If you’ve been following local political news over the last several months, you’ve likely heard a lot of talk about budget cuts. The state is making cuts, even though those cuts aren’t as dramatic as once feared. The city of Portland may have to make cuts too.
Some of the pressure facing both the state and the city is related to sweeping federal funding cuts to education, healthcare, and a variety of other social services.
But it’s not just budget woes: Portland’s economy, as a whole, appears to be struggling. The Portland Metro Chamber last month wrote that the city’s economy is in “crisis,” citing a report showing that the metro area lost 9,000 jobs last year and that multifamily housing construction has slowed to a crawl.
The Metro Chamber, led by President Andrew Hoan, has said Portland is in an economic “doom loop”—borrowing a term coined by Columbia Business School professor Stijn Van Nieuwerburgh in 2022 to refer to the cyclical strains placed on cities by the rise of remote work.
But whether or not the doom loop description fits Portland’s situation, observers from across the political spectrum agree that the city’s economic situation is not what it needs to be—and not only because of the pain inflicted by the Trump administration, but because of decades-long struggles to deal with the fallout of federal disinvestment in housing and social services and changes to Oregon’s property tax laws in the 1990s.
Caitlin Baggott Davis, executive director of the North Star Civic Foundation, said Portland and other Oregon cities have long been in precarious budget situations.
“Our entire social safety net is based on income taxes and property taxes,” Baggott Davis said, highlighting how the local tax base hinges on a gainfully employed population. “We have no schools, mental health services, public health care, roads to drive cars or bicycles or trains on without those taxes. Without jobs, income taxes diminish and property taxes diminish, and Oregon progressives who care about a reliable social safety net need to care about jobs.”
Sarah Iannarone, who was a candidate for mayor in 2020 and now serves as the executive director of MOVE Santa Barbara, agreed.
Last fall, when she was leading The Street Trust, Ianaronne penned an editorial in The Oregonian with state Rep. Mark Gamba advocating for strategic investments in the state’s critical infrastructure—linking the fight against climate change to job creation in a manner that harkened back to the Green New Deal she proposed when she was a mayoral candidate.
“We’ve taken several best practices trips as leaders to Detroit, and when you touched base down in Detroit, from the moment you hit that airport to the minute you left, all you heard was jobs, jobs, jobs, jobs,” she said. “Even at the bottom of their bankruptcy: they understand that a place is not livable unless the people can afford to work and live there.”
Iannarone said that instead of worrying about the city’s image and appeal to visitors, local leaders should take a different approach.
“Portland does really well when it makes places that are good for the people who live, work, play, and pray there,” she said. “Not when we’re marketing ourselves to the rest of the world to be cool, but when we were authentically creating a good place for our people.”
But despite the broad agreement on the need to create jobs, add revenue, and bolster the local economy, there is ideological disagreement in both Portland and Salem on how best to go about accomplishing those goals.
“The best economic strategies for widespread prosperity are investments in people: and that’s education, high-quality childcare, healthcare including mental healthcare, and housing—and those are things we can pursue on a local level.”
Mary King, economics professor at Portland State University
Gov. Tina Kotek, for instance, has made job creation and economic development one of her highest priorities as she runs for re-election this year—backing bills aimed at reforming the state’s permitting process and offering tax incentives to businesses investing in the state.
Kotek’s emphasis on development led her, earlier this year, to hire former Republican state Sen. Tim Knopp as her new chief prosperity officer. She has also formed a 16-member “prosperity council” to advise her on economic issues.
“The economic situation that we’re in right now as Portlanders requires a retooled approach to the economic agenda,” Baggott Davis said. “I think what I’m asking of progressives is, what is the progressive vision for jobs, economic growth, and relationships with employers?”
Mary King, an emerita professor of economics at Portland State University, said the real key to attracting business and creating new jobs is not appealing directly to the interests of those businesses but by investing elsewhere.
“The best economic strategies for widespread prosperity are investments in people: and that’s education, high-quality childcare, healthcare including mental healthcare, and housing—and those are things we can pursue on a local level,” King said.
King noted not only that cities like Portland can invest in those areas at the local level, but that, given the lack of federal investment, they must.
“We’re much better off focusing on a skilled labor force than we are on attracting businesses, because a skilled labor force will attract businesses—it’s the decisive factor in deciding where businesses decide to locate,” King said. “It’s why businesses are still in Silicon Valley.”
King pointed to Preschool for All as an example of the kind of local program that should significantly benefit the city’s economy in time, and she believes the program should be expanded further.
She also supports the construction of new, publicly-owned housing and free public transportation—following Montgomery County’s lead in pursuing bond financing for new housing construction and putting higher tiers on the payroll tax to help fund the investments.
Those kinds of investments, she said, will not just add jobs but add jobs that pay people a living wage and in turn bolster the rest of the economy. Iannarone said that, at one point, Portland’s business community saw things similarly.
“Once upon a time, the business community understood that these investments were important and didn’t oppose every single good thing,” Iannarone said. “Because the green community was actually partnered with the business community. Where are they now?”
Those kinds of partnerships may be particularly critical at a moment when Portland is facing headwinds at the federal level and may have to chart its own economic course through the coming years or risk seeing further declines in social service provision and a further erosion of public trust.
Avoiding that fate may matter not only for Portland’s economic life, but for its ability to preserve some measure of its autonomy as well. Iannaraone pointed to the city’s robust response to the Trump administration’s plan to deploy federal troops to Portland last year as a direct result of long-term investments in livability and equality.
“That’s civics,” Iannarone said. “That’s social cohesion. And those things are based in some very core principles in Portland that go right down to things like parks and green spaces and streets and neighborhoods: the fact that we are connected and work together in our democracy is going to be the difference of whether we are able to withstand and bounce back or get dragged along.”
Iannarone highlighted Pedalpalooza and the city’s World Naked Bike Ride, organic, community-driven events, as examples of what made Portland so desirable in the first place.
“That was about the people who live and work here,” Iannarone said. “Those weren’t marketing exercises. I think at some point, Portlanders have to get back to—not what anybody else thinks of us, but what we want to be as a community.”
