Oregon business leaders urge Gov. Kotek to think bigger with prosperity council effort

By Shaanth Nanguneri, Oregon Capital Chronicle

SALEM, Ore. -- A leading Oregon business group is urging Gov. Tina Kotek’s economic advisers to act with greater ambition if they want to attract businesses into the state and reignite the state’s economy.

In a letter last week to the governor’s economic prosperity council, the Oregon Business Council  called upon the group to pursue a “corresponding shift in policy ambition” in light of the state’s economic and demographic headwinds. The business council hosts the annual Oregon Business Plan summit, where business leaders across the state gather to discuss the top issues facing private industries throughout Oregon with lawmakers and political leadership. 

Oregon has for years struggled with its reputation for overburdening businesses with regulations and taxes, and several high-profile recent rounds of layoffs spurred concerns that businesses are fleeing the state. The letter notes that Oregon is facing high housing costs, poor public school performance, outdated land use rules and climate-related risks such as wildfires.

“If Oregon responds incrementally, the state risks drifting into a prolonged period of modest growth, fiscal constraint, and diminished national relevance. If it responds decisively, it can renew its economic model for a slower growing, more competitive nation,” the letter reads. “The work of the prosperity council should aim unmistakably at the latter outcome.”

Kotek announced the council’s creation in December with the goal of bringing together a diverse sector of industry leaders to issue potential recommendations on policy issues such as permitting reform, global trade and corporate tax incentives. She tapped former Senate Minority Leader Tim Knopp, R-Bend, to lead the council, which continues to hold regular meetings until it plans to issue formal recommendations for the governor in the summer. Aside from an initial meeting in January, those have so far been closed to the public.

The governor’s office didn’t immediately respond to a request for comment Thursday.

The letter laid out several priority areas but offered few specific proposals. It criticized Oregon’s corporate activity tax, reliance on personal income taxes and high local taxes in Portland, and called for more sector-based workforce development efforts.

It also called for legislative action in 2027 on land use, arguing that the state’s system hinders production of housing, industrial sites and clean energy. And it urged changes to regulatory actions, including independent economic reviews of state rules. 

The business council also warned that some economic development proposals, such as an investment in industrial land development Kotek supported, took a back seat in this year’s short legislative session. Though Kotek initially sought a $40 million one-time investment, a committee stripped that allocation from the governor’s signature economic development legislation, which would also seek to fast-track the permitting process.

“For the first time in modern history, Oregon is entering an era of population scarcity. Natural population growth has turned negative. Domestic in-migration has slowed. Talent is more mobile than at any point in history, and states are competing fiercely for people, ideas, and capital,” the group said in its letter last week. “For decades, Oregon’s central economic question was how to manage growth. Today the question is whether we can generate it at all.”

John Tapogna, president of the Oregon Business Council and a prominent economic observer in the state, told the Capital Chronicle that he believes the council’s findings could rise “to that level of nation-leading policy thinking.” He compared it to efforts by Oregon in the past few decades to require beverage industries to spearhead bottle recovery and recycling efforts, eliminate many forms of single-family zoning and reverse drug decriminalization in the state.

But he said the findings should also be focused on reaching households and investors outside of Oregon, conveying that the state “understands the challenges of the next generation and is prepared to deal with them.”

“It feels like a recession in Oregon. It probably is very recession-like in Oregon, but that’s just a short-term problem, and elected leaders, other civic leaders need to consider this a generational challenge, as much as a short term business-cycle challenge,” he said.

The prosperity council work gives Oregon an opportunity to compete for households, businesses and capital, he added. Oregonians can submit feedback to the governor’s prosperity council at this link, where they can email the governor’s prosperity council or fill out a form to provide feedback or facilitate a listening session.