What happens in Tina Kotek’s second term?

Oregon — The midterm elections probably were cathartic for many Oregonians, who overwhelmingly dislike (loathe probably is a better description) President Donald Trump. Voters here and elsewhere sent Trump a rebuke of massive, though not unprecedented, proportions. However, the election did not offer much hope for the state to improve its near-the-bottom rankings in virtually all economic measures as well as many standards for education and well-being.

Gov. Tina Kotek’s approval ratings are almost the same as Trump’s. The Legislature will have most of the same faces. And Democrats will hold even more seats, though they appear likely to fall one seat shy in each chamber of enough votes to meet quorum requirements without any Republicans.

That means for conditions to improve in Oregon, one of three things has to happen. Either the same policies have to work this time, even though they haven’t for more than a decade. Or the same people who thought those policies were a good idea in the past have to change their minds. Or new technology such as artificial intelligence, an emerging business, or some other X factor has to magically lift Oregon without help from its elected leaders.

If Kalshi placed odds on any of those things, they would not be favorable for anyone inclined to bet on Oregon.

But if you are looking for hope, and we all should no matter who we voted for, here are some things to watch:

Migration trends.

Does population start to grow again or do we remain stagnant or declining? And, in particular, do we lose more upper middle-class and wealthy households? Funding Democrats’ ambitions requires either higher taxes or more people earning more money, thus creating increased revenue at current rates.

The second scenario is preferable but can only happen if Oregon not only increases in population but also retains and attracts high earners. There’s reason to fear we are headed in the opposite direction. Population growth has been stagnant this decade and a poll conducted by DHM Research for The Oregonian showed that 37 percent of Oregonians are considering moving in the next five years.

Worse, the demographic groups most interested in moving are those between 18 and 29 and those earning more than $150,000 a year. A separate study of population data by the Oregon Journalism Project showed that 30-to-50 year-olds, prime working age adults, are leaving Oregon faster than others in that age group are moving in. Bottom line: Oregon is losing a big chunk of its current and future earnings power. That trend must reverse for the state to thrive economically.

Does Kotek show any signs of change?

It’s possible for Kotek to spin the election results as an endorsement of her performance despite her low approval rating. After all, she won by a larger margin this year than she did in 2022. However, as Jeff Eager pointed out in a detailed analysis earlier this week, when you compare results within the context of external political factors (primarily Trump’s unpopularity in Oregon), Drazan outperformed other Republicans challenging incumbent Democratic governors.

So will Kotek, approach her term treating the election as a mandate or as a signal she must do better?

Two early indicators: Does she make another run at raising taxes? And how many, if any, of the Prosperity Council’s recommendations does she adopt?

Not raising taxes is the most important step, but the Prosperity Council went further, suggesting that the state make changes in the corporate activity tax and raise the threshold at which the Oregon estate tax is implemented, as well as other more complicated long-term tax reforms. The longer-term changes will be politically fraught, but Kotek needs to at least make small tax adjustments that signal the state is trying to be more hospitable to businesses and wealth creators.

The Prosperity Council report also includes suggestions that are not tax related and probably are more likely to receive Kotek’s attention. Two of the easiest and most important are to reduce the time needed to get permits and to remove redundant and outdated regulatory requirements. Philosophically, it’s hard for anyone to disagree with these recommendations, but implementing them requires taming Oregon’s hyperactive bureaucracy.

Even if Kotek wants to enact the Prosperity Council’s tax recommendations, the recent election will make her job harder. Current results suggest three new legislators supported by public sector unions critical of the Prosperity Council recommendations will serve in the legislature beginning next year.

How do Oregon’s major private employers perform?

Can Nike and Intel rebound? Do any more companies leave or, worse, close? Does the next Nike or Intel emerge?

Of all the excuses Democrats offer for Kotek’s first-term performance the most valid is that she’s not responsible for the decline of Oregon’s marquee private employers, Nike and Intel. Their wounds were self-inflicted, and having your economy anchored by two of the worst-performing Fortune 500 companies certainly is a disadvantage.

However, Kotek and the Democratic Party more broadly do share blame for creating an environment in which there have been so few Oregon success stories since Nike, which was founded in the 1960s and became a juggernaut in the 1980s. And, worse, the most notable recent success story, Dutch Bros, chose to move its headquarters out of state.

A rebound by Nike and/or Intel would make Kotek’s job easier, but it would be a better sign for the state’s future if a new growth company emerged in Oregon. Or, less likely, if an established company chose to invest significant resources in Oregon, as Intel did starting in the 1970s.

If none of these things happens, Oregon likely will be moored near the bottom of national economic rankings when voters choose the next governor in 2030.

By Mark Hester
Mark worked 20 years at The Oregonian in positions including business editor & editorial writer. He is regular contributor to Oregon Roundup.

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Republished by Right Now Oregon with Permission from Oregon Roundup. Oregon Roundup Foundation created this article. ORF is a 501(c)(3) nonprofit corporation dedicated to covering Oregon political and government news.