, and Oregon Lottery revenues were less than expected. Nonetheless, the legislature managed to adjust the 2013-15 biennial budget, although two issues indicate there are deeper unresolved problems remaining: ongoing public employee dissatisfaction and the impact of general fund redistribution on specific programs.