The 2003–2004 biennium saw continued economic problems for the state of Oregon, including a continuation of high unemployment rates. The recession brought decreased revenues for state coffers, causing budget shortfalls and threatening budget cuts for education, health care, services to senior citizens, and law enforcement. To prevent these cuts, the Oregon Legislature passed a bill enacting several tax increases, and repealing some tax credits. The main tax increase was a tax surcharge, in which taxpayers would be charged an additional percentage of their income tax liability, based on their tax bracket. However, anti-tax activists, collaborating with the state Republican and Libertarian parties, collected enough signatures to require a referendum to approve the law.
Especially surprising to some observers was the margin by which the measure was defeated in Multnomah County. Measure 28 had passed in that county, but Measure 30 was defeated there with 58 percent voting no. Some claimed that this was because county voters had passed their own temporary income tax in the wake of Measure 28's defeat and were not interested in bailing out the rest of the state.