The common reading of those facts is that the governor’s race is essentially symbolic. If Democrats keep the legislature, the argument goes, a Republican in Salem becomes a governor in name only — vetoing bills that get overridden, signing budgets written by other people, mostly cutting ribbons.

That reading is wrong. It misunderstands how Oregon’s executive power actually works. Much of the state’s policy machinery sits on the governor’s desk rather than in the legislative calendar, and most of it does not require the legislature’s permission to operate.

Start with the veto. The Oregon Constitution requires a two-thirds vote in each chamber to override. Democrats can’t clear that threshold. They currently hold 37 of 60 House seats and 18 of 30 Senate seats — comfortably above the three-fifths needed to raise taxes, but just shy of the two-thirds needed to override a veto. Even an unusually good Democratic year in November is unlikely to clear two-thirds in both houses. That means a Republican governor’s veto sticks.

Veto threats change what gets written. Bills the governor has signaled they will reject tend not to make it out of committee. The threat reshapes the legislative calendar before a gavel falls. Consider the 2025 transportation package. HB 3991 — the gas tax, registration fees, and payroll tax doubling that Republicans referred to the May 19 ballot as Measure 120 — was passed in special session by exactly the required three-fifths majority in each house. A Republican governor would have made that bill politically impossible long before it reached their desk. Democrats would have had to negotiate, scale back, or wait. Some version of road maintenance funding might still have moved. The version now likely to fail on the ballot would not have existed.

The line-item veto is narrower in scope than legislators sometimes pretend, but it matters. Under Article V, section 15a, the governor can strike individual items from appropriations bills and emergency clauses. That power does not extend to policy bills, nor does it allow the governor to edit tax statutes. It does give the governor a scalpel within the budget that lawmakers spend half their session writing. Pet projects tucked into omnibus appropriations are exactly the kind of thing a Republican governor would have leverage over — and exactly the kind of thing legislators stop attaching once they know their pork will get sliced.

The ability to strike emergency clauses means that bad bills can be referred to the voters. The first day in office, a Republican governor should declare, “No more fake emergencies.”

The executive order is the tool that bypasses the legislature entirely. After Republican walkouts denied quorum and killed cap-and-trade in 2019 and 2020, Governor Kate Brown issued Executive Order 20-04, directing more than a dozen state agencies to set sector-specific emissions caps, expand the Clean Fuels Program, and reweight transportation spending around greenhouse gas reduction. The legislature never voted on any of it. Most of what Oregon now calls its climate policy descends from that order signed by one person rather than from a statute passed by the legislature. A Republican governor has the same authority to rescind those orders, replace them, and issue new ones in directions the legislature would never have voted to take.

Appointments are where the office quietly becomes the most powerful position in the state. The governor staffs the agencies. Education is the most striking case. Under a 2011 statute, the governor of Oregon also serves as Superintendent of Public Instruction, and the deputy who runs the Department of Education day to day serves at the governor’s pleasure. K-12 takes among the largest shares of the state budget, and the agency that administers it answers to the governor by design.

Across the rest of the state government, after two generations of Democratic appointments, the top of every agency is populated by people whose median sits well to the left of the median Oregon voter. A Republican governor inherits the authority to clean house. A useful exercise for any Republican candidate is the “keep, fire, or arrest” question. Who would they retain, who would they fire, and who would they investigate for malfeasance? Most answers will fall in the first two categories. A few may not. That triage, done seriously, would do more to change Oregon policy in a year than a decade of legislative skirmishes.

Boards and commissions are the part of state government that most voters underestimate. The Oregon Transportation Commission decides which projects move and which do not—projects like tolling or the Interstate Bridge Replacement. The PERS Board sets the assumed rate of return — a single technical decision that shifts billions of dollars in unfunded liability between today’s taxpayers and tomorrow’s—with no legislative vote required. The TriMet board makes capital and service decisions that shape every commute in the metro area—whether to expand light rail or cancel bus routes. None of these bodies reports to the legislature in any direct way. All of them are appointed, in whole or in part, by the governor. Rulemaking by such boards has the force of law and rarely gets meaningful legislative review.

Judges round out the list. Oregon governors fill mid-term vacancies on the circuit courts, the Court of Appeals, and the Oregon Supreme Court. Most appellate judges in this state first reached the bench by appointment rather than by election. Those choices shape how every statute, rule, and administrative decision gets read for a generation.

None of this is to wave away the difficulties.

A Republican governor would walk into a building where, by any honest measure, almost no one currently working there has ever served a Republican administration. Institutional memory of how a non-Democratic executive operates Oregon’s machinery has effectively been lost.

A Republican governor’s first job will be to figure out how to turn on the lights. The legislature will be hostile. Some agency heads will resign rather than serve, and some may refuse to leave. Litigation will arrive promptly, and parts of the judiciary will not be friendly. These are real costs, and a serious candidate should plan for them. The campaign should already be drafting personnel lists, vetting board appointees, and identifying the lawyers who will defend the first wave of executive orders. None of that work happens automatically on inauguration day.

The reason to take the race seriously is that the governor’s powers do not depend on legislative cooperation. They depend on a Republican showing up at Mahonia Hall with a plan, a personnel list, and the willingness to use the authority the office already carries. Oregon has spent forty years assuming the governor’s chair would be filled by someone who shares the legislature’s priorities. Salem’s operating model now depends on that assumption, and most of the people in state government have stopped noticing. It is worth finding out what happens when a Republican holds the governor’s pen.

Originally published in The Oregon Transformation newsletter.

He is not wrong to feel it. Downtown foot traffic rose year-over-year in eleven of twelve months in 2025. Homicides are down sharply. In downtown, sidewalks are mostly clear of tents and tarps. Private investors bought Big Pink and 200 Market. Phil Knight dropped two billion dollars on OHSU. If you drove certain corridors two years ago and drive them again today, something has changed—for the better.

Wilson has earned the right to feel good about some of what he has done. At this point, I might go so far as to say he’s been the best mayor Portland has had since Vera Katz left office more than two decades ago.

As mayor, Wilson’s administration cut red tape on permitting, moved to waive system development charges for new housing, and championed modest but real relief on the business license tax. Those are the kinds of supply-side moves that actually work. The city should do more of them.

The problem is that the city’s budget agenda for the coming year runs in the opposite direction at the same time—layering on new fees, new charges, and new penalties at the moment when Portland can least afford them.

Resurgence and renewal do not happen passively. The economy is not a passing storm that gives way to sunny weather. While we can’t control the weather, we play a crucial role in whether and how our city returns to its glory days as the “Most Livable City” in America.

The Renaissance began in the late Middle Ages because Florence was flourishing. Portland won’t see a Renaissance until we have a thriving and growing economy. In many cases, those choices mean reducing taxes and regulatory burdens rather than adding new ones.

Credit Where It’s Due

Start with the good stuff, because it is genuinely good.

The business license tax exemption had sat frozen at $50,000 in gross receipts since 2007, nearly two decades. Inflation alone has eaten most of the relief that threshold was designed to provide. Wilson and Councilor Eric Zimmerman introduced a measure to raise the exemption to $75,000 in 2026 and $100,000 in 2027, aligning it with Multnomah County’s existing threshold. The council passed it unanimously.

It will save roughly 5,800 businesses about $207 each in 2026. The total relief is not enormous—about $1.2 million in the first year—but the principle is right: let small businesses keep more of what they earn, and stop letting inflation do the tax-raising that the council was unwilling to do on the record.

The system development charge waiver is a bigger deal. SDCs can run around $20,000 per new housing unit. The city’s July 2025 ordinance temporarily exempted new residential units from those fees through September 2028, with the goal of creating 5,000 new housing units in three years.

The early data is inconclusive—roughly 260 units under construction through the program as of this spring—but the direction is correct. Portland went from nearly 8,000 new housing permit authorizations in 2016 to fewer than 1,800 last year. Something had to give. The SDC waiver is a credible attempt at something.

The permitting reforms deserve credit, too. The city went from permitting housing projects worth roughly $1 billion in 2016 to about $300 million last year. A permitting system that does not actively obstruct development is not a luxury. It is a precondition for any renaissance. With that backdrop, the council unanimously passed a package of code suspensions to speed up permitting for renovation and alteration projects, and City Administrator Raymond Lee has made fixing the permitting process a central priority of his tenure.

That said, I’ll believe it when I see it. The city has promised to “streamline” permitting for 30 years or more.

The Storefront Subsidy Problem

Less convincing is Wilson’s plan to pay businesses to move into vacant ground-floor storefronts. Under the proposal Wilson unveiled Friday, the city would put up $100,000 for a new grocery store, $50,000 for a restaurant, and $25,000 for other retailers that open in vacant downtown spaces.

The ambition is understandable. Downtown Portland’s office vacancy rate hit 34.7% in late 2025—the highest on record—and commercial storefronts have emptied out in its wake. Wilson wants to activate those spaces, and that is the right goal. But writing checks to individual businesses raises questions the mayor did not answer.

First, why is a storefront vacant? If the answer is structural—weak foot traffic, public safety concerns, remote work, rents above what the location can support—a one-time subsidy does not fix any of those things. It papers over them until the check clears. Property owners are already cutting rents and restructuring deals to attract tenants. If rents are falling to market-clearing levels on their own, a $100,000 check from the city is not solving a market failure. It is just a check.

Second, who benefits? The businesses most likely to chase a $100,000 grant are those that were planning to open anyway and can now book the city’s money as found revenue. The rest is deadweight loss and displacement—the subsidized new entrant pulling customers from the unsubsidized operator down the block, who already made it through the worst of it.

Third, there is the fiscal reality. Portland is staring down a $169 million budget hole heading into the next fiscal year. The deficit has grown from roughly $67 million last December to $169 million by February, partly because business license tax revenues came in below projections. A city that cannot keep its fiscal house in order should think carefully before handing out five- and six-figure checks to restaurant operators.

Fourth, Wilson says the program would be administered by Prosper Portland, which has a bleak record of delivering prosperity.

As we noted earlier, Prosper Portland and the Old Town Community Association launched the “No Vacancy” pilot in 2025—offering technical support and financial assistance to businesses willing to occupy vacant Old Town storefronts. Yet, as of January 2026, not a single business had opened through No Vacancy.

None of this is to say that activating empty storefronts is the wrong goal. It is exactly the right goal. But the tools matter. Reducing the cost of doing business works across the whole city. Subsidizing specific occupants of specific storefronts is a different animal, and a less well-behaved one.

The Fee Pile-Up

Here is where Wilson’s agenda runs into real trouble.

At the same time, the city is trying to encourage business investment and housing development, the council seems eager to pile on new costs that will land squarely on the people and businesses the mayor is trying to attract.

Transportation Utility Fee and Street Damage Restoration Fee. The Finance and Governance Committee recently advanced a proposed transportation utility fee that would add $12 per month to single-family homeowners’ utility bills and $8.40 per unit to apartment residents. In addition, the city would charge a 4.3% rate on commercial utility bills.

The city estimates the fee would generate about $47 million annually. That tax increase is nearly 40 times larger than the “relief” the city granted to business owners by raising the business tax exemption. They give with one hand and take away with another.

