GOP Leaders Warn of Inflation, Downturn from Government Overspending

Republican lawmakers are criticizing state tax collections this week amid new, rosy revenue forecasts that predict continuing economic growth and strong consumer earning and spending.

In a statement from House Republicans, the new predictions suggest that state revenues will continue to exceed expectations, hitting record levels and triggering another kicker.

But higher earnings mean higher taxes, GOP lawmakers warn, leading to record collections for the state. And economists say it also brings an increased risk of the economy “overheating” due to inflation.

“It’s clear from this strong revenue forecast that Oregonians are incredibly resilient and should be commended,” House Republican Leader Christine Drazan, of Canby, said.

“Many people have navigated difficult circumstances to find jobs, helping our economy rebound. Employment levels returning to pre-pandemic years is exactly what families and businesses needed. Unfortunately, inflation is a warning sign that a downturn is around the corner and we must proceed cautiously with our state budget.”

Drazan criticized the state government’s performance, claiming that agencies continue to fail at core services for students, families and businesses despite record spending and budget surpluses.

Not surprisingly, Oregon’s Democratic Governor Kate Brown offered a somewhat rosier take on the November revenue forecast Wednesday. She said the report, along with the news that the statewide unemployment rate has dropped to 4.4%, confirms Oregon’s “strong momentum for recovery from the economic impacts of Covid-19.”

“With a healthy ending fund balance, we have an opportunity to make targeted investments to close the gaps for Oregonians still in need,” she said. “We must continue to center equity in our recovery efforts to ensure that the communities disproportionately impacted by the pandemic due to historic disparities … benefit equitably from Oregon’s strong economic recovery.”

She said she has tasked a subgroup of the state’s Racial Justice Council — which includes business owners and workers — with developing a package of workforce investments for the February short session aimed at helping people get back to work and improving career paths.

She said she is continuing to push lawmakers on policy solutions to help people access and retain stable housing and will encourage them to leverage state resources with the billions expected from the bipartisan infrastructure bill to spur Oregon’s families, businesses and workers in their continued recovery.

“As we recover, we must support the communities that have been disproportionately impacted,” Brown said. “With these critical investments from the Biden-Harris administration, we can now ensure these communities have access to good-paying jobs, affordable broadband, reliable public transit, and other essential resources.”

New Senate Republican Leader Tim Knopp, of Bend, said Wednesday that every quarterly revenue forecast since the pandemic began has exceeded expectations — but the most recent one acknowledges the impact rising inflation is making on Oregonians’ bottom lines.

“Inflation is devastating for working families, but pads the pockets of government,’ Knopp said. “Blowout spending from federal government borrowing has given us more money than we know what to do with at the same time most working people have gotten effective pay cuts because everything is more expensive.

“Yet, Democrats’ vision continues to be tax, borrow, and spend. It’s time to give working Oregonians some relief in their family budget.”

GOP leaders claim Oregon Democrats have consistently rejected tax relief measures that would have benefited working Oregonians, included denying student loan and property tax relief for veterans and refused to waive taxes on Covid relief stimulus checks.

“The state continues to get bigger budgets, but working families are struggling to make ends meet because of inflation,” said Senator Lynn Findley, R-Vale, a member of the Senate Finance and Revenue Committee.

Findley promised to reintroduce legislation to cut taxes for everyday necessities in next year’s short session.

“Oregon Democrats have refused every opportunity to give working families a break. Prescription drugs, diapers, and feminine hygiene products should not be taxed.”

Oregon’s 2022 legislative short session will run 35 days starting Tuesday, Feb. 1.

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