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Commissioners Fish and Fritz warm to income tax to pay for streets

Posted by on October 14th, 2014 at 9:16 am

council work session novick fritz hales fish

Portland’s city council speaks with staff Monday about the “Our Streets PDX” proposal.
(Photo: M.Andersen/BikePortland)

Can Portland’s proposed transportation income tax count to three?

In the political tea leaves of Portland’s five-member city council, three is the magic number. And the tenor of Monday’s hearing on the city’s proposed tax suggested that consensus is building. But the vote seems likely to hinge on who would pay how much.

What Portlanders would pay

In their documents Monday, Portland Bureau of Transportation staff offered three scenarios for a fee structure based on a taxpayer’s adjusted gross income. (That’s your income minus student loan interest, self-employment tax and health savings accounts, but not deductions such as mortgage interest.). Here’s what the per-month payment might look like for single tax filers, with the flattest tax on the left and the most progressive one on the right:

proposed tax levels single

And here are the corresponding scenarios for joint tax filers:

proposed tax levels joint

As The Oregonian reported Monday morning, these exemptions for low-income workers would ensure that 41 percent of Portlanders would owe nothing.

Meanwhile, a different tax would also be charged to every licensed business in the City of Portland. For the smallest businesses, fees would range from $2.50 per month for a freelance photographer to $12.50 a month for a small coffee shop to $15 a month for a tiny medical office.

For the largest businesses, fees would range from $20 a month for a large bank to $60 a month for a major software firm to $120 a month for a hospital or large hotel.

You can read about the proposed business rates here.

Any of the scenarios above would be projected to raise $40 million a year — assuming that 90 percent of businesses and 83 to 85 percent of residents who are supposed to pay the tax actually would. (The city’s $35-a-year arts tax, which is collected annually by April 15 as this tax would be, currently has a 71 percent compliance rate.)

What the commissioners said

Press Conference for Transpo Fee -1-2

Commissioner Steve Novick in April, discussing what was then proposed as a mostly flat fee rather than an income-based tax.
(Photo: J.Maus/BikePortland)

Commissioner Amanda Fritz, who had once been seen as the likelist to join Mayor Charlie Hales and Transportation Commissioner Steve Novick as a third vote for the plan, was the most vocally skeptical of the plan Monday, saying that couples who make more (but not a lot more) than $30,000 between them should be exempt from a tax.

“$30,000 doesn’t seem high enough to me” for the exemption for joint filers, Fritz said.

Fritz also questioned a $3 million line item that would help fund a biking-walking bridge across Interstate 405 at Flanders.

“We had an extensive conversation about this,” she said, referring to the abandoned 2008 proposal to relocate the Sauvie Island Bridge to this location and making clear that she continued to see it as a lower priority than safety improvements in more outlying neighborhoods.

Commissioner Nick Fish, for his part, asked if the city’s advisory committees had considered exempting businesses from the tax in their first year.

“We’ve seen a big jump in business licensees,” Fish said.

Willamette Week reported Monday that Fish has suggested splitting an upcoming council vote into two questions: first, whether a tax should be created; and second, whether it should be approved by voters.

“This change would allow him to back the reworked street fee without reneging on his promise not to bypass voters,” WW’s Aaron Mesh wrote.

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One telling point in the work session came when Hales casually laid out a possible compromise over whether a tax or fee should go to voters.

“There seems to be consensus among the committees that a referral is not at this point necessary, but a sunset seems reasonable to me.”
— Mayor Charlie Hales on the need for voters to approve a transportation income tax.

“There seems to be consensus among the committees that a referral is not at this point necessary, but a sunset seems reasonable to me,” he said. After six years, he suggested, the city council “can renew it, reject it or refer it [to voters], based on what the council at that time wants to do.”

No commissioners responded one way or the other to that.

Hales also said he favors a relatively flat tax, one that would charge the highest-earning Portlanders no more than $50 a month and would raise rates for middle-income earners.

Commissioner Dan Saltzman, for his part, said relatively little during the work session, at one point asking politely which projects would be scaled back if other projects ran over budget. (PBOT Director Leah Treat promised to work this out.)

And Novick, the politician who’s devoted most of the last year to the proposal, said he’s glad the city was persuaded to abandon an earlier version of the fee that, like the many similar per-household fees around the state, charged rich and poor about the same.