The vague “Vision Zero improvements” carve-out in the ordinance raises a further concern: a charge nominally dedicated to pothole-filling that ends up funding plastic bollards and bike-lane reconfigurations is not what the initial pitch promised. It’s the old gas tax switcheroo: You pay for one thing, but you get another.

The city is also moving toward a street-damage restoration fee for utilities and contractors that excavate city streets. The rationale is sound: trenching reduces pavement life by more than 60%, and the entities doing the cutting should bear some of that cost. But some of the biggest trenchers in Portland are city bureaus—Water and Environmental Services. When city agencies pay a fee to another city agency, the money just circulates inside the municipal bloodstream. When private utilities pay—and they will—the cost flows through to ratepayers in higher water, sewer, gas, and telecom bills.

It is a reminder that “fees on businesses” are often just “taxes on residents” with a fresh coat of asphalt.

Vacant Property Tax. The most aggressive item on the list is the city’s exploration of a tax on properties that sit empty for six months or more, with a charge that would escalate over time.

But, Portland’s downtown vacancy is not primarily the product of landlords holding out for higher rents. It is the product of weak demand—remote work, reduced foot traffic, public safety concerns, and business closures. Landlords are already cutting rents and offering concessions. A tax does not conjure demand. It adds to the cost for owners who are already losing money on empty space, which is a strange way to court the next round of investors.

There is also a deeper contradiction. The city is simultaneously offering up to $100,000 grants to attract businesses to vacant ground floors and weighing a tax on owners who fail to fill them.

Proponents might call this a “carrot and stick” approach. In this case, it’s not a stick dangling a carrot—the stick is doing some whacking. Even then, that won’t get the mule to move. If weak demand is the real problem—and it is—neither measure fixes it. It’s just a tax-and-spend cycle that goes nowhere.

The Arc of Recovery

Wilson inherited a city in genuine distress and has moved it in a better direction on several fronts. Downtown foot traffic is up. Crime is down. Sidewalks are noticeably freer of tents and tarps. These are real improvements.

But they are improvements from a very low baseline. The office vacancy rate is still catastrophically high—well above pre-pandemic levels and far above the national average. Affordable housing units have a 7.4% vacancy rate, with thousands of subsidized units sitting empty on any given night. The regional count of people living unsheltered grew by nearly 3,000 during Wilson’s tenure. The budget hole is growing.

There are small signs of renewal. But the mayor’s state of the city speech is an exercise in counting eggs before they are hatched. Those eggs need to be protected and incubated. That takes work.

The policies that are working—removing SDC barriers, simplifying the business license tax, expediting permits—work because they reduce the cost and friction of doing business in Portland. The policies being layered on top—the TUF, the SDRF, the vacancy tax—impose new costs and new uncertainty on the same people Portland is trying to attract.

What a Real Renaissance Requires

Wilson is right that Portland cannot afford to slide back into the era of open-air drug markets, abandoned storefronts, and a city government that shrugged.

But to achieve a renaissance, Portland must be seen as a city that consistently makes it easier and cheaper to build, start businesses, hire workers, and put capital at risk within its city limits.

That requires more of what Wilson has been doing well—lower fees on small businesses, fewer barriers to housing construction, faster permitting—and less of what is now being piled on top of it.

The Transportation Utility Fee, the Street Damage Restoration Fee, and the vacancy tax each may have some justifications. None of them, in isolation, is catastrophic. Together, stacked on a city whose business license revenues are already missing projections and whose budget office has spent six months revising its deficit estimate upward, they send a signal that Portland has not yet decided whether it wants to be the kind of city that attracts investment or the kind that taxes what it cannot attract.

Mayor Wilson’s optimism is welcome, but it’s his job to be optimistic. Literally, his job is to “Actively promote economic development to broaden and strengthen the commercial and employment base of the City.”

The Renaissance will not happen on its own. It has to be built—brick by brick, business by business, job by job, permit by permit, policy by policy. And sometimes that means having the discipline to put down the fee schedule long enough to let the city recover.

I went to lunch downtown this week. As we walked to our table, everyone in the group reported that as they walked from their cars to the restaurant, they saw someone hunched over smoking fentanyl. The conversation continued. Everyone over 50 admitted they are looking for ways to leave Portland, and many of their friends had already done so: “Once the kids are gone, we’re outta here.”

When the talk turns to the region’s taxes, declining schools, deteriorating roads, diminished public safety, and the commercial real estate crisis, someone will inevitably ask, “Can’t these politicians see what’s in front of their faces?”

Well, they do. But, according to a theory named after a long-time Boston mayor, they might like what they see because that’s a key to getting them into office.

That theory is the Curley Effect, coined by Harvard economists Edward Glaeser and Andrei Shleifer and named for James Michael Curley, four-time mayor of Boston.

Curley spent four decades using patronage, targeted redistribution, and ethnic grievance to push wealthier Anglo-Saxon residents out of the city while keeping his Irish working-class base firmly in place. Boston stagnated. Curley kept winning. His Irish constituents were probably worse off in 1950 than they had been in 1914 — but Curley was still in power.

An Economic Model of the Curley Effect

The Curley Effect says that an incumbent politician with a loyal base can increase the probability of staying in power by adopting policies that are distortionary and wealth-reducing — not despite those consequences, but because of them.

The model shows that if the policies drive opponents away, the electorate becomes friendlier toward the politician. The politician wins, even as the city loses. The model identifies two mechanisms.

The first is geographic exit: high taxes, reduced services, or degraded public order push the disfavored group out of the jurisdiction. The second is social mobility prevention: policies that discourage supporters from rising into higher income brackets, where their political allegiances might shift.

One of the model’s counterintuitive predictions is that greater geographic mobility makes the strategy more attractive, not less.

Standard economic reasoning says that when residents can vote with their feet, bad policies get disciplined — people leave, tax revenues fall, governments shape up. The Curley model says the opposite can be true. If your opponents are mobile and your base is not, policies that push opponents out will improve your electoral position. The easier it is for opponents to leave, the more politically rational it becomes to encourage them to do so.

The paper distinguishes between what I’ll call the strong and weak versions of the effect. In the strong version, incumbents deliberately engineer policies to drive opponents out. Glaeser and Shleifer argue the evidence for this is clearest in cases like Detroit under Coleman Young, who explicitly governed toward the creation of a Black political metropolis and openly welcomed white flight.

In the weak version, no one is orchestrating a purge; the policies reflect genuine ideological commitments, but the governing coalition benefits from — and learns to exploit — the demographic consequences those policies produce. The difference matters for assigning intent. It matters less for predicting outcomes.

Portland’s Unintended Experiment

Portland’s version begins in the early 2000s, not with a deliberate expulsion strategy but with an embrace of what was then fashionable urban-planning theory.

Mayor Vera Katz and her administration adopted the “creative class” framework associated with Richard Florida, which held that post-industrial cities could attract economic growth by cultivating talent, tolerance, and technology — building bike infrastructure, funding arts districts, and branding themselves as “weird.”

Portland was an enthusiastic early adopter. Portland State University published a 2005 “case study” that looked more like a strategic plan to implement Florida’s prescriptions to attract the creative class.

Florida himself later conceded that the creative-class strategy had largely failed on its own economic terms — that talent clustering generated rewards flowing disproportionately to knowledge workers while delivering little for everyone else, and that the cities that pursued it most aggressively ended up with gentrification, rising inequality, and displacement rather than broad-based growth.

Portland’s efforts to implement Florida’s creative-class approach led to demographic sorting. The city’s progressive cultural brand attracted young, nonprofit-employed, politically left-leaning migrants from across the country while signaling inhospitality to business and moderate-to-conservative residents and families.

Katz and her successors would probably claim that nobody designed this outcome. But it happened nonetheless. Unintended consequences abound in the world of public policy.

It’s perhaps the weakest form of the pull version of the Curley Effect: an effort to attract an electorate largely aligned with the incumbent.

The Tax Architecture of Entrenchment

After Katz left office in 2005, her chief of staff, Sam Adams, landed on city council and eventually became mayor. The now-loathed Arts Tax was his brainchild.

Efforts to get the Arts Tax on the 2012 ballot were led by the Creative Advocacy Network, a nonprofit “initiated” by — you guessed it — Sam Adams. Think about that. A city mayor founds a nonprofit whose main goal is to lobby himself and the city council for a new tax to subsidize arts organizations.

That’s the weak form of the Curley Effect in action: tax the masses, enrich your supporters, and leverage that support to stay in office. Adams didn’t run for re-election, so that strategy didn’t work that well for him. Nevertheless, the Arts Tax remains.

Between 2019 and 2023, taxes in the City of Portland skyrocketed. Three overlapping levies account for much of that increase.

1. Metro’s Supportive Housing Services’ two income taxes — a 1% marginal income tax on higher earners and businesses across the Metro region — generated more than $1 billion in unanticipated revenue.

2. Multnomah County’s Preschool for All income tax (1.5% to 3% on incomes above $125,000) accumulated more than $600 million in reserves even as actual preschool seat delivery lagged far behind projections.

3. Portland’s “Clean Energy Fund” surcharge — nominally a 1% gross receipts tax on large retailers — collected revenues approximately five times higher than projected, totaling $1.6 billion over five years.

In the Curley model, the incumbents tax the disfavored group and transfer some fraction of the proceeds to the favored group, with some loss due to administrative friction. The three Portland-area surtaxes closely fit this structure. They fall disproportionately on higher earners, large employers, and the business-owning class. The revenue flows primarily to nonprofit service providers, advocacy organizations, and public-sector programs — the institutional base of the governing coalition. Whether or not any legislator modeled this as an electorate-reshaping exercise, the incidence is the same as if they had.

The fiscal consequences are real. IRS migration data shows consistent net outflows of adjusted gross income from Multnomah County. Between 2020 and 2021, Multnomah County lost approximately $1 billion in taxable income. The most recent IRS data shows that the following year, the county lost another $1.2 billion in taxable income. IRS migration data show that people leaving the county have an average annual income of $105,800, while arriving residents have an average of $73,540—a gap of $32,260 per household.

In 2006, Republicans accounted for more than 20% of Multnomah County’s registered voters. The most recent data show less than 10% of the county’s voters are registered Republicans. True, the party of 2006 is very different from the party of 20 years ago. But some of that shift is surely due to exodus.

Back in 2006, business executives and middle managers served on city commissions and boards. They were engaged in civic organizations, like the Portland City Club. Some would successfully run for office. Today, that middle has been hollowed out.

Around 2019, in the name of “equity,” City Club purged its leadership — and effectively its membership — of anyone who wasn’t on the racial/ethnic justice bandwagon.

Public commissions and boards are now stuffed with nonprofit staffers and union leaders, with a token of one or two people from the business community to check the boxes. Part of that is due to the gutting of the business community, as companies move out of state or get bought up. But surely some of that is due to a recognition that their job on a city board is to silently serve in the superminority. That’s no way to spend an evening, when your family is sitting together on the couch watching a show.

