What the Portland Business Alliance Wants from the City’s Street Tax/Fee/Fund

In less than half an hour, Mayor Charlie Hales and Commissioner Steve Novick will unveil their revised plan for the Portland Street Fund (née “transportation user fund” (née street fee)). It’s a big moment, because we’ll see, for the first time, how Hales and Novick plan to balance their own differences as well as stake out a sweet spot between competing interest groups.

Those differences clouded a public council work session on the fund/fee/tax last month, the first general airing of efforts to levy a new income tax on residents alongside a dramatically reduced and graded fee for businesses.

How much would rich Portlanders have to pay? Novick was siding with advocacy groups and calling for a $200 cap, in part to spare poorer and middle-income Portlanders. Hales floated a $50 cap, heeding concerns from business groups and others who didn’t want a tax at all, just a graduated fee. And how much should be spent on paving vs. safety projects? The idea, initially, was to spend roughly the same on both, with some new money carved out for unpaved roads.

It’s been a month since that session, and there’s been a lot of back-and-forth behind closed doors to try to figure some of those things out, and win at least three council supporters—ahead of what’s now been advertised as a December 3 vote.

Those details could be the difference between a referral to next spring’s ballot or quiet, grudging acceptance by critics. That’s all provided Hales and Novick manage to thread the needle. To divine a sense of how difficult that might be, the Mercury reviewed a letter from the Portland Business Alliance from last month outlining where that lobbying group stood heading into the homestretch.

The good news for Hales and Novick? The group has declared itself okay, for the most part, with the revised non-residential fee.

We believe the non-residential mechanism is vastly improved and has reached an acceptable structure. While there may be technical issues that still need to be ironed out related to LLCs, we believe mechanisms are available to do so. We very much appreciate the sincere effort to accommodate the impact of the transportation user fee on businesses large and small.

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But it also made clear it doesn’t support an income tax, let alone one that charges super-wealthy Portlanders $2,400 a year (less after tax deductions!). It especially doesn’t like that the city has to exempt government pensioners.

On the residential side, our strong preference is for a fee that is tied to utilization of the system, as was originally proposed. We support an exemption for low income residents with the least ability to pay. The transportation system has always been funded based on use of the system, or a proxy for use of the system through gas taxes and registration fees. We are concerned with efforts to move toward an income tax based approach with all the inequities that brings, such as the issue with those with PERS income.

Moreover it wants far more money spent on paving, from the tax but also from existing revenues, despite polls that indicated safety projects as key to citizen buy-in.

Today’s news, announced starting at 10:30, ought to reveal some compromises on both fronts. Check back for updates. Hit the full PBA letter after the jump!

FROM: Sandra McDonough, Portland Business Alliance

Mayor Hales and Commissioners:

As you know, from the onset of the transportation user fee discussion this spring, the Alliance has been clear that we understand there is need for additional revenues to address the maintenance backlog on the city’s road network. We have also been consistent that we are not opposed to a transportation user fee per se, but that the details matter. We have been pleased to be engaged in discussions about what a package may look like over the course of the past several months. We participated diligently and constructively in that process. As you move closer to considering an actual proposal, we want to take this opportunity to convey our priorities related to a transportation user fee.

First, the narrative around the kick off the transportation user fee was that there was a $91 million backlog in deferred maintenance. This $91 million backlog is for street paving. We know that investing in roads in the near term saves money in the long run as streets become exponentially more expensive to rehabilitate as they fall further into disrepair. We strongly support a preