Five months after Gov. Tina Kotek sent a special committee hunting for ways to pep up Oregon’s sluggish economy, she has a set of recommendations in hand – and likely plenty of fierce debate ahead.

According to the 15-person “Prosperity Council” the governor convened in January, the path to economic success includes lowering taxes on some wealthier residents, slashing regulations, beefing up state assistance to business owners, and making more of Oregon’s highly-protected land available to industry.

Those are among 10 overarching prescriptions the council released Thursday, in a report that drew on dozens of listening sessions around the state, and feedback from more than 1,000 Oregonians.

“People love Oregon; they do not love what’s going on in Oregon,” said Renée James, a tech executive who co-chaired the Prosperity Council alongside Curtis Robinhold, executive director of the Port of Portland. “We’re just not competitive. That’s not even a judgment – it’s just fact.”

James’ outlook mirrors that of business people around Oregon, who have argued for years a lopsided tax structure, onerous permitting and heavy-handed regulations are making the state increasingly unappealing to people hoping to start or grow a company.

James and Robinhold say Oregon’s recent economic performance speaks for itself.

The state shed 19,000 jobs in the last year – a 1% drop only rivaled by Virginia, Maryland and Washington, D.C., which all lost jobs under President Trump’s push to pare down the federal workforce. Oregon’s unemployment rate sits at 5.2%, in line with its West Coast neighbors but well above the national average.

“We need to act and we are making some really thoughtful recommendations that are absolutely doable,” Robinhold told OPB ahead of Thursday’s release. “They’re not free and they’re not easy, but they’re pretty straightforward and they’re achievable.” (Editor’s note: Robinhold is vice chair of OPB’s board of directors.)

That doesn’t mean elements of the council’s roadmap won’t be strenuously opposed by some influential groups.

Two labor-affiliated members on the Prosperity Council, Robert Camarillo and Alice Dale, have signaled since April that they disagree with business-minded council members. Dale and Camarillo accused those members of favoring a “low-road” to economic growth that would short-change public services in favor of what they described as tax cuts for the wealthy.

“Just like any smart CEO, Oregon should pursue a strategy of its own and ignore the low road of doing everything other states do, just more cheaply,” they wrote in a report released in April.

The document suggested that Oregon’s economic outlook is more positive than business groups acknowledge, and concluded that pouring more money into public services is the best course. The argument echoes those of labor unions and progressive groups that often play a central role in propelling Oregon Democrats – including Kotek – to office.

Kotek may be able to avoid taking a side in the debate as she pushes for reelection in November. Many of the Prosperity Council’s recommendations are keyed to 2027 and beyond.

Here’s a rundown of the council’s 10 top recommendations for improving Oregon’s economy:

Rethinking the state’s economic development agency. The council recommends morphing Business Oregon into a more-focused agency it calls the Oregon Commerce Authority. For years, Business Oregon has been criticized as an “island of misfit toys” – an agency that has been saddled by lawmakers with an ever expanding list of responsibilities, but that is not particularly adept at run-of-the-mill economic development. “It’s not a proactive mechanism to go and help grow businesses,” James said. The council wants policymakers to rethink the agency in the mold of other states with aggressive economic development programs, with an eye toward ensuring Oregon businesses remain in the state.

Short-term tax changes. The council has a slate of recommendations that business owners (and legislative Republicans) will cheer. They include:

• altering Oregon’s estate tax, ensuring only estates larger than $3 million need to pay when their owners die, instead of the $1 million threshold currently in place.
• modifying the state’s Corporate Activity Tax, currently paid by businesses that generate more than $1 million in annual sales. The council recommends shifting the tax burden to businesses that have $2 million total sales and more, while adjusting rates to ensure the tweak is revenue neutral.
• expanding state tax credits for businesses’ research and development spending.
• including tax breaks for sales of so-called “qualifying small business stocks” in Oregon’s tax code. Legislative Democrats opted to nix those benefits earlier this year.

Robinhold and James said this week that their proposed short-term tax tweaks are mostly aimed at retaining small and medium-sized businesses struggling to expand in the state. But the suggestions are the most controversial in the report.

“Two members disagreed with some of the short-term tax changes and expressed concerns about the necessity of broader business incentives and their long-term impacts to the state,” the document said, apparently referring to Dale and Camarillo. “They agree that Oregon must strengthen its long-term competitiveness but believe increasing investments in talent and quality of life is more effective for enhancing the state’s economy.”

Exploring more foundational tax changes. The council report argues that Oregon’s income tax-reliant revenue system is not just a problem for the wealthy. It says Oregon residents making $50,000 and $80,000 a year have a higher effective tax rate than people with the same incomes in Washington or California.

“There is an erroneous conversation in this state that the whole tax conversation is about rich people,” James said. “The rich people have just left. That’s the problem with our revenue. This is about people who work and stay here.”

The report recommends a “tax reform working group” that can recommend alterations to the state’s tax code by 2029. Those could include “rebalancing” income tax rates, changes to the state’s corporate activity tax, asking voters to make property tax changes, and more.

Quicker permitting. The council suggests requiring state agencies to approve or deny permits within a set “shot clock” to minimize project delay. The recommendation builds off a bill Kotek pushed earlier this year that requires agencies to expedite permit applications for some large projects.

Slashing state regulations 20% by 2029. The council says this can be accomplished by nixing “outdated and duplicative” regulations from state rules. The report points to an effort launched by Glenn Youngkin, the former Republican governor of Virginia, that reportedly trimmed state regulations by more than 25%. “We know 20% is arbitrary,” Robinhold said. “We tried not to be overly aggressive. We meant it to be a signal that the state is taking this seriously.”

Overhauling land-use laws. While it’s short on specific recommendations, the council says Oregon needs to update policies that restrict the amount of land available for industry and businesses. It also suggests an expansion of the “urban growth boundaries” that govern where development can and cannot occur. “The state must ensure an adequate supply of development sites aligned with the needs of target-industry clusters. As part of this, the state should consider increasing available land by 2% over where the urban growth boundary is set today.” Such wholesale expansion would virtually guarantee a contentious debate in Salem.

Major spending on preparing land for business. The council proposes allocating $250 million in every two-year budget to help prepare vacant land for use by commercial tenants.

Swapping Oregon’s greenhouse gas policies for a “cap and trade” program. In 2020, business interests helped kill a Democratic proposal that would have capped greenhouse gas emissions and required businesses to purchase tradable credits for some of their pollution. The bill’s defeat led former Gov. Kate Brown to order a more stringent policy on emissions that businesses now despise. The council recommends scrapping Brown’s “Climate Protection Program” in favor of a cap and trade policy, a request businesses have made increasingly over the last year.

A new council on preparing Oregon workers. The council recommends a “Governor’s Cabinet of Economic and Talent Development” to lead efforts to improve K-12 education outcomes and better align higher education institutions in the state.

More funding for higher education. Without offering specifics, the council says Oregon needs to bring its spending on public universities and community colleges in line with other Western states. “Oregon ranks 37th nationally in higher education appropriations per full-time student and invests 24% less per student than the national average, contributing to some of the highest tuition costs in the West,” the report notes, adding that low state investment results in higher tuition that “limits the state’s ability to develop the talent pipeline needed for long-term economic competitiveness.”

News Source : https://www.opb.org/article/2026/06/25/prosperity-council-kotek-taxes-regulation-land/