The Curley Effect Comes to Charter Reform

If the regional tax architecture looks structurally Curley-like, the 2022 charter reform looks strategically so. This is where the strong hypothesis takes over.

Left-wing nonprofit organizations designed the reform measure. They shaped the 12-member council structure. They helped draw the new geographic district boundaries. They staffed the “independent” commissions created to implement the new system. Then they ran their own candidates under the rules they had written and, in 2024, produced a 5-member progressive caucus, or “Peacock,” four of whom are members of the Democratic Socialists of America.

Analysis of the 2024 elections showed public-sector unions — SEIU, AFSCME, IBEW, LiUNA — achieving the highest endorsement success rate of any organized political bloc.

Proponents of ranked-choice voting claim it puts more moderate candidates in office. The current makeup of Portland’s city council rebuts that claim.

The Curley model’s forward-looking version says that incumbents with long time horizons will invest in reshaping the political arena itself, not just the electorate. Redesigning electoral rules, drawing district boundaries, and staffing implementation bodies are exactly that kind of investment. The charter reform process is the clearest evidence that at least part of Portland’s governing coalition moved, at some point, from the weak Curley version to the strong one.

The Nonprofit Patronage Loop

Underlying all of this is a political economy that does not require any individual actor to be conspiring. Oregon’s nonprofit sector employs roughly 11% of the state’s private-sector workforce — approximately 190,400 workers across some 10,500 nonprofit establishments statewide. As Oregon’s most populous county and home to the state’s largest city, Multnomah County contains a disproportionate share of these organizations and workers. However, county-level employment breakdowns for the nonprofit sector specifically are not published by the Oregon Employment Department.

That workforce is embedded in the city’s political institutions in ways that Portland’s traditional business community simply is not.

Multnomah County awarded at least $1.2 billion in contracts to outside entities in 2023. The homelessness-services ecosystem alone consumed $724 million in one year across 522 organizations in the Portland metro area, while measured homelessness continued to increase.

The arrangement is self-reinforcing: funds flow to nonprofits, whose workers and clients support the politicians who keep the flow going. Politicians who want to redirect those funds face a formidable, organized opposition with public money already in its hands.

This is the “social mobility prevention” channel of the Curley model operating at a sectoral level. The policy environment discourages private capital formation, burdens small businesses, and subsidizes a sector — nonprofits and public agencies — whose workers are unlikely to accumulate the kind of entrepreneurial wealth that tends to shift political allegiances toward the center-right.

It Doesn’t Matter Which Version You Believe

Here is the part that should concern anyone still on the fence about the Curley framing: the strong and weak versions produce identical outcomes.

If Portland’s governing coalition deliberately engineered the departure of business owners and moderates, the city loses its private-sector tax base and its middle-of-the-road voters. If no one engineered anything — if the creative-class branding, the surtaxes, the charter reform, and the nonprofit patronage loop all happened independently, driven by genuine ideology and institutional momentum — the city loses its private-sector tax base and its middle-of-the-road voters.

The Glaeser-Shleifer model is not a conspiracy theory. It is a description of incentives. When the incentives produce Curley-consistent outcomes, the question of whether anyone intended those outcomes is philosophically interesting but practically beside the point.

The Curley model also predicts what comes next. Portland has seen two straight years of decreasing employment. Office vacancy downtown has reached 34.7%, a level that strains the commercial property tax base that those three surtaxes were not designed to replace.

The departure of the people and businesses that fund the redistribution eventually undermines the redistribution itself. Curley’s Boston stagnated. Young’s Detroit collapsed.

Portland is not Detroit, but it is following a recognizable sequence.

The governing coalition reshaped the electorate. The electorate now sustains the governing coalition. The coalition is currently insulated from the economic consequences of its own policy choices. Until they do, voting with your feet is your only option, and the Curley Effect will continue.

Walk through downtown, Old Town, or the languishing Hollywood District, and the evidence is unmistakable: papered-over windows, locked gates, dark interiors, weathered “For Lease” signs. The political pressure to do something about it is understandable.

To address this, some city council members have proposed employing the age-old battlefield tactic of bayoneting the wounded.

Under a $62,520 contract with ECOnorthwest, Portland is studying a fee on commercial and residential property owners whose spaces have sat vacant for at least six months.

Later on, I call this a half-baked proposal. I don’t mean that as an insult. There is no formal proposal yet, but it’s pretty clear where things are headed.

Council President Jamie Dunphy—of Netflix tax fame—has been the most vocal proponent, arguing that property owners are sitting on empty spaces, refusing to accept market-clearing rents, and—in his words—exploiting vacancies as “tax write-offs.” The political theory is that landlords are behaving badly, and a financial penalty will correct that behavior.

The evidence points in a different direction, and following it where it leads has real stakes for the city’s economy.

The wrong diagnosis

The numbers tell a much different story.

ECOnorthwest’s 2026 State of the Economy describes Portland as operating in “a new national baseline of reduced demand for commercial real estate” within a regional economy that has faced “stalled population growth [and] job losses.” Specifically, the report notes that the region lost 8,800 jobs in 2025, ranking fourth-worst among the 80 largest U.S. metro areas. Portland ranks 80th out of 81 metro areas in national real estate attractiveness.

The downtown office vacancy rate hit 34.7% in the last quarter of 2025, according to CBRE.

Quarterly office leasing in the Central City averaged 252,289 square feet in 2025—the lowest on record with the exception of 2020—representing roughly a third of the 800,000-square-foot quarterly peak averaged in 2014, according to the Portland Metro Chamber’s 2026 State of Downtown report.

Rents are falling, concessions are widespread, and major landlords are taking deals they would have rejected five years ago. The Portland Business Journal reports that the CEO of Melvin Mark Companies, which manages 4 million square feet of Portland commercial property, has described executing lease deals he would never have considered pre-pandemic.

A botched diagnosis

Councilor Dunphy has argued publicly that property owners can exploit vacancies as tax write-offs, creating a financial incentive to keep spaces empty. He is simply wrong.

Under standard tax accounting, property owners can deduct ongoing operating expenses—maintenance, insurance, property taxes—regardless of occupancy, but cannot deduct the foregone income of a vacant unit. A vacant property incurs full costs with no offsetting revenue, resulting in a straightforward financial loss. Analysts at HFO Investment Real Estate documented this error at length.

A regional mismatch in retail vacancies

Prosper Portland’s estimate of a 32% retail vacancy rate appears to refer to downtown or Central City retail, not to Portland as a whole. In contrast, Kidder Matthews’ retail market report for the first quarter of 2026 covers the Portland metro area and reports an overall retail vacancy rate of 4.8%.

That gap is huge!

A city-wide vacancy fee aimed at a downtown-specific problem would impose costs on landlords throughout Portland—Woodstock, St. Johns, Lloyd District, Gateway—for a vacancy crisis concentrated in the Central Business District.

The policy discussion has not acknowledged this geographic mismatch, and a vacancy tax won’t solve it.

The vacancies the fee won’t touch

The oddest part of this half-baked vacancy tax is who won’t be taxed.

Some of the worst residential vacancy rates don’t sit in some fat cat speculator’s portfolio. Nope. They sit in the city’s own public housing authority.

Home Forward, Oregon’s largest affordable housing provider, has more than 900 vacant units—a vacancy rate of roughly 12%, or about 60% higher than the city’s overall affordable vacancy rate.

The shortfall stems from a mix of institutional and financial pressures. HUD voucher subsidies have not kept pace with Portland-area costs, leaving Home Forward with an estimated $30 million deficit in the current fiscal year. The agency is also facing a growing backlog of repairs it cannot afford to complete. At the same time, market rents have fallen close enough to subsidized levels that even units priced at 60% of the area’s median income are proving hard to fill.

The institution posting the city’s highest measured residential vacancy rate—with the most direct connection between empty units and people who need housing—would be exempt by design.

The pilot that already answered the question

In early 2025, Prosper Portland and the Old Town Community Association launched the “No Vacancy” pilot—offering technical support and financial assistance to businesses willing to occupy vacant Old Town storefronts.

As of January 2026, not a single business had opened through No Vacancy. Applicants encountered spaces requiring expensive renovations they couldn’t afford, prohibitive tenant-improvement costs, and lease structures they couldn’t make work—barriers that exist independent of any landlord’s willingness to negotiate.

A vacancy fee can pressure landlords to find tenants faster. But, it can’t generate the tenants.

The feedback loop no one is modeling

Portland’s 20 largest office buildings have lost roughly 70% of their market value since 2019. The Big Pink tower sold for $45 million—roughly 12 cents on the 2015 dollar—cutting the city’s annual property tax collections from the building by 68%. More than 700 commercial property tax appeals were filed in Multnomah County in 2024.

A vacancy fee in this context produces one of two obvious outcomes: either landlords sign up tenants faster, or they can’t. It’s more likely they can’t.

In a market where rents are falling but absorption is negative, additional cost pressures are more likely to accelerate disinvestment than to fill vacant storefronts. The results are further declines in assessed values, more property tax appeals, and a widening fiscal hole that the tax was supposed to help address.

What Portland actually needs

The city-commissioned study will cover both commercial and residential vacancies—two structurally distinct markets with distinct causes and remedies.

I fear the study will focus solely on the supply side, neglecting the demand side. Even worse, I fear the study will be balanced, but the council will focus solely on the supply side and downplay the demand side.

The Governor’s Central City Task Force, ECOnorthwest’s earlier research, and the Metro Chamber’s downtown analysis all point in the same direction. Demand is a bigger driver of vacancies than supply.

That requires a different set of policy tools. Demand-side tools that increase public safety, improve mobility, retain employers, and encourage visitors.

A vacancy fee might—but probably won’t—work in tight markets where documented speculative withholding is occurring. The empirical preconditions for such a policy—a supply-constrained market, documented owner holdouts, a reliable vacancy registry—are largely absent here.

In current conditions, sticking a financial bayonet in a wounded real estate market would penalize property owners for a market outcome largely outside their control, and risk accelerating the doom loop the city is so desperate to exit.

Dunphy points to Chicago’s decade-old streaming tax as the model. Before Portland goes down that road, residents should understand what the Chicago model actually costs households—and whether the tax would accomplish what Dunphy says it will.

Chicago taxes paid streaming services at 10.25%. A back-of-the-envelope estimate suggests Dunphy’s $10 million annual revenue target would require a Portland rate of roughly 5%—effectively a sales tax on streaming subscriptions.

Most households don’t subscribe to just one service. Deloitte’s 2025 Digital Media Trends report finds that the average American household pays about $69 per month for four streaming services. Parks Associates estimates six services cost about $109 monthly. Sports fans, parents with young children, and viewers following premium series often subscribe to several platforms because the content they want is spread across them.

A percentage-based tax applies across every subscription. At a 5% rate, the average household would be paying $41-65 a year. And that would come on top of Dunphy’s proposal to increase the annual Arts Tax from $35 per adult to $50.

Rather than replacing the despised Arts Tax, the proposal effectively doubles down on it—more than doubling arts-related taxes for many Portlanders.

