Mississippi Studios has become a hub for Portland’s music scene. It’s a small music stage and a recording studio in north Portland. But the little venue has been embroiled in a big fight over state taxes.
The Oregon Employment Department says Mississippi Studios owes $6,000 in payroll taxes it says the studio should have paid for performing musicians.
As Colin Fogarty reports, the conflict has become a focal point for music venues and musicians all over the state—and they're fighting back.
The recording rooms at Mississippi Studios are in the upstairs of an old building in North Portland.
Nat sound: guitar music.
Colorful rugs make it a comfortable and quiet space, ideal for recording musicians like signer-song writer Garrett Brennan. The manager here, Jim Brunberg sits in front of a wide mixing board, recording the tracks and giving feedback.
Jim Brunberg: I liked that solo.
Garett Brennan: Oh really. I felt like it was kind of notey.
Jim Brunberg: I thought it was cool.
Garett Brennan: OK.
Jim Brunberg: You want to do one where you just do it live, Garrett.
Garett Brennan: Sure.
Jim Brunberg: [music starts] My job is so hard.
Brunberg’s job actually has gotten a lot harder since the Oregon Department of Employment audited the accounts of Mississippi Studios. The agency found that Brunberg failed to pay unemployment insurance taxes for some of his employees…not the janitor or bar tender…the musicians.
Brunberg says the agency has in effect decided that every musician that plays here is his employee.
Jim Brunberg: There’s really nothing about them that’s like an employee. We don’t control them in any way. It’s true that we give money to the musicians at the end of the night. But we only know them for a total for three hours or so. And then they get on their tour bus and head to Albuquerque or Seattle.
Brunberg could pay his $6000 bill. Instead, he’s fighting the employment department and trying to get musicians to declare what he considers obvious—that they are not his employees.
Jim Brunberg: So I’m having people write letters. I’m getting hold of bands that have recorded here who are really hard to get a hold of. Like REM. Things like that show up on the list of employees that I have because I wrote them a check.
Colin Fogarty: You employ members of REM?
Jim Brunberg: Isn’t that fantastic? They don’t know it. (laughs)
The idea that Brunberg is the boss is something that musicians like guitarist Tony Furtado can’t fathom.
Tony Furtado: It sounds completely outlandish. I’ve never run into a situation where I was claimed as an employee of the venue of a venue, of one of the thousands of venues I‘ve played around the world, I’ve never been claimed that way.
Before Jim Brunberg got in this fight with the Oregon Employment Department chances are most musicians had never heard of ORS 657-506. But that state law says clearly that a musician is assumed to be employed by the venue, unless a contract specifically says otherwise.
The agency’s Tom Fuller says employment department managers don’t write the law, but they do have to enforce it.
Tom Fuller: This was passed originally by the legislature in the 1960s and amended in the 1980s and it really is very specific, so that there is no choice here. There is no judgment. There are no decisions. It is the law. We simply have to look at the contract that’s there.
Fuller says all venues need to do to comply with the law is include one line in the contract saying who pays unemployment taxes. Fuller’s agency was backed up recently by an advisory opinion from the state Attorney General’s office.
Now state lawmakers – including — Portland Democrat Chip Shields — want a change in the law.
Chip Shields: North Portland has a great music scene and that music scene needs to be watered, nurtured and encouraged to grow. And I’m committed to doing just that. It’s important culturally. It’s important economically. And besides I like good music.
Shields and Brunberg are hoping they can get a bill passed during the upcoming legislative session scheduled for February. But that's expected to be a short session with a limited agenda. So they may have to wait until the next full session in 2009.
In the meantime, Brunberg has created a new industry trade group called CHORAL, Concert Hall Operators for the Rational Application of the Law. He says the aim is to bring organization to an industry that doesn’t always lend itself to organization.
Jim Brunberg: People say that the music industry is really competitive. It’s actually not so much competitive. I found that people have been really sharing and been willing to help each other. And I’ve got a lot of help. I’m the littlest guy in town. So I’m really digging that part.
Other music venues in Oregon are watching Brunberg’s case closely to see whether they’ll owe back taxes too.
Brunberg is challenging the Oregon Employment Department before an administrative law judge. If that doesn’t work he plans to sue the agency outright.