“In May and June we brought a proposal to council that was mostly what everybody else does,” he said. “We now have street revenue proposals before us that do not represent what everybody else has done. And I think we in Portland agree that that’s often a good thing.”

After the work session, city staffers who have been taking direction from Novick and Hales to gather consensus around the fee congratulated one another on a job well done.

A public council hearing is set for Nov. 12, with a likely vote Nov. 19. If approved, the first payments would be due April 15, 2016.

Correction 11 pm: An earlier version of this post misstated the size of the city’s annual arts tax. Also, Commissioner Fish says it misquoted his statement that there had been an increase in business licensees; an earlier version of this post had quoted him as saying there had been an increase in business license fees.

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Bjorn
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Bjorn

Why would they use a different way to calculate your income than normal income tax. I just don’t understand why the city insists on creating new complicated bureacracy around this? Why not just have it be a part of filing your income tax that we all already do and base it on the same income federal and state taxes are based on? Also it seems that by doing this separately they are creating a fee that only residents of portland will pay even though commuters put much of the peak demand on our streets. Why not an income tax that is on people who live or work in portland much like oregon’s income tax is for people who live or work in oregon?

Kiel Johnson (Go By Bike)
Guest
kiel johnson

I can’t understand how Fritz, after recent events, would hesitate to block any funding for traffic safety which would prevent similar families from having to undergo the tragedy her’s is.

Todd Hudson
Guest
Todd Hudson

Will there be a guarantee that the income tax rate won’t increase and that revenue will be used exclusively for transportation maintenance/safety projects, and not art, homeless programs, and commissioner pet projects du jour?

davemess
Guest
davemess

This honor system tax payment system is insane (as is the honor system payments for the MAX).

“Hales also said he favors a relatively flat tax, one that would charge the highest-earning Portlanders no more than $50 a month and would raise rates for middle-income earners.”

Real shocker there!!!

davemess
Guest
davemess

“And Novick, the politician who’s devoted most of the last year to the proposal, said he’s glad the city was persuaded to abandon an earlier version of the fee that, like the many similar per-household fees around the state, charged rich and poor about the same.”

I really don’t trust anything Novick says. This was his baby, that he defended to the city when it was a flat, totally regressive fee.

Spiffy
Guest
Spiffy

as somebody that doesn’t own a road-destroying motor vehicle I’m glad I have the option to not pay this tax designed mostly to repair damage from motor vehicles…

jonno
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jonno

Such a complex scheme…why not just enact a gas tax, or a citywide parking sticker fee? Or start charging for parking in congested districts? Parking lot tax? God forbid a congestion charge maybe! Connect it to road system usage instead of making me have to fill out yet another form at tax time.

Edwards
Guest
Edwards

Ahhh yes, and the ugly truth rears its two faced head!

when the “I want it my way and I want now” sayers are faced with a solution of “here you go, now pay for it!”

the excuses and dodging come flying!

Justin
Guest
Justin

Just for clarification – “registered businesses” can be a totally virtual employee or small business.

So let’s take a freelance photographer (as the article mentions) with no actual physical office space. (S)he has a bike but no car, taking advantage of Car2Go or ZipCar for gigs where more space is necessary. The photographer would pay twice per month – as a business, and as a Portland resident.

Now, let’s take a suburban commuter – say, one with a pickup truck and studded tires. They would pay $0 per month.

I’m not saying that I totally oppose this fee – but Portland’s “licensed business” classification is already onerous on small businesses and freelancers (who pay double income tax), and adding on ADDITIONAL double taxes doesn’t make me feel great.

Will P
Guest
Will P

Michael – Are you citing exactly what the adjustments to income are for this tax or is your list just providing examples of adjustments? I am curious to know if the city plans to use the federal AGI adjustments or if they are picking and choosing what they will allow for adjsutments.

jeff bernards
Guest
jeff bernards

This street fee thing is embarrassingly ridiculous. I’ve gone from paying way more than my fair share with the first proposed street fee. To paying nothing with the income tax street fee proposal. I feel I use the roads and should pay something, not nothing.
I guess I have to say it again: A GAS TAX PROVIDES ME AN OPPORTUNITY TO CONTRIBUTE CLOSER TO THE AMOUNT OF ROAD I USE BETTER THAN ANYTHING THEY’VE COME UP WITH YET. I’VE GOT GAS TAX FEVER!

