This Week in the Mercury


Monday, May 13, 2013

Hales Offers Deal to Schools over Challenged Arts Tax Cash

Posted by Denis C. Theriault on Mon, May 13, 2013 at 5:22 PM

Legal challenges and other problems besieging the arts tax enthusiastically approved by voters last fall have cast a cloud over the program's signature promise: millions to help local school districts staff up with arts teachers.

Treading lightly in the face of lawsuits calling the $35 tax an unconstitutional head tax, Mayor Charlie Hales announced this year he wouldn't be handing out any of the money promised to schools or arts organizations. Hales fretted over the nightmare of having to refund taxpayers in case the city loses—even though some districts, like Portland Public Schools, had already built the expected revenue into their upcoming budgets.

But today, Hales responded to that pushback and announced a major compromise. Hales offered to distribute up to half of the estimated $6 million scheduled to be distributed this November—$3 million—"pending favorable rulings or settlements" on the two lawsuits challenging the tax.

To make that pencil out, if the city loses and has to hand back the money it's collected, he's putting the risk on three pots of money, grabbing $1 million each from (1) the $3 million contingency fund he's proposed for his next budget, (2) the city's future appropriations to the Regional Arts & Culture Council, and (3) a pot of reserve money put up by the six districts benefiting from the tax: PPS, Centennial, David Douglas, Parkrose, Reynolds, and Riverdale.

“The superintendents and I have been working to find a way to be true to the taxpayers, whose money this is, and to the voters, who approved the arts tax,” Hales said in a statement. “We think this does it.”

Hales' office notes that though districts like PPS had been planning to spend the money, others were banking it to see how the grappling over the tax shakes out.

“We are not in the business of telling superintendents how to run their districts,” Hales also said in a statement. “These decisions have been tough to reach, but it’s been a combined effort all along, and we’re grateful to the arts community and our school districts for working with us to find a practical solution. In the end, getting teachers in our classrooms will pay dividends for generations to come.”

Last week, Hales announced a change in the arts tax after the city attorney's office decided it wasn't allowed, after all, to tax Social Security and state pension income. That wasn't clear when the tax was proposed and approved. Previously, Hales asked council to approve a $1,000 income minimum. A review of changes, also commissioned by Hales, is due by July.

Anyone who makes $1,000 in private income a year, so long as their household is above the federal poverty line, is obligated to pay. The deadline is Wednesday—after it was extended from April 15.

Read the full release after the jump.

Mayor Charlie Hales on Monday proposed a deal on the 2012 city arts tax, which should allow all six school districts to hire art instructors for the coming year.

The arts tax—OK’d by voters in November, 2012—has been challenged in two law suits. If the city were to lose either suit, the money might have to be given back to taxpayers. Consequently, the mayor announced in March that the city could not distribute the money to the schools, or to arts organizations, as intended; he understands, however, the importance of having teachers in classrooms.

Distribution of the money – an estimated $6 million – was scheduled to begin in November, 2013.

Under the deal proposed by Hales, some city money would be freed up to help the six districts – Portland Public Schools, along with Centennial, David Douglas, Parkrose, Reynolds and Riverdale school districts.

The city will disburse $3 million in November, but no more during the 2013-14 fiscal year, pending favorable rulings or settlements on the law suits.

“The superintendents and I have been working to find a way to be true to the taxpayers, whose money this is, and to the voters, who approved the arts tax,” Hales said. “We think this does it.”

Of that $3 million disbursement, the risk will be shared equally: $1 million from the city’s contingency fund; $1 million from future budget appropriations to the Regional Arts & Culture Council, or RACC; and $1 million combined from the six school districts.

The money disbursed fall overwhelmingly to Portland Public Schools, the largest of the districts. About two-thirds of the dollars are earmarked for PPS; one-third to the other districts.

Each district will decide how it wants to spend the money. For instance, Superintendent Carole Smith of Portland Public Schools will recommend hiring an estimated 30 FTE arts teachers – not 45 FTE, or full-time equivalent – and spreading those 30 positions evenly across her district.

Other districts could spend the money to hire, or bank it in case the law suits go against the city and money has to be returned.

“We are not in the business of telling superintendents how to run their districts,” Hales said. “These decisions have been tough to reach, but it’s been a combined effort all along, and we’re grateful to the arts community and our school districts for working with us to find a practical solution. In the end, getting teachers in our classrooms will pay dividends for generations to come.”

The mayor said his focus has been on elementary school students in the Portland area. “We want these students to have the benefit of the arts education that taxpayers have supported, and to do it in a financially responsible way,” he said.

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