That creates a particular burden for households that already cut cable to save money. Streaming is the lower-cost alternative to cable, movie theaters, and live events. Taxing it to subsidize performances many residents cannot afford shifts money from a low-cost entertainment option to a higher-cost one.

Higher-income households tend to subscribe to more services and would pay more tax, but they are also far less likely to cancel subscriptions when prices rise. Deloitte found that 60% of streaming subscribers say they would cancel a service if its price rose by just $5 per month. The households most likely to cancel—and lose access to content—are the price-sensitive households the tax burdens most.

Dunphy says the goal is to “get people out from in front of Netflix and out into the community” by making streaming more expensive. That assumes taxing streaming will push people toward theater or concert tickets.

But consumers have another option: free streaming. YouTube—the largest streaming platform in the United States by viewing time—is free and would not be taxed. Neither are Tubi, The Roku Channel, and many other ad-supported services.

When a paid subscription gets more expensive, the typical response is to cancel it and switch to a free alternative—not to buy $20-plus tickets to a live show. A streaming tax won’t drive audiences to theaters when free entertainment is one click away.

Research on music streaming and concerts also points the other direction: streaming often increases concert attendance by helping fans discover artists they later pay to see live. Taxing streaming could reduce that exposure and hurt ticket sales.

Portland residents are already among the most heavily taxed in the country. Adding a new tax on top of an unpopular one—especially a tax that falls hardest on price-sensitive households and pushes viewers toward free alternatives—will not revive the arts. It will simply make Portland’s tax system more complicated, more regressive, and even less popular than the Arts Tax it was supposed to fix.

The clock is ticking fast, and it clear that councilors have not done the due diligence necessary to avoid litigation if they approve the proposals.

• On March 27 (Friday): The final resolution and ordinance are scheduled to be posted, and the testimony window opens.

• On April 2 (Thursday): The Finance & Governance Committee will consider the proposals.

• In the week of April 6: If moved forward by the committee, the final ordinance and resolution could go to the full City Council for a vote.

City officials present both as practical responses to a real funding problem at the Portland Bureau of Transportation. PBOT says its maintenance backlog has grown into the billions, the buying power of fuel-tax revenue has eroded, and state transportation funding is unsettled. That much is true.

But the real question is not whether PBOT has a funding problem. It plainly does. The real questions are whether these charges align with the maintenance costs they purport to recover, who would actually bear the costs, and whether the city has made a strong enough case to impose them by ordinance rather than by ballot.

On those questions, Portland’s case is weaker than it looks.

The two proposals now advancing are (1) a Transportation Utility Fee, or TUF, and (2) a Street Damage Restoration Fee, or SDRF. At the committee-endorsed rates, they are projected to raise about $68 million per year combined.

The TUF would charge single-family households $12 per month, multifamily units a lower monthly amount, and commercial properties 4.3% of their existing utility bill, averaging about $61 per month. The SDRF would charge utilities and contractors more when they trench city streets, based on the square footage of the cut.

PBOT says its deferred maintenance backlog has reached roughly $6.6 billion. More than 64% of the city’s busiest streets are rated as being in poor or very poor condition. It also says the city can no longer count on roughly $10.6 million in fiscal year 2025-26 and roughly $24 million in fiscal year 2026-27 because the state’s transportation funding bill was partially referred to voters. In addition, the city’s 10-cent gas tax now has about half the buying power it had when it was first passed in 2016. There’s not much to debate about those facts, and they help explain why the city is looking for new revenue.

These facts, however, do not justify the current proposals the city council is considering.

That is especially true because Portland is not coming to the public from a position of demonstrated success. Voters approved the 10-cent local gas tax in 2016 after the earlier Street Fee debacle collapsed under widespread public opposition. PBOT says the gas tax now generates about $18 million annually, and the city points to defined allocations, annual reporting, audits, and oversight as a model for accountability.

Over roughly the same decade, however, PBOT’s maintenance backlog kept growing. The city explains that the gas tax never matched the full scale of the need and that inflation eroded its value. That may well be true. But it should be noted that in recent years, about one-third of the gas tax funds have been allocated to “Safer Streets” projects that have nothing to do with maintenance.

That means the city must face a question much harder than “do we need more money?”

The city must explain why the public should believe that these new charges—imposed without voter approval—will produce better results than the last round of dedicated transportation revenue.

The TUF is easy to bill and hard to justify

The city’s best point about the TUF is the simplest one: it would be easy to collect. The Portland Water Bureau already sends combined water, sewer, and stormwater bills to roughly 190,000 accounts. Adding another line item is administratively easier than building a standalone collection system. That is a real advantage. Portland’s Arts Tax is the obvious local reminder of what happens when the city creates a separate collection system and then struggles with collection costs and low compliance for years.

The city also claims to have some political cover. PBOT says 31 Oregon cities already use a transportation utility fee, including several in the Portland region, and Portland’s proposed single-family rate lands around the regional average shown in the city’s own comparison table. That helps rhetorically. It is easier to sell a fee when neighboring cities have lived with one for years.

PBOT, however, does not explain whether those cities operate under Portland-style charter restrictions on water and sewer funds. That distinction matters—big time.

That’s because Portland’s City Charter has stringent protections for water and sewer ratepayer funds. Charter Section 11-104 prohibits transferring water fund revenues to funds “unrelated to the water works.” Charter Section 11-302 requires that sewer and stormwater service charge proceeds be spent only for matters “reasonably related to the sewage and storm drainage conveyance, disposal and purification system.”

If other Oregon cities don’t have the same strict protections for ratepayers, then PBOT’s comparison with other cities may be irrelevant or misleading.

Even setting aside the charter issue, the TUF has a basic design problem. For residential properties, the city’s logic is at least intelligible. A flat monthly household charge does not accurately reflect road use. Still, it can be defended as a rough payment for access to a transportation network that benefits nearly every household, including households that do not drive.

That argument has limits. A household with two cars and a motor home would pay the same as a car-free household. Still, there is at least some plausible connection between the charge and a general benefit.

The commercial TUF rate is much harder to defend

Portland proposes charging commercial properties 4.3% of their existing utility bills. The city’s public materials say that averages about $61 per month. But a commercial property’s water and sewer bill is not a meaningful proxy for the transportation costs it imposes, or the transportation benefits it receives.

Water use reflects irrigation, plumbing load, cooling systems, industrial processing, food service, fixture use, and sewer discharge. It does not systematically measure customer trips, employee commutes, truck deliveries, curb use, or pavement wear. A laundromat or car wash may use a great deal of water while generating relatively modest transportation demand. An office full of commuters may use much less water while placing more demand on the street network at peak times. A data center or cold-storage facility may have substantial water use tied to cooling or industrial processes that tell you very little about local trip generation. A hospital may have both high water use and high transportation demand, but that does not make one a useful proxy for the other.

That is what is known as the “nexus” problem. The proposed commercial TUF is pegged to one thing (e.g., water and sewer usage) while nominally funding another unrelated thing (e.g., the transportation system).

The farther the commercial rate drifts from any plausible measure of transportation use or benefit, the closer the “fee” drifts toward being a “tax.” That matters because if the TUF is a tax, then the city must get voter approval.

The low-income story is thinner than the city suggests

PBOT says one equity advantage of billing the TUF through the existing utility system is that low-income discounts would be easier to administer, since discount programs already appear on customers’ water, sewer, and stormwater bills.

Again, that is true as far as it goes. It just does not go as far as the city’s shorthand implies. The city itself has acknowledged why.

In many multifamily buildings, individual tenants do not have their own water accounts. The property has a master meter, and the landlord or property owner is the account holder. That makes it difficult for the Water Bureau and Bureau of Environmental Services to deliver tenant-level assistance directly through ordinary account-based discount programs—you can’t get a discount if you don’t get a bill. Portland said exactly that when it created the Regulated Affordable Multifamily Assistance Program, or RAMP, a program for a narrow slice of regulated affordable housing. Only a small share of low-income residents participate in RAMP.

RAMP is a messy workaround, not a solution to extending discounts to low-income residents.

While the city says the TUF could piggyback on existing assistance structures for some households, it is disingenuous to claim that RAMP or similar programs adequately address low-income residents’ concerns.

Enforcement is not a footnote

One of the most consequential implementation questions remains unresolved, even this late into the process.

Portland’s charter gives the city substantial collection authority over water bills and charges, including the ability to discontinue water service for unpaid bills or charges. If the TUF rides on the same utility bill, the obvious question is whether nonpayment of the transportation charge would be enforced by water shutoffs.

The city could design the TUF so that it is billed and enforced separately, using civil collection tools rather than service shutoff. It could keep the transportation charge from triggering the most coercive utility-bill enforcement mechanisms. This is a critical unresolved design question at the center of the proposal.

That is one reason public skepticism here is not a mere anti-tax reflex. When a city puts a transportation charge on a water bill, it needs to know whether the city is using its monopoly over an essential service to collect a non-water charge.

The SDRF makes more sense—until you look closely

Of the two proposals, the SDRF has the more plausible theory. If trenching weakens streets and shortens pavement life, then utilities and contractors that cut into streets should bear a greater share of the resulting costs. In conceptual terms, that is much easier to defend than a broad utility-bill charge.

PBOT says trenching can reduce a street’s useful life by more than 60%. The city also says roughly 50 miles of streets have been trenched in the past three years and that the current permit system mainly covers administrative costs rather than the long-run damage to pavement. In the top-scenario now advancing, the fee would be $10.38 per square foot, or about $6,342 for an average permit, and would net roughly $22.2 million per year.

That is the city’s best case: trenching damages a shared asset, and a permit-based damage-recovery fee is more defensible than a broad household charge.

But even here, the public case is weaker than it should be.

Start with the rate itself. PBOT’s public materials do not present $10.38 as a demonstrated per-square-foot damage cost. They present it as the 75% recovery option. This implies a full-cost benchmark of about $13.84 in long-run “damage” per square foot.

What we don’t know—and what the city hasn’t shown—is whether trenching projects actually impose nearly $14 of long-run damage to the street network for every square foot trenched. That sounds like a lot to me, but I don’t know. The city must “show its work” on this. Until then, residents should be highly skeptical of this charge.

That is not a minor omission. The entire justification for the SDRF is that it recovers trench-related damage to the street network. If the fee closely tracks actual expected damage, the nexus argument is stronger. If it materially exceeds actual damage, the city starts to look less like it is recovering costs and more like it is using utility trenching as a convenient revenue base for general transportation finance.

There is a second problem, and it concerns not the rate but the use of the money.

The SDRF is justified as cost-recovery for trench-related pavement damage. But PBOT’s own accountability materials present new transportation revenue in broad categories that include not just paving and base repair, but also signals and lighting maintenance, safer intersections, pedestrian and public-space retrofits, traffic calming, safety on neighborhood streets, and Safe Routes to School. Some of those may be worthwhile transportation projects. But they are not the same thing as restoring pavement life lost to trenching.

That distinction is crucial. If a fee is defended as mitigation for a specific harm, the city’s case is strongest when the revenue is tied closely to that harm. The more the revenue functions as a flexible source for PBOT’s broader capital and maintenance agenda, the weaker the nexus argument becomes.

