ON THE SECOND FLOOR of Portland City Hall, it looked to some like another blessed trouble-free budget year.
In regular updates, commissioners' offices on that second floor were assured the city would have tens of millions more next year than would be required to continue existing city programs, a surplus partly fueled by record business tax revenues. And as Mayor Charlie Hales worked up a budget proposal, they were told by budget staffers that pressing concerns—like police staffing, firefighter positions, a mandate that the city pay certain parks workers more, and millions for housing and homelessness—would all be taken care of.
After all, the city was sitting on a $20 million surplus. Until Thursday, that is, when news arrived that it was actually a $25 million surplus—meaning more than $500 million in the city's general fund. Big money.
Then Friday came, and any shot at a trouble-free budget year flew out the second-floor window. Hales' office that day quietly broke the news to commissioners that $500 million, in the mayor's opinion, isn't enough to meet the city's needs. We need closer to $510 million, Hales says.
So on Monday, Hales publicly unveiled a plan that's surprised a lot of people. As part of his budget, he'll ask Portland City Council to approve a raise to the Business License Fee local companies pay every year—from 2.2 percent of profits to 2.5 percent. That's actually a 13.6 percent hike in the fee, good for $8.7 million a year.
It's a bold, last-year-in-office type move from Hales, who long ago shed any notions of catering to the whims of the Portland Business Alliance, and who says it's the prudent thing to do as Portland plans for rising costs in coming years.
"I'm not naturally inclined to raise taxes," Hales said at a showy press conference announcing the budget proposal. "This is a necessary increase to pay for services that are critical."
The mayor makes the case that most of the $8.7 million will come from big corporations. A majority of Portland businesses don't earn enough to even qualify for the fee, and lots of others pay the minimum $100. When Hales' plan for a more generous deduction for owner salaries is considered, 25,236 businesses would see tax increases under the change, the city says.
But all the figures in the world may not be able to outweigh one: $500 million. Commissioners are scratching their heads over a tax increase when the city is in such a comfortable place.
"I can't justify a rationale," Commissioner Dan Saltzman told Willamette Week. Commissioner Steve Novick, hoping that voters pass a gas tax on May 17, immediately set about suggesting cuts that would render a tax hike unnecessary. Commissioner Amanda Fritz didn't offer many critiques.
All of which means Commissioner Nick Fish, who serves as a city liaison to business group Venture Portland, is a likely swing vote on Hales' most contentious budget. And inconveniently, he's in Europe visiting family.
"He's not going to take a position while he's in Spain," Fish's chief of staff Sonia Schmanski says.
Plenty of businesses will anxiously be awaiting his return.