Idyllic aura has faded in the Pacific Northwest

"To pass the state's $11.6 billion budget for 2003-05, [Oregon] lawmakers are considering selling state assets, additional spending cuts, and tax increases," Stateline.org, a website operated by the Pew Center on the States, recently reported. "The state has already emptied its rainy-day fund, borrowed the maximum amount allowed against future payments from national tobacco settlement, and slashed budgets for most state services."

Meanwhile, Washington State recently settled on a two-year operating budget of $23 billion, which will require considerable belt-tightening. "This budget contains a lot of pain," said Gov. Gary Locke (D), who is considering running for a third term as governor. "We had to cut back on good programs and take other difficult steps in order to live within our means, but I know this budget is a prudent approach to difficult economic times, and I know it is something we had to do."

Washington State officials say the economy may rebound soon, but it will be a slow process. "Even if the economy is now poised for a gradual recovery, the labor market is likely to react slowly and the unemployment rate probably won't improve appreciably until late this year," said Washington State Employment Security Commissioner Sylvia Mundy.

In economic terms, several things are going on, including the decline of natural resource industries - mainly timber and fishing - and the cooling of the hot-to-trot high-tech industry.

Additionally, the sour state of the nation's economy means fewer tourist dollars are flowing into the region, and fewer people are able to bail out of overstuffed California and retire comfortably in the Northwest. And the need for tax reform remains in both Oregon (which has no sales tax), and Washington (which has no income tax).

The region has been here before. In the 1970s - during the last energy crisis and a recession - there were big layoffs at Boeing. As people left for greener pastures, billboards around Seattle sprung up: "Will the last one to leave please turn out the lights?"

Since then, court rulings protecting endangered species have caused many mills in the region to close. Battles over river flows - a classic Western conflict involving farmers, ranchers, native Americans, and wildlife refuges - have meant sharp declines in commercial fishing.

In fact, aside from the high-tech entrepreneurs at Microsoft and at other companies able to pay cash for fancy homes and start their own philanthropic organizations, much of the Northwest began feeling the economic decline some years ago. Poverty rose while falling elsewhere, the unemployment rate surpassed the national average, and income disparities widened faster than in the rest of the country, according to a new report by Northwest Environment Watch, a private research organization in Seattle.

"Surprisingly, we found that for ordinary Northwesterners, today's economic hard times actually started well back in the so-called boom of the 1990s," said executive director Alan Durning. "The Northwest states - which historically have had lower poverty rates and higher middle-class incomes than the nation as a whole - lost their lead during a time when they were regarded as economic hotspots."

How can the region reverse these trends? Most experts say Oregon and Washington need more balanced taxation. Oregon gets 70 percent of revenues from income taxes, which can plummet when businesses do poorly and people lose their jobs. Likewise, Washington State draws 61 percent of its revenue from sales tax, which can decline when people have less disposable income. Though both states are considered relatively liberal in politics, voters have consistently rejected general tax increases and approved caps on property taxes.

The sun glinting off Mt. Hood or a pod of orcas in Puget Sound are unforgettable sights. Portland maintains its remarkable balance of small-town charm and sophistication. The fish and flowers at Pike Place Market are well worth Seattle's traffic problems. Now it's up to people here - and especially their politicians - to figure out how to pay for this livability.

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