Oregon’s September economic forecast was a big surprise: Instead of a coronavirus-caused $1 billion shortfall, the state predicts to end the 2019-21 budget with a leftover pile $1.7 billion high.

A COVID-19 boom? We are not so lucky. The seemingly good numbers conceal two pieces of disturbing news.

The first is: High-income households were spared by the pandemic. It hit low-wage sectors of the economy the worst.

Josh Lehner, Oregon state economist, and others crunched some Oregon data, and the preliminary findings were “that low-wage workers in high-wage industries are the ones being laid off there, while high-wage workers in low-wage industries have been spared to a great degree. Regardless of industry, workers earning lower wages have borne almost the entire recession.” That would mirror what is happening nationally.

The second is no less worrisome. Oregon’s state spending is expected to grow faster than government revenue. Unless something changes, Oregon is anticipated to face a structural deficit. State spending goes up every two years by 13% to 15%, and revenue has only been going up by 8%.

Wildfires and the pandemic will increase state spending. But much of the increase in spending is also related to increasing personnel costs. State employees are getting raises — some $200 million. Total pay increases will be 15% on average. Those are step increases as well as cost of living increases. The increases were approved before the pandemic began. Whether you believe they are deserved or not, they will put more pressure on Oregon’s Public Employees Retirement System, which already is struggling to keep up with obligations to pay future benefits. PERS was more than $20 billion behind before the new raises.

Where might the state’s Democratic leadership go to get more money? Provide incentives for business to grow? No. The default Oregon answer is taxes.

One target might be zapping the new state tax cuts automatically copied from the federal coronavirus relief bill. Senate President Peter Courtney, D-Salem, and House Speaker Tina Kotek, D-Portland, had them on their list. The tax breaks were estimated to cost the state $225 million. The tax breaks do things such as eliminating the cap on business losses that taxpayers can deduct. An argument for getting rid of them is that they primarily benefit wealthier taxpayers. An argument for keeping them is they help businesses stay afloat during the pandemic.

A handful of other states that automatically copy federal tax breaks into state code have stripped the tax breaks. Will Oregon be next?