Idyllic aura has faded in the Pacific Northwest

In the Pacific Northwest, they say, people have two incomes: The one they earn from their regular job, and the other that's measured - every time they walk out the door - in soul-refreshing views of mountain ranges, rugged coast, and high desert. Seattle, Portland, and other cities here have been nominated "most livable" so many times that former Oregon Governor Tom McCall once quipped, "You're welcome to visit, but for heaven's sake please don't come here to live."

Here in Bend, Ore., the population has doubled over the past decade to 57,000, as California émigrés and others arrive with their skills (or their retirement investments), building new homes, turning old mills into upscale shops and restaurants, and pumping their candy-colored bikes toward the spectacularly rugged 10,000-foot peaks of the Three Sisters Wilderness in the Cascade Mountains.

But the region Ernest Callenbach had in mind when he wrote "Ecotopia" 30 years ago seems to have fallen on hard times: Dot-com collapse in the land that Bill Gates built. The move of Boeing's headquarters from Seattle to Chicago. The highest unemployment rate in the country. Schools closing weeks early for lack of funds. Even the iconic salmon are dying out.

What's happening here?

The short answer is that the national economy - combined with business and tax quirks in Oregon and Washington State - has hammered an area known until recently as uniquely booming and beautiful. History's longer view of the land and its people helps explain the region's particular role in the American West's boom-and-bust cycles.

The Pacific Northwest, in fact, covers an area the size of Western Europe. The region encompasses rivers and streams that flow into the Columbia River, which - in addition to Oregon and Washington State - includes Idaho, western Montana, and some of British Columbia.

Two hundred years ago, the "Corps of Discovery," captained by Meriwether Lewis and William Clark, recorded the natural wonders of a territory that had plentifully sustained its original inhabitants for thousands of years.

Today much of the area is still an awesome sight. However the impact of development is very evident. Just last week, Christopher Swain finished swimming the full 1,243-mile length of the Columbia, from its headwaters in the Canadian Rockies to the Pacific Ocean. His goal - and self-acknowledged obsession - was to publicize the impact of dams, pollution, logging, mining, and nuclear waste on the river. These human impacts have reduced wild salmon runs to a small fraction of their original numbers.

"I have come to realize that every challenge facing the river can be reduced to human terms," Mr. Swain said. "Really what the river has become is a reflection of who we are and the choices we've made here in the Northwest."

The river is symbolic of the way the region is doing more broadly. Oregon has the highest unemployment rate in the country (8.2 percent), followed by Washington (tied with Alaska at 7.3 percent). The list of Seattle-area companies cutting jobs reads like a who's who of prominent businesses: Boeing, Microsoft, Nordstrom, Alaska Airlines, Weyerhaeuser, AT&T Wireless.

Here in Oregon, state officials last week extended emergency unemployment benefits from 13 to 20 weeks. Lawmakers and the new governor, Ted Kulongoski (D), continue to struggle over a budget to cover expenses for the next two years. So far, the state is running a $2.5 billion deficit.

This has affected government-funded healthcare and other social services, courts and prisons - there's a four-month backlog of drug and property cases - and especially local schools, which get much of their funding from the state. State college and university students face higher tuition rates. Education budget cuts have caused business leaders considering moving here to have second thoughts.

"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.