S. Brian Willson
Guest

As I have said before, I am opposed to a street fee or specific income tax directed to transportation infrastructure. I support a gas tax indexed to inflation that will produce fees from those machines that most impact safety of pedestrians and cyclists, and cause wear and tear on streets – private fossil fuel driven automobiles. Yes, I know it would be unpopular, but oh so fair and instructive for instituting a process that begins to reckon with the disaster of King Car culture.

Brian
Guest
Brian

Out of curiosity, this “gas tax” idea comes up every time in these threads. What do the members of City Council think about a gas tax? Have they made public statements on the idea?

Matti
Guest
Matti

I have the fever, too… Gas Tax Fever!

spencer
Guest
spencer

GAS TAX!

S. Brian Willson
Guest

I doubt the City Commissioners will take a gas tax seriously because of its perceived unpopularity. I have not heard them discuss it up to this point. However, if enough people demanded a gas tax and that demand was expressed vigorously in many community venues they might likely entertain it. The tax they are now linking to income should rightly go directly before the population in a ballot provision.

Rob Chapman
Guest
Rob Chapman

This rotten plan being pulled from the City’s collective 4th point of contact, seemingly as they go along, remains an exercise in throwing good money after bad. They’ve already admitted that it will still leave a huge funding gap. Where do they propose to get the rest of it?

I’ll say it again, the heart of our problem lies in our antiquated form of City government.We aren’t a quant little town anymore. Instead of representing Portland our councilors represent their bureaus (fiefdoms) first and foremost. This is how Parks, Rec, and Culture gets a bigger piece of the general fund pie than PBOT does. The City as it stands is pretty much operated like a taxpayer funded Ponzi scheme and it is unsustainable.

I know that a strong mayor system was shot down at the polls recently. Maybe a manager-council system would be more palatable to voters? If we stick with our current system I believe we are hosed. We need a more representative local government, period.

In any case, I’ll bet you dollars to donuts that if this stupid tax passes, active transportation will be lucky to get a sniff of the scraps.

J_R
Guest
J_R

Wow, $20 per month for a “large bank,” while my family ends up paying $8 to $12 per month depending on the plan. I can certainly see how my family’s transportation works out to have about half as much impact as a large bank.

After all, my house is kind of like a bank: All that activity at my driveway with dozens of autos parking for a brief time and driving out again, the armored car that makes a couple visits daily, long queues that occasionally back onto the street when my kids’ friends come to visit. Oh, and there’s that traffic signal right by my house.

BS!

Chris Anderson
Guest

Gotta side with Amanda Fritz on the bridge. $3 million is enough money to put diverters every 2-3 blocks on the entire Neighborhood Greenway network. This is required if we want to make Greenways into the type of place children can ride without needing a “bike train.”

Mike
Guest
Mike

Just curious as to when we reach the point to tell our politicions “enough is enough”. Raising taxes is fine if the money will be spent wisely but does the past allow us to trust them? No matter what form the tax(street fee, gas tax, income tax) I don’t think they are responsible enough to use the money for which it is intended.

Jonathan Gordon
Guest
Jonathan Gordon

For those curious Novick and Hales aren’t considering a gas tax, they have been explicit about their reasons. You can find it on their website here:

https://www.portlandoregon.gov/novick/article/493599?

6. Why not just raise the gas tax, which could discourage people from driving?

Surveys show that gas taxes are extremely unpopular with the public, and this effort has been shaped by public input. A survey of Portland residents in March 2014 as part of the Our Streets PDX conversation showed that residents favored a street fee over a gas tax and other alternatives.

A gas tax would keep the transportation system financially dependent on the growth of driving and the associated pollution, climate change and negative health impacts. It would continue to diminish in purchasing power relative to inflation. It would also increase the perception that people who bike, walk or take public transit do not financially contribute to the transportation system. With a transportation fee, everyone pays and everyone benefits.

random
Guest
random

“With a transportation fee, everyone pays and everyone benefits.”

Well, except for the 41% of Portlanders who won’t pay anything…

Chris Anderson
Guest

If everyone here commenting in favor of a gas tax testified at the City Council meeting, it might make a difference to the conversation.