Portland City Hall is on the National Register of Historic Places.
By Mary C. King
King is professor emerita of economics at Portland State University
Judging by our city leaders’ current proposal of severe cuts to our beloved Bureau of Parks and Recreation and the chronic human misery on our streets, you wouldn’t know that Portland is more prosperous than ever. Last fall, the Oregonian/OregonLive reported that median household incomes in the Portland area hit an historic peak, and business profits are high. We can and should do more to fund our city services locally. We can’t wait for our federal and state governments to step up.
Portland city commissioners’ single best strategy to fund healthy recreation programs, support mental health initiatives and invest in housing may be to follow the approach of the new tax created in 2018 by the Portland Clean Energy Initiative. Right now, the Clean Energy surcharge to the city business license tax is levied only on big, brick and mortar retailers, with revenues of $500,000 or more in the city and global sales of at least $1 billion a year.
Extending the 1 percent tax to giant firms in all industries, while maintaining the exemption for groceries, medicines and health care, could raise approximately $200 million annually, extrapolating from a 2017 city revenue division report.
Meanwhile, for want of $6.3 million, the city is talking about closing the Sellwood and Hillside Community Centers and Columbia Pool, significantly limiting hours and offerings elsewhere and eliminating 70 positions. Our recreation programs provide critical, affordable exercise options; inexpensive neighborhood preschools; beautiful, outdoor gathering spots and teen employment. Rather than cutting, we should be expanding programs, centers and parks, as our population grows in size and density.
Our city and county Joint Office of Homeless Services runs well designed, comprehensive programs, but is seriously underfunded for the size of the problem. The office’s proposed 2019 budget calls for just $33 million from the city, but far more is clearly required to accomplish its goals. Portland’s homelessness prevention efforts could be much more effective if they could scale up, take over more of the first responder role that police currently fill and include investments in public housing.
The genius of the business tax surcharge is that it is structured to protect small and medium-sized businesses while making it hard for huge corporations to avoid or pass on to customers. If big businesses want to sell in Portland, they have to pay the tax since it is on sales; it’s as simple as that. They can’t dodge it as they currently do federal and state profits taxes by booking profits in offshore tax havens or taking advantage of the corporate income tax breaks resulting from well-funded lobbying efforts over the years. And they can’t simply pass the tax on because they are competing with smaller, local firms not subject to the tax surcharge.
We have considerable room to expand the top tier of our business taxes. Despite the endless complaints of business lobbyists, state and local taxes on companies doing business in Oregon are the second lowest in the country. Meanwhile, as Bloomberg reports, “profit margins for all of corporate America are near their all-time highs,” especially for the largest corporations.
City leaders can no longer rely on our property tax system, crippled by 1990s “reforms” now cemented into our state constitution. Oregon’s illogical property tax structure limits the growth of assessed values, while gradually shifting the property tax burden from commercial to residential property owners and creating tremendous inequity among households.
Portland’s quality of life depends on expanding our parks and community centers for a growing population, while meeting local mental health and housing needs. It’s time to be more proactive to raise the revenue to do that, particularly given how prosperous Portland has become.