HPAC cover

At Gov. Tina Kotek’s request, the Oregon Legislature this year agreed to devote hundreds of millions of dollars to the production of housing. It also agreed to make it easier, though only temporarily, for some cities to add buildable land to their urban growth boundaries.

In recommending this course of action, the governor was guided by the Housing Production Advisory Council, a panel she created in 2023 to recommend an action plan for building 36,000 homes per year.

The panel’s work is not done. It recently released its final report, which contains several reasonable recommendations as well as this strange conclusion: The supply of housing in Oregon has not matched demand because businesses and individuals aren’t taxed heavily enough.

To remedy that supposed problem, the report proposes a collection of new and increased taxes amounting to $3 billion per year (see table below, which appears in the finance workgroup’s recommendation document here).

The governor should distance herself from this guidance as quickly and unequivocally as possible. Not only would three of these tax proposals require constitutional amendments to enact, but the exercise itself is so self-defeating even the work group that developed the list admitted that “(i)ncreased taxes decrease disposable income, which may exacerbate housing unaffordability.”

May? The finance workgroup acknowledged in its recommendation that it included no subject matter experts. But you don’t need experts to know that decreasing affordability is a terrible way to increase it.

Rather than relying on tax increases, as OBI’s Scott Bruun wrote in response to this plan, the state should “explore alternative funding mechanisms that prioritize affordability, economic growth, and sustainability.”

The state also should examine regulatory impediments to housing production, including its rigid and highly bureaucratic land-use system.

The table below appears in the finance workgroup’s recommendation, which can be viewed by following a link on page 31 of the HPAC’s report. 

New revenue