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Why Portland's Mayor Is Talking Taxes, In Spite Of Record Revenue


Portland’s city council just voted on a new budget for the year. General fund spending rang in at $530 million.

The city is bringing in record revenues thanks to business growth and hotel taxes, but revenue is only half of the equation. The need for services is also growing, and city council is considering raising taxes on everything from marijuana sales to new construction.
 
When Portland Mayor Charlie Hales ran for office four years ago, he promised to be a boring guy. A grey-haired transportation engineer with glasses. His big initiatives were paving, and balancing the budget.

“I said we would focus on basic services like streets and parks and we have,” he says.



Four years later, that guy — the old Hales, the budget cutter — is pretty much gone. The new Hales has pushed for millions in new investments in policing, affordable housing, and city services. 

“We’re not a small town any more. And we have to change our thinking from just getting by, balancing the books, taking care of the town to understanding we’re a major American city,” Hales says.

Portland is growing, about twice as fast as the country as a whole. It now has more residents than Baltimore, and is close to the size of Boston. Hales says that means new revenue from businesses and and rising property values. But also big city problems, “gang violence, people in poverty, homelessness, and the crime that comes from deprivation.”



The budget the council has adopted includes some, but not all of the money the mayor asked for to tackle those problems. The council rejected his proposal to raise the business tax to pay for a diversion program and police salary increases.

But several commissioners agree that the city does need to find new pots of money to pay for the growing demand for services.    

“In terms of the requests that citizens have asked us to fund and pay for, compared to the amount of money that’s available, we are still definitely in a deficit situation,” says commissioner Amanda Fritz.

In particular, the city has neglected maintenance and repairs of its parks, roads, and infrastructure. The budget office estimates Portland needs an extra $270 million a year just to keep up with basic maintenance. That’s for everything from swimming pools to street lights to fire stations.

Fritz is planning to introduce her own modest revenue proposal next month: a city tax on recreational marijuana sales.

“I’m looking to refer something to the voters in November, for a tax on recreational marijuana sales, and probably dedicating it to public safety and drug and alcohol treatment programs,” she says.

Across the hall, Housing Commissioner Dan Saltzman is also planning to introduce a tax measure next month. He wants the council to impose a one percent tax on new construction and major building remodels.

“I’m hoping we’ll dedicate 100 percent of it to affordable housing construction,” Saltzman says.

That’s not all. Saltzman is also working with a group called The Welcome Home Coalition. It plans to ask voters in Multnomah county to support an affordable housing bond. The goal: raise $350 million. 

But while Saltzman says he’s committed to finding new funding for affordable housing, he’s skeptical of some the mayor’s other priorities. He rejects the idea that Portland’s needs are growing faster than its budget.  

“Our needs are going to grow, but I also believe our revenue base is going to grow,” he says, adding that he sees budget requests he considers frivolous.  

“We proliferate staff.  You take your prototypical mid-level project manager position, we hire about 50 of those every week. I wonder what they’re all doing.”

Not so, says Mayor Hales. The city has a staff of about 6000. That includes everyone from police officers to the guy who fixes your sewer. And yes, some mid-level project managers too.

The workforce has grown by less than a half of one percent since the recession hit.

“So we have just edged above the total workforce that we had 8 years ago, in a smaller, simpler city,” Hales says.

The debate over new taxes to fund Portland’s basic services will likely continue well into the next mayor’s administration.

Mayor elect Ted Wheeler has called Portland’s tax system “antiquated.” Just look at Seattle, he says, envy in his voice.  That city recently came up with $1.6 billion for transportation improvements. They did it by raising their sales tax one half of a percent.

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