That is not just a theoretical concern. In Sheetz v. County of El Dorado, the U.S. Supreme Court held that legislatively imposed permit conditions are not exempt from scrutiny under the Nollan/Dolan framework simply because they are adopted by ordinance.

The Court did not decide whether a fee like Portland’s would satisfy that test. But it did make clear that a permit-based charge does not avoid constitutional scrutiny merely because it is legislative. That makes the relationship between the fee’s stated rationale and the actual use of the proceeds critically important.

The burden would fall heavily on utility ratepayers

Even if the rate were well supported and the use of funds were tightly matched, the city still has an incidence problem that it is not honestly describing.

PBOT’s own materials show that Portland’s Water Bureau accounts for about 31% of trenching activity, and the Bureau of Environmental Services accounts for about 23%. Together, Portland’s own water and sewer utilities account for 54% of the trenching the city wants to charge for. That means more than half the projected revenue from the SDRF would be tied, directly or indirectly, to city-owned utility operations funded by ratepayers.

So the city’s framing matters. If the proposal is described as a charge on utilities and contractors, many readers will picture private utility companies paying for the harm they cause. But the city’s own numbers show much of the burden would fall on Portland water and sewer customers, since Portland’s utilities are among the biggest trenchers.

That does not make the fee irrational. Public finance often works through pass-through. But it changes the honest description of the policy. A large share of this is not a charge on some outside “them.” It is a charge that would flow back to “us”—local ratepayers—through utility finance.

The same goes for private utilities. NW Natural, PGE, Comcast, and others will not absorb these costs out of civic goodwill. To the extent regulators allow, they will seek to recover them through rates. That is how utility finance works. So even the share not borne by city utilities is likely to show up in other customer bills over time.

The charter problem is more serious for the SDRF than for the TUF

Portland’s charter protections for water and sewer ratepayer funds are not decorative. They have already been litigated, and the city has already paid for getting them wrong. In 2017, Portland settled long-running litigation over alleged improper spending of utility money for $10 million.

Under the city charter, proceeds from water sales and charges for water service are deposited into the Water Fund. The Water Bureau may collect sewer and stormwater service charges, but the bureau must be compensated for that service, and those proceeds are restricted to matters reasonably related to the sewer and storm drainage system.

For the TUF, the cleanest legal theory is straightforward enough. The Water Bureau would act only as a billing agent. Transportation revenue would remain separate. Any administrative work done by the Water Bureau would be reimbursed from transportation funds rather than subsidized by water or sewer ratepayers. If Portland structures the charge that way and keeps the accounting clean, the charter risk is lower.

The SDRF is harder. Here, water and sewer bureaus would actually pay a substantial share of the fee because they do a substantial share of the trenching. The city can argue that paying for pavement damage caused by water and sewer work is reasonably related to operating those systems. That argument is strongest if the SDRF is genuinely calibrated to trench-related damage and if the resulting revenue is used closely enough to mitigate that damage. It becomes weaker to the extent the fee exceeds demonstrated damage costs, rests on a damage formula the city has not publicly substantiated, or is used for a broader set of PBOT programs with a looser connection to trench-related pavement loss.

At that point, the issue is no longer just who pays. It is whether a ratepayer-funded utility is being used to generate transportation revenue beyond the cost of the harm its work actually causes.

The city should not treat the charter question as a technicality to be handled later. If Portland intends to impose a fee that sends millions of dollars of cost through ratepayer-funded utilities, it should be prepared to explain in detail how it derived the damage figure behind the SDRF’s recovery schedule, how closely the use of funds tracks trench-related harm, and why the resulting expenditures are reasonably related to utility operations.

Portland has been here before

The political history matters more than city officials would probably prefer.

In 2014 and 2015, then-Mayor Charlie Hales and Commissioner Steve Novick pushed what was often called the Street Fee and sometimes framed as a transportation utility fee. It faced heavy public opposition, in part because the charges seemed arbitrary, in part because the city seemed to be trying to avoid a public vote, and in part because the public did not trust the city to keep the money focused on basic maintenance. In the council election following the Street Fee fiasco, Hales did not seek re-election, and Novick lost his council seat.

Since then, PBOT’s trust problem has become nearly insurmountable. The public already approved a dedicated gas tax as the politically legitimate alternative to the last street-fee fight. That tax came with visible accountability mechanisms and voter buy-in. Yet the backlog still grew.

Now the city wants a much larger stream of new charges—on top of the gas tax—without going back to voters.

PBOT may need more money, but this is not the way

It is possible to believe PBOT needs more stable revenue and still conclude that these are the wrong instruments.

Portland’s basic argument is that the problem is urgent, so the city should act now by ordinance. But urgency does not cure weak policy design. It does not eliminate incidence. It does not solve the charter problem. And it does not erase the city’s own track record.

I’m not claiming that Portland’s streets are fine or that PBOT needs no new revenue. Portland’s streets are in terrible shape and getting worse. PBOT needs more money to maintain and repair those streets. That money should come from other programs that are not as “mission-critical” as having a functioning transportation network.

If the city council believes these charges are fair, well-designed, and necessary, they should be willing to make that case directly to voters. Portlanders have shown they will approve transportation funding when the case is credible and the accountability mechanisms are visible. They did that with the gas tax. If the city is unwilling to seek that kind of legitimacy here, it should be clear what they think about the city’s voters.

Two recent news articles—from the Portland Mercury and the Oregonian—highlighted that case using the latest filer data. County Economist Jeff Renfro is quoted in both pieces, expressing confidence that the base is expanding.

Both articles, however, measure growth incorrectly, ignore the areas where the county is actually falling behind compared to the rest of Oregon, and treat an initial filer count with a large unexplained anomaly as conclusive evidence.

Despite the reports, the latest data reveal nothing about whether Multnomah County taxpayers can or will accept another income tax hike.

When you compare Multnomah County’s filer growth against statewide filer growth, the picture looks considerably less reassuring. The middle brackets of the PFA tax base ($150k to $250k) are falling behind compared to the rest of Oregon. And the entry-level bracket is growing so fast in the initial years that inflation, not genuine income growth, is almost certainly the primary driver. A filer count inflated by workers crossing a fixed nominal threshold as prices rise is not evidence of a healthy tax base.

The policy stakes are real. The same data used to reassure county commissioners is also cited to justify a scheduled 0.8 percentage point rate hike on January 1, 2027. The actual base matters for that discussion.

The Wrong Denominator

Both articles focus on the absolute number of PFA filers as the key measure. In a growing economy, that is the wrong denominator. The right question is whether Multnomah County kept its share of Oregon’s high-income population.

County PFA return data, compared with Oregon Department of Revenue statewide figures, show what that comparison looks like.

The $500,000-and-above tier—the one both articles focus on—tells you almost nothing specific to Multnomah County. The county’s share of Oregon’s highest earners barely moved, while the absolute count fell locally and statewide by nearly identical percentages. What drove that decline and partial recovery is primarily the volatility of capital gains—a point Renfro himself has made. That is a national and statewide phenomenon, not a Multnomah County story.

The county-specific story is in the middle brackets. The $200–$250k range grew statewide by nearly 24% between 2021 and 2023. Multnomah County grew that bracket by only 13%. Had the county simply held its 2021 share of Oregon’s $200–$250k earners, it would have recorded roughly 770 more filers in that bracket in 2023 than it actually did. The $150–200k bracket tells a similar story: 21% statewide growth, 6.5% in Multnomah, with the county’s share falling from 3.7% to 3.3%.

These are the brackets most populated by salaried professionals, two-earner households, and small business owners—the people Portland Metro Chamber CEO Andrew Hoan described last year as the “highly mobile middle class and higher-income earners who are choosing to leave.” Neither article examines these brackets in any detail.

What the Entry-Level Surge Actually Signals

The entry-level bracket—filers between $125k and $150k—grew by 103% in Multnomah County between 2021 and 2023, against 15% statewide. That kind of divergence is consistent with bracket creep: inflation pushing workers over a fixed nominal threshold without any real gain in purchasing power.

However, in 2024, the entry-level count dropped by roughly 60%—from 6,911 to 2,733. The 2024 data are preliminary, and late filers may push that number higher. But no one has explained the drop, and the articles do not mention it. A tax base with a 60% single-year swing in its entry bracket is not obviously a stable one, and preliminary data with unexplained anomalies of that magnitude is a thin foundation for confident conclusions.

The PFA tax thresholds are fixed in nominal dollars and not indexed to inflation. Commissioner Julia Brim-Edwards brought indexing proposals to the Board of Commissioners twice. Both times, the board declined to act. The result is that, year after year, as nominal wages rise with the cost of living, more households cross the threshold without any real gain in purchasing power.

Prices in the Pacific region rose roughly 20% between early 2021 and late 2024. Multnomah County’s median household income rose about 16% over the same period. Adjusted for inflation, real per capita personal income in the county actually fell. Households are earning more dollars and buying less with them.

A worker earning $103k in 2021 who received standard cost-of-living raises through 2024 would cross the $125k threshold—and become a PFA taxpayer—without being any better off in real terms. The county counts one more filer, and the articles report a growing base.

The Oregonian acknowledges in passing that inflation “played a role” in filer growth, and quotes Renfro saying the base grew even after inflation was factored out. That may be true in aggregate, but neither article shows the work, and the 103% surge in the entry bracket compared to 15% statewide is not addressed at all. That gap is where the bracket creep signal lives.

For context: Metro’s Supportive Housing Services tax has a similar structure. Metro’s own materials state that starting in tax year 2026, SHS thresholds will be adjusted annually for inflation. The policy logic is exactly what Commissioner Brim-Edwards proposed for PFA. Metro took action. Multnomah County did not.

What Follows

None of this proves that the PFA tax is the primary cause of Multnomah County’s demographic trends. Housing costs, public safety, and remote work are all operating at the same time, and separating their effects requires more data than currently exist. Claiming certainty about the causal story goes beyond what the evidence supports.

What the evidence does support is narrower but important. Multnomah County is underperforming the rest of Oregon in the middle brackets of its own high-income tax base—the brackets where the PFA burden is most felt and where residents have the most options.

The increase in entry-level growth through 2023, which boosts the headline filer counts, is better explained by inflation rather than by in-migration or rising incomes. Both articles compare preliminary 2024 data with finalized 2023 figures: the current 2024 total of approximately 36,233 is actually about 6% lower than the 2023 final count of 38,561—a fact neither newspaper reports directly.

The county economist may be correct that the final 2024 figures will show a year-over-year increase. That would be worth noting. However, it wouldn’t resolve whether the base is truly healthy. An increasing filer count, driven partly by inflation and partly by a statewide economic trend that Multnomah County is underperforming, isn’t the same as having a resilient tax base.

That distinction matters because the 2027 rate increase is still current policy. The argument in favor of it partly relies on the idea that the base can handle more.

The data, read carefully, do not clearly support that claim.

The good citizens of Portland vote. They volunteer. They approve bonds and levies for schools, parks, and housing. They pay some of the highest local tax burdens in the country. In exchange, government is expected to build and maintain institutions that deserve the trust of the people who fund them.

