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It seems that every day brings another news story about a government agency or school district in need of more money — much more money.
At the state level, the Oregon Department of Transportation is short $354 million, although it is difficult to imagine how responsible managers could let this happen. No wonder there will be a state referendum on this. The city of Portland is $150 million in debt, while schools statewide are asking the state Legislature for an immediate additional $1.2 billion to avoid midterm budget cuts. The reduction of federal support going forward will only exacerbate these deficits; in fact, it already has.
At the local level, Eugene School District 4J is $30 million in the hole, largely because their administrators and board made hard commitments with soft money. The city of Eugene continues to have a budget deficit after cutting over $30 million in expenditures over the past two years, as demand for services increases while property taxes remain stagnant.
The Lane County Sheriff’s Office needs an additional $22 million to enforce the laws we have enacted, while the Lane County District Attorney’s Office needs an additional $10 million to prosecute a new wave of transient criminals who have made our county home. The Lane Events Center wants at least $35 million to expand its activities, while Lane Community College and the University of Oregon are both deeply in debt, $8 million and $30 million, respectively.
The list goes on. Everyone seems to be running a deficit or in need of additional funds, and they are all searching for additional public financial support in the coming year.
Meanwhile, Oregon’s economic activity is declining, population growth is slowing and unemployment is rising — all at a faster pace than the U.S.
These financial challenges are compounded by the results of a recent KVAL survey, which found that 96% of Eugene and Springfield residents don’t trust their local governments to make responsible spending decisions. What a surprise.
I am not questioning the soundness of many of these requests for additional funding, although responsible people probably should. My point is much simpler: What happens in 2026 when all of these budget requests and tax and fee increases confront us all at once?
Are we supposed to vote on one big beautiful bill to pay for it? Or perhaps we could charge tariffs on people coming from out of state? We could significantly increase taxes on the wealthy, but an honest search will reveal that there are very few genuinely wealthy people in the state, and tax loopholes abound. Besides, Oregon already has the fifth highest state income tax rate in the U.S., and wealthier residents — and both large and small businesses — are currently leaving the state in droves. What is more likely to happen is for state and local governments to gear up for major tax and fee increases in 2026 for all Oregonians.
A more sensible approach would be to consider — don’t kill the messenger — a state sales tax. Washington state’s sales tax, ranging from 6% to 10% depending on the area, yields roughly $35 billion annually to state coffers. And since Washington, like Oregon, is a tourist state, much of this is paid by out-of-state tourists. Yes, Oregon is smaller than Washington, but perhaps a 3% or 4% sales tax that exempted groceries, rent and medical care could generate significant funds for state and local operations.
The only alternatives to this are to either significantly reduce our state and local government spending, or to massively increase our income taxes and state and local fees for everyone. I think we have to be honest: One way or another, our state and local governments will need larger operating budgets going forward, partly because of greed or poor decision-making and partly because of circumstances beyond their control. This is going to happen. The question is how to pay for it. Perhaps it’s time to consider a state sales tax as part of our funding model to spread costs across a broader tax base in a way that yields greater fairness for Oregon citizens.