That’s the social contract: government asks citizens to pay taxes, and citizens expect the government to faithfully use those tax dollars.

Under that social contract, citizens have a right—an obligation, really—to test their government. If a policy breaches the contract, it should be repealed. If a politician breaks the contract, that politician should never serve in office.

The Portland Arts Tax is a policy that broke the social contract. Any candidate who supports the Arts Tax is telling voters that they reject the social contract.

After more than a decade, the Arts Tax stands as a case study in how to design a tax that alienates nearly everyone. It is widely disliked across the political spectrum. It frustrates people who pay it. It frustrates people who refuse to pay it. It frustrates people who support the arts but cannot defend the structure.

When you hear OPB’s politics reporter say the Art Tax is “the bane of all Portlanders,” you know you have a failed policy. When his colleague reports the tax is “famously a headache for taxpayers,” you know have an unpopular policy. When the newly-elected city council president notes, “everybody hates the Arts Tax,” then you have a policy that’s ripe for repeal.

In the upcoming city council election—in which half the seats are up-in-the-air, the Arts Tax is the simplest, clearest test of who understands and honors the social contract and who does not.

That’s because where a candidate stands on the Arts Tax tells you almost everything you need to know about how they will govern and where they will stand on even bigger issues.

A Tax on Simply Existing

The Arts Tax is a flat $35 charge on most adult residents of Portland. It applies regardless of income—whether you earn $15,000 or $500,000. It applies if you move here on December 31, and live in Portland for a single day. No proration. No sliding scale. It is a head tax.

The burden falls hardest on those least able to pay. Imagine two neighbors: a barista cobbling together gigs to make rent, and a partner in a law firm sitting at the top of one of Portland’s skyscrapers. Both owe $35. For the white shoe attorney, that is a rounding error. For the barista, that’s $35 that can’t be spent on groceries.

A homeless person who turns in an average of 30 cans a day at the Bottle Drop makes enough to trigger the Arts Tax.

We would never design a tax this way. But, somehow, we did.

Supporters say it is only $35. But the size is not the point. The structure is the point.

A head tax is unfair in principle, even if small in practice. In a city that prides itself on equity, this contradiction goes to the core of the policy. It’s a tax on simply existing.

Oregonians hate head taxes with so much intensity that they voted twice to ban head taxes—once in the legislature, and a second time in the state constitution.

Yet, somehow, here we are.

Broken Promises and Bureaucratic Drag

The ballot measure promised administrative costs would not exceed 5% of revenues.

That promise was broken every year.

In the early years, admin and collection costs ran at around 10% of revenue. In 2018, the city council quietly removed the cap. Today, admin and collection costs are more than $2 million a year, or about 16% of revenue.

Of that $35 Arts Tax, about six of those dollars gets chewed up by the bureaucracy.

And compliance—that “headache for taxpayers?”

Nearly one-third of Portlanders subject to the Arts Tax do not pay it. There’s a very good chance that many of the people who voted for the tax don’t pay it. That inefficiency corrodes public trust.

Spending on Autopilot

The main purpose of the tax is to funnel money to the six school districts within the city limits. Portland Public Schools is the largest of these. Over the program’s existence, a little less than 60% of the money raised has flowed directly to the school districts.

These school districts are separate governments. They have their own elected boards, their own taxing authorities, their own budget processes, and their own access to state funding, property taxes, and voter-approved levies.

When the city levies a tax and transfers most of the proceeds to a separate government, it creates confusion about accountability.

Wait. Sorry. That’s a misstatement. There is no “confusion” because there is no accountability.

The money transfer from the city to the schools is on autopilot. There’s no public hearing and no city council vote. The money goes in, the money goes out. No questions asked.

If Portlanders want to raise more money for schools, that choice should be made through the school board. They have their own taxing authority, and they can add art teachers to their next local option levy.

The city is not a school district and has zero business raising money on any school district’s behalf.

Millions Collected, Sitting Idle

If the case against the Arts Tax stopped here, one might argue the tax is flawed but tolerable. Maybe some tweaks are in order.

Recent revelations eliminate any remaining defense.

Recent reporting has revealed that about $9 million in Arts Tax revenues have been sitting unspent in city accounts—roughly a full year’s worth of collections, parked in a reserve the city’s own code does not authorize.

The volunteer oversight committee claims it only recently learned of this balance, accumulated since 2013.

When a city collects millions for a voter-approved purpose and lets a year’s worth of tax dollars sit idle while telling voters there is no money—that is a breach of the public trust.

Time has revealed these defects as structural failures:

• A regressive head tax.

• Standalone billing that guarantees low compliance.

• Administrative costs triple the promised cap.

• Automatic transfers that weaken accountability.

• Millions sitting idle while taxpayers are told resources are scarce.

This is why the Arts Tax is so broadly reviled. It offends people for different reasons—but it offends almost everyone.

The Litmus Test

In a crowded council race, voters will hear soaring rhetoric about compassion, accountability, and fiscal responsibility. They will read polished websites and voter’s pamphlet statements. They’ll listen to debates and candidate interviews.

Ignore those AI-generated scribblings and the word salad utterances.

Ask one question: “Will you vote to repeal the Arts Tax?”

The answer is a litmus test.

• If the answer is an unequivocal yes—that they’d vote for repeal—you have a candidate willing to admit when a policy has failed and take action to end the failure.

• If the answer is no, you have a candidate who is comfortable defending an unfair structure, an unaccountable process, and broken promises of fiscal responsibility.

• If the answer is tortured mutterings about “stakeholder engagement” and “exploring options,” you have an unserious candidate unwilling to take a clear stand on an issue that affects nearly every voter in Portland.

And here is the political reality: in an election where turnout will be fragmented and margins thin, a candidate who runs clearly and unapologetically on repealing the Arts Tax has a very real path to victory.

I’d go so far as to say a single-issue candidate whose single issue is “Repeal the Arts Tax” has a shot at winning a seat this year.

Why? Because the opposition is not ideological. It is experiential. People dislike writing the check. They dislike the separate bill. They dislike the enforcement letters. They dislike not knowing if the districts are actually hiring teachers with their Arts Tax money. They dislike learning that millions sit in reserve.

Campaigns often search for an issue that cuts through noise. This is it.

Fund the Arts Honestly

If City Council believes arts education deserves funding, then fund it honestly. Pay for it out of the general fund. Debate it in public. Vote on it annually. Let school districts seek levies directly if they wish.

Portlanders have repeatedly shown they will tax themselves for priorities they trust.

But trust must be earned.

The Arts Tax has broken that trust. It has become a symbol of a city government that is quick to impose and slow to admit error.

“Good citizens are the riches of a city.”

Citizens have done their part. In this election, it is time for candidates to show whether they will do theirs.

Six months later, the mayor ended his “pilot” program. But the damage was done, and the message was clear: Portland had unconditionally surrendered. Today, Portlanders are still reeling from the terms of that surrender.

In two decades, how did Portland go from “The City That Works” and being listed as one of the most livable cities in the United States—if not the world—to a cautionary tale and the butt of jokes?

The Blueprint of a “City That Works”

In the early 2000s, Portland had all the right ingredients for a thriving city. Aside from its natural beauty and its perfect location just 90 minutes from either the coast or the mountains, it was a small city that punched above its weight by delivering basic services at a modest tax burden. Most importantly, Portland was affordable. In 2002, the median home price in Portland was 4.2 times the median income, slightly below the national average.

At the time, Portland was led by a mayor who knew the importance of business vitality and economic growth. Vera Katz was obsessed—almost to the point of fixation—with economic development, downtown vitality, and regional competitiveness. She understood that her progressive goals would be achieved only if the city was growing, productive, and attractive to investment.

Katz also understood that livability and economic growth are not in conflict. In fact, they reinforce each other. A city that is clean, safe, interesting, and functional attracts businesses and the “young creatives” she believed were the key to increasing prosperity. Businesses create jobs, generate tax revenue, and contribute to political stability. That stability, in turn, allows a city to fund social programs, arts, transit, and public amenities.

She was a transactional politician. No one would describe her as warm and fuzzy. Katz had an unspoken deal with the business community. She would encourage development, prioritize basic services, and invest in livability. In exchange, businesses would do their public duty by paying taxes and contributing to the community, and—most importantly—they wouldn’t sabotage her progressive policies.

The Drift Toward Benign Neglect

Katz left office at the end of 2004 and was replaced by Tom Potter, who served as police chief in the 1990s. Potter never understood why he wanted to be mayor, and never figured out what to do once he was. Most of his energies were spent on visionPDX, a multi-year “visioning” exercise that led nowhere. If you look up the word “benign neglect,” you might see a picture of Mayor Potter.

Potter’s term ended in the middle of the Great Recession, and his successor, Sam Adams, was left to deal with much of the fallout. As Katz’s long-time chief of staff, Adams knew how city hall worked. As such, Adams was a very effective mayor. Unfortunately, however, he was very effective at implementing terrible policies. In particular, Adams had an intense disdain for what his transportation department called a “roads first” mentality. In 2012, he announced he would stop all major paving projects and street cleaning, and redirect the funds to rebuilding the Sellwood Bridge—which was a county, not city, obligation—and building TriMet’s now-languishing Orange Line light rail. Every April 15, Portlanders are reminded that, as mayor, Adams spearheaded the campaign to secure voter approval of the much-hated “Arts Tax.”

Some might say that Adams was the worst Portland mayor of the last quarter-century, but they’re wrong. That honor is reserved for Charlie Hales, who became mayor in 2013. While serving as a city commissioner in the late 1990s, he earned the nickname Skateboard Charlie for his intense advocacy for skateboarding, culminating in his efforts to establish designated skateboard routes throughout downtown. His return to office as mayor was a case study in carpetbagging, as he was then living in Washington to avoid Oregon income taxes while maintaining his Oregon voter registration. As mayor, he had the bad ideas of Adams, combined with Potter’s ineffectiveness.

A Perfect Storm: Housing, Drugs, and Policy

Hales entered office at a pivotal point in the Portland economy. I mean that literally, because it was during his term that Portland’s economy pivoted downward.

On the one hand, Portland seemed to be booming. Population and employment were growing, and unemployment was falling. But that boom added new pressures. One of the biggest pressures was housing prices. When Hales took office, the median home price in Portland was 4.4 times the median income, which was below the national average of 5.0 times median income. By the time he left office in 2017, that ratio had grown to 7.5 times the median income. According to the Case-Shiller Home Price Index, Portland home prices increased about 40% in the four years that Hales was in office. During his term, rents increased by more than 5% a year, with 2015 seeing a staggering 12.7% jump.

Portland lost one of the key drivers of its attractiveness—affordability. It’s expensive to live here. It’s expensive to work here. It’s expensive to run a business here.

State and local politicians responded in some of the worst ways possible. In 2016, Portland adopted an inclusionary zoning ordinance requiring any new apartment development of 20 or more units to set aside a portion of the units as affordable. Around that same time, Portland voters elected Chloe Eudaly to the city council, who ran on a platform of rent control and tenant protections. Soon thereafter, the city enacted a “relocation assistance” ordinance requiring landlords to pay $2,900–$4,500 to tenants who were evicted without cause or faced large rent hikes.

Almost immediately, new multi-family construction halted. It’s never recovered.

Around 2013, the methamphetamine market in Portland underwent a massive shift from locally “cooked” meth to mass-produced “P2P meth” imported by cartels. This new version was far cheaper and more abundant than previous forms. Unlike the older ephedrine-based meth, P2P meth is associated with much higher rates of severe psychosis and rapid mental health deterioration. By the summer of 2017, meth had reportedly eclipsed opioids as the most common drug among Portland’s unsheltered population.

While fentanyl-related deaths exploded during the pandemic, the crisis began around 2015. In 2018, federal authorities in Oregon began making massive seizures of illicit fentanyl, including one effort that removed nearly three million doses from the market. During this time, fentanyl began appearing more frequently as an adulterant in other drugs like heroin and oxycodone, leading to a rise in accidental overdoses.

State and local officials in law enforcement and public health were unprepared for the rapid onset and intensity of the drug crisis. Users were unable to hold down jobs and pay for housing, with many of them turning to the streets, exacerbating an already growing homeless population. About 60 percent of the unsheltered homeless suffer from some combination of mental illness and substance abuse.

February 8, 2016: The Terms of Surrender

Now we’re back to where we began—with The Day Portland Gave Up. On October 7, 2015, the city declared a housing emergency, which provided the mayor with expansive emergency powers. Later that month, Mayor Hales announced he would not seek re-election, making him a lame duck. On February 8, 2016, he announced his “Safe Sleep” policy that effectively legalized overnight camping on public property throughout the city.

He rang a bell that could not be unrung. And the entire Portland region has been struggling with homeless camps ever since.

Homelessness is only one area in which Portland gave up.

Since The Day that Portland Gave Up, a string of city mayors and council members have pushed through policies that have worsened housing affordability with permitting delays and development charges. In 2018, voters approved a tax on retail sales to fund so-called clean energy projects, denying the general fund use of those revenues to maintain or improve basic services. In 2020, voters approved Metro’s personal income tax and business income tax for supportive housing services. The same year, Multnomah County voters approved a steep personal income tax for the county’s floundering Preschool for All program. In the middle of the COVID-19 pandemic, local leaders stepped aside while rioters burned and looted the city for months, with some elected officials calling to “Defund the Police.”

Portland has given up. Rather than use this year’s budget process to refocus city spending on maintaining and improving the basic services necessary for a flourishing city, they are pushing for opportunities to attend ribbon-cuttings funded by new or higher taxes. To them, there is no problem that can’t be solved with more tax dollars.

Our leaders have given up because we voted for politicians who promise to share out the spoils of surrender to their supporters rather than commit to fighting for the prosperity that benefits everyone.

Portland faces a similar moment. The city suffers from an economic coronary—a cascade of fiscal and demographic failures that reinforce each other in what one Portland economist has called an “urban doom loop.”

The question of whether Portland “hit bottom” deserves a clear answer. And the answer is “no” because the city is still falling.

First, let’s examine the vicious cycle that sends a city down the doom loop toward hitting rock bottom. Then, let’s go over the evidence that Portland is somewhere in the middle of the loop. Last, let’s explore what we can do to get out of the loop.

Understanding Urban Economic Collapse

Urban economists use the term “doom loop” to describe a specific failure mode. When a city’s decline becomes self-perpetuating, normal policy adjustments no longer work. The mechanism operates through vicious cycles: deteriorating services drive out taxpayers, which shrinks the revenue base, which forces service cuts, which drives out more taxpayers.

Research on municipal bankruptcy identifies consistent warning signals. Beth Parker Seymour’s analysis of bankrupt American cities found that specific financial ratios accurately predict insolvency. Pennsylvania’s analysis of 2,560 municipalities concluded that 48% of cities showed signs of fiscal distress.

Detroit’s decline began in the 1960s, crossed the point of no return sometime in the 1980s, but didn’t declare bankruptcy until 2013—after more than 40 years of decline. Stockton, California crossed it around 2008; bankruptcy followed in 2012. Pittsburgh crossed it in the early 1980s when the steel manufacturing industry collapsed; the state imposed financial oversight in 2003 after twenty years of decline.

Portland is now in the middle of this process. The evidence spans multiple economic indicators, and the trends are accelerating. It doesn’t matter when it began or how we got here. That’s ancient history at this point.

The Flight of Portland’s Tax Base

Between 2020 and 2021, Multnomah County lost approximately $1 billion in taxable income. The most recent IRS data shows that the following year, the county lost another $1.2 billion in taxable income. IRS migration data shows that people leaving the county average $105,800 in annual income, while arriving residents average $73,540—a gap of $32,260 per household. Over the past two years, roughly $1 billion annually has left the county.

They’re not leaving because of the weather.

Departing residents move primarily to Clackamas County, Washington County, and especially Clark County, Washington, where they can maintain Portland-area employment while avoiding Oregon, Metro, and Multnomah County’s income taxes. This represents a direct vote of no confidence in the county’s service delivery relative to its tax burden.

The fiscal consequences extend beyond city boundaries. Multnomah County contains 19% of Oregon’s population but generates 24% of the state’s tax revenue. The Portland metro area—comprising 43% of the state’s population—produces 53% of state revenue.

Oregon’s budget structure relies on Portland’s economic engine operating at full capacity. When high earners relocate to neighboring jurisdictions, they create state-level revenue shortfalls that force cuts to municipal aid, thereby accelerating the doom loop.

Employment Base Erosion

Oregon lost more than 18,000 jobs over the past year, while the national economy added millions. Portland shed 9,600 positions in information, financial services, manufacturing, and professional services—sectors that typically pay $80,000 to $150,000 annually and support three to four service jobs through their consumption. The average income of those moving into Multnomah County is $73,540, while the average income of those moving into Clark County is $106,715. That’s a gap of $33,175.

Multnomah County’s August 2025 unemployment rate reached 5.5%, more than a full percentage point higher than the national average. The country is currently experiencing an economic expansion. Thus, the unemployment gap signals structural rather than cyclical problems.

Commercial Real Estate Collapse

Downtown Portland’s office vacancy rate stands at 34.6%, while the retail vacancy rate is 32%. A healthy office market typically maintains a vacancy rate of 10-15%; anything above 20% indicates severe distress. Portland’s vacancy rate approaches double the national average and exceeds that of San Francisco.

The July 2025 sale of the US Bancorp Tower illustrates the magnitude of value destruction. The 42-story building—known as “Big Pink” and the most prominent structure on Portland’s skyline—sold for $45 million, compared to $373 million in 2015. This represents an 88% decline over a decade. The county assessor said the sale price was “pretty close to land value.” In other words, there’s a 42-story office tower in the middle of downtown Portland that is worth approximately zero.

This transaction established a comparable for property tax appeals. More than 700 commercial property owners filed appeals in 2024, up from 277 seven years earlier. The county granted $18.3 million in property tax refunds in 2023. As each distressed sale or reassessment occurs, it triggers a cascade of appeals that erode the tax base funding city services.

The Fiscal Vise

Portland faces simultaneous pressure from two structural forces. The Oregon Public Employees Retirement System (PERS) carries a $29.4 billion unfunded liability—roughly equal to the state’s entire biennial General Fund budget. The system lost $8 billion in 2022 alone. Employer contribution rates continue climbing because Oregon’s constitution protects existing pension benefits from reduction.

Salem pays $11 million more annually for pensions than it did several years ago. Gladstone School District saw PERS costs rise from 3% to 19% of payroll. School districts statewide face a $670 million increase in pension obligations for the 2025-27 fiscal years. These mandatory payments take priority in every government budget, automatically reducing funds available for other services. Every year, automatically, more money goes to pensions, less to everything else. It’s austerity on autopilot.

Oregon’s property tax system creates the other side of the vise. The state constitution caps annual assessment growth at 3%, which normally protects taxpayers from sharp increases. The system also caps total taxes as a percentage of real market value. When market values collapse—as they have downtown—this mechanism forces tax reductions.

Big Pink’s property tax payment fell from $2.7 million annually to $860,000, a $1.9 million a year loss from one building. Multnomah County Assessor Mike Vaughn reported that compression losses were approximately $130 million in 2024, with Portland accounting for $29 million of those losses. Each new distressed sale provides comparables that trigger additional appeals and reassessments.

Rising mandatory pension costs, combined with falling property tax revenues, force cuts to discretionary services—such as parks, transportation, economic development, and permitting. These cuts make the city less attractive, accelerating the flight of high earners, which further shrinks the tax base, necessitating deeper cuts. This self-reinforcing mechanism defines the doom loop.

Investor Confidence Collapse

The Urban Land Institute ranked Portland third among 78 major metropolitan areas for real estate investment attractiveness in 2017. In 2024, Portland ranked 80th out of 81 metros. Portland State University economist Gerard Mildner summarized the shift: “No American city has fallen as fast as Portland.”

When national investors view a city as toxic—when companies opt to expand their operations elsewhere—the problem extends beyond marketing. Rebuilding investor confidence after such a collapse requires decades of demonstrated improvement, if recovery occurs at all.

Why Portland Hasn’t Hit Bottom

Portland has not hit bottom because the city continues falling. Urban death spirals rarely reach their nadir quickly. Detroit’s bottom likely occurred in the mid- to late-1980s, but bankruptcy didn’t arrive until 2013. Pittsburgh crossed its threshold around 1983 but didn’t receive state oversight until 2003. The gap reflects how long institutions can defer reckoning through accounting adjustments, deferred maintenance, and incremental cuts.

Portland today resembles Detroit circa 1980 or Pittsburgh circa 1990—in the middle of a decline that can continue for decades absent radical intervention. All trends point downward, and the rate of decline is accelerating. The city faces perhaps two to five years to demonstrate population stabilization, renewed investment, and fiscal improvement.

Without visible reversal by 2030, the perception will harden that Portland has entered terminal decline. Once that perception takes hold, it becomes self-fulfilling as capital and talent systematically avoid the region.

Incremental changes will not work. We need immediate, radical action.

PERS Reform at State Level

The $28 billion PERS unfunded liability strangles the state government as well as every Oregon municipality and school district. County and city governments cannot solve this problem locally. Mayors, city and county councilors, and school board members should descend on Salem to demand that the legislature reform PERS. Legislators may not listen to business leaders or voters, but they will listen to their friends and colleagues in local government.

Governor Tina Kotek and the Oregon Legislature must prioritize pension reform above all other policy objectives. If the state constitution blocks reform, then change the constitution. Other states have done it.

Without substantial PERS reform, the alternative is watching every government in Oregon cut services to fund pension obligations for a system heading toward insolvency.

Emergency Tax Competitiveness Reform

We’re losing about $1 billion in taxable income annually to tax competition.

Portland should immediately freeze or roll back local income and business taxes. The Metro homeless tax should be suspended until it demonstrates results. Multnomah County’s Preschool for All tax should be eliminated altogether, never to be revisited. Every tax must pass this test: Does it raise revenue to provide services to the people who stay, or does it drive people away?

Progressive taxation sounds great in a college classroom, but it backfires when those who face ever-higher taxes load up the moving van.

Commercial Real Estate Emergency Response

When a third of downtown office space sits vacant and landmark buildings sell for 12 cents on the dollar, emergency measures become justified. We need more people to work downtown and live downtown.

Remote work is here to stay. There’s not much that can be done about that. However, the local government has made downtown a hostile environment for employers and their employees.

Portland’s and Multnomah County’s decisions to distribute tents and tolerate encampments, combined with Measure 110’s drug decriminalization, produced catastrophic results visible in downtown vacancy rates and property value destruction. The city needs immediate enforcement: clear unauthorized encampments, prosecute theft and vandalism, shut down open-air drug markets, and pair enforcement with treatment requirements.

Metro and Multnomah County impose onerous income taxes on their residents as well as on those who work in their jurisdictions—even if they don’t live there. Employers face enormous pressure from their employees to “get out” so the employees won’t pay taxes for services they don’t receive. When an employer relocates from Portland to Clark County, the workers receive a higher paycheck without a raise.

Portland needs bold steps to revive the real estate market. That means ending inclusionary zoning and rent control. But that’s just the beginning. The city should eliminate all zoning, design review, historic review, system development charges, and any permitting unrelated to safety until vacancy rates meet national levels.

The Choice Portland Faces

Detroit chose to protect pensions over services, avoid difficult conversations about tax base erosion, and pursue incremental reforms when radical action was required. The city’s population fell from 1.8 million to 700,000 over four decades before bankruptcy finally forced restructuring.

Pittsburgh chose to face reality. When the state imposed fiscal oversight in 2003, the city cut its workforce by 20%, reformed pensions, and restructured government operations. Pittsburgh today serves as a model of post-industrial recovery, characterized by stability, growth, and economic diversification.

Portland stands at this fork now. The city has less than five years to demonstrate that reversal is possible. After that window closes, perception hardens into reality. Capital flows to other cities. Talented workers build careers elsewhere. The doom loop becomes irreversible without external intervention that may never arrive.

We have a choice: face reality and take radical action, or shrug our shoulders, watch the decline, take a sip of chardonnay, and say, “Well, we tried.”

To business leaders: Stop being polite. Demand change or relocate—not as a threat, but as an economic reality. If your political leaders aren’t serious people, vote them out and replace them with someone who is serious.

To elected officials: Your legacy is being written now. You’ll either be leaders who saved Portland or waffled while it declined into irrelevance. There is no middle ground. You cannot study or process your way out. Choose: radical action or terminal decline.

To every Portlander: Stop pretending this is someone else’s problem. Demand accountability. Demand results. Demand change.

We have only a few years. After that, the perception hardens into reality, the doom loop becomes irreversible, and we spend a generation raising taxes on a dwindling tax base to support ever-diminished services.

Right now, Portland still has a pulse. We can still call 911. We can still perform CPR. But if we walk past this crisis, if we convince ourselves someone else will help, if we wait just a little longer to act—we’ll find ourselves standing over a body we were too late to save.

The bottom is coming.

The facts speak for themselves.

• Since my last article, Intel’s woes have worsened, with the company eliminating about 5,400 jobs since last August.

• Multnomah County has lost 5,100 jobs over the past year.

• The state’s economists say Oregon is in a “growth recession” or “near-stagnation.”

• CNBC reports Oregon is one of the worst states for business.

• Oregon is listed as the fourth-worst place to move to.

• The Oregonian reports, “Oregon’s current fifth graders posted bottom-of-the-barrel math scores that were measurably worse than those in 45 other states.”

To make matters worse, President Trump’s recently passed One Big Beautiful Bill will blow a hole in the state’s budget. Changes to Medicaid and food stamps will cost our state billions we don’t have.

Our elected officials can’t hit snooze anymore.

How Oregon Went from Success Story to Cautionary Tale

Twenty years ago, Oregon was winning. In 2004, outlets such as CBS News and USA Today called Portland one of America’s “most livable” cities. Our economy was so hot that Washington County actually charged Intel a $1,000 “head tax” for hiring too many workers. Today, we rank near the bottom for job growth while Clark County, Washington—right across the river—is booming.

Around this time, “second paycheck” mumbo jumbo was popularized among policymakers. That was the idea that the state’s natural beauty (views of Mt. Hood!) and recreational opportunities were so valuable that just living in such an environment amounted to getting a second paycheck.

What changed?

Our politicians treated Oregon’s success like lottery winnings they could draw down without consequences. They forgot that prosperity requires constant work to maintain.

Look at the numbers. In 2004, the Public Employee Retirement System (PERS) had a $2.1 billion shortfall. Today, it’s approaching $30 billion. PERS costs have tripled from 10% to 30% of payroll, crushing state and local budgets across the state. Back then, we spent about 40% of our general fund budget on schools and 25% on “human services” such as the Oregon Health Plan. Today, those numbers have flipped—we spend more on human services than education.

In 2005, Portland launched a 10-year plan to “end” homelessness. Despite spending billions, the problem is worse than ever. Portland’s gone from one police officer for every 550 residents to one for every 800. The city has 200 fewer cops today than it did 20 years ago.

The War on Business Backfires

Instead of asking how to attract good jobs, Oregon’s politicians declared war on employers. They piled on regulations, made permits nearly impossible to get, and raised taxes again and again. They seem to believe businesses are magical money machines that can absorb infinite punishment.

Their attitude is simple: “If you can’t handle our rules and taxes, you just aren’t good at doing business.”

Maybe they’re right. Perhaps they aren’t good at doing business … in Oregon. But what happens when businesses take that advice, leave, and do business elsewhere?

The Exodus is Real

Downtown Portland tells the story. Office buildings are 30% empty. The iconic U.S. Bancorp Tower just sold for $45 million—80% less than it sold for in 2015. Lenders are seizing major properties like the Block 216 tower and the Broadway Tower hotel. Major employers like Wells Fargo, Standard Insurance, and Unitus Community Credit Union have fled downtown or left entirely. When buildings suffer large vacancies or sell for pennies on the dollar, property tax revenues will collapse, hammering city, county, and school budgets.

Small businesses are dying too. Beloved Portland restaurant Higgins recently begged for help to avoid closure. Slow Bar and HOME both shut down, citing declining neighborhoods and crushing costs for everything from insurance to permits.

Even so, one letter writer echoes a far-too-common notion, suggesting that the James Beard Award-winning Higgins owners are bad at business because they “priced themselves out of the Portland market.”

Why Downtown is Dying

Remote work changed everything. The pandemic fundamentally changed the workplace, with many employees—and their employers—adopting work-from-home practices. Despite the downsides of work-from-home, it looks like it’s here to stay. Workers like the convenience: They avoid lengthy commutes and save on childcare expenses. Research suggests employees are willing to take a 5-10% pay cut to take a remote job. Put another way, if employers want workers to return to the office full-time, they’d have to offer a 5-10% pay bump. If you can work anywhere in the world, why would you schlep downtown to sit in an office all day?

For years, the city has made schlepping downtown more and more miserable. There’s an old saying that “getting there is half the fun.” However, with the city’s steady supply of “road diets” and dedicated bike lanes and bus lanes, navigating downtown is anything but fun. Once you’re there, don’t forget to feed the meter because parking enforcement is the city’s most efficient agency. Get out of your car, and you’ll find yourself dodging tents, tarps, feces, panhandlers, and fentanyl zombies. Why take a meeting downtown when you can hop on a Zoom call?

Crime makes everything worse. It seems every Portlander knows someone who’s had their car broken into or stolen. Shopping means waiting for employees to unlock cases for basic items like shampoo and detergent, then having armed guards check your receipt like you’re a criminal.

The Tax Trap

Oregon’s tax burden is driving away the exact people we need most.

If you work in Portland, you’re faced with the county’s Preschool for All personal income tax as well as Metro’s homeless services personal income tax—even if you don’t live in those jurisdictions. Both the county and Metro assess their taxes based on where you live or where you work.

An accountant who lives in Sandy but works in Portland must pay those local income taxes. That accounting firm can save its employees thousands of dollars a year by closing shop in Portland and moving the office out of the region or across the river. They can give their employees a raise without increasing their salaries. Good employers listen to their employees. When the employees say, “We gotta get out of Portland,” it won’t take more than 30 minutes with a spreadsheet to make the economic case. Once they taste the sweet freedom of Clark County, they won’t be coming back.

You’ll see headlines when Intel announces layoffs or Dutch Bros. announces they’re moving their headquarters to Phoenix, Arizona. You don’t see headlines when a consulting firm closes its downtown office and moves to Vancouver. You don’t see headlines when a manufacturing firm considers—and rejects—opening a new plant in Oregon. The headline-grabbing announcements are just the tip of the iceberg. Underneath are thousands of missed opportunities.

The Real Solution

I’d love to be more optimistic, but even a mild optimist gives Pollyanna vibes. No, it’s not “just going to work out.”

It will take serious work, top to bottom, from the state to the counties to the cities to the school districts. Reversing the decline requires admitting our policies have failed and changing course. We need to:

• Reform PERS before it bankrupts state and local governments;

• Get tough on crime and clean up our streets;

• Slash business-killing regulations and taxes;

• Fix our failing schools;

• Stop throwing money at homelessness programs that don’t work; and

• Overhaul our bloated Medicaid system.

Unfortunately, we don’t have serious people in policy positions. We’ve seen a two-decade decline, and no one in power has taken serious steps to reverse it. Instead, we have “blue ribbon” committees, work groups, and task forces that excel at producing PowerPoints, but fail at reversing—or even slowing—the decline.

Time is Running Out

Some might say we just need to hit bottom. That’ll shake things up, and it’ll get better. But, no matter how bad you think things might be now, we haven’t hit bottom. There’s still a long way to go. Things just aren’t bad enough, yet.

Some say if we could just elect better people, then we’d get better policies. Over the past 20 years, every governor we’ve elected has at one point claimed they’d be the “education governor.” Yet every one of them has overseen an erosion in outcomes and achievement. Every Portland mayor since Bud Clark has promised to reduce homelessness. Yet, the problem has worsened. Everyone knows that PERS is a crisis destroying state and local government finances. Yet, Democrats refuse to address the crisis, and Republicans have given up trying.

I hate being such a pessimist, but electing better people is a lost cause. Vic Atiyeh was the last Oregon governor with business experience, but he left office nearly four decades ago. Keith Wilson is the first mayor in memory to have business experience, but he’s floundering under a system and city council that seeks to preserve the status quo. While he has enormous power under the new city charter, in the interest of comity with other electeds, he’s done little to reverse the city’s “doom loop.”

It’s too late to elect a new captain when the ship takes on water. At that point, the best option is to head for the lifeboats and float to the closest island. The people and businesses with options are leaving. It’s not the best thing for Oregon, but it’s the best thing for them. Unfortunately, those taxpayers and job creators are precisely the people we need to bail out the ship. Once they’ve jumped, they aren’t looking back.

In the meantime, we can still enjoy the views of Mt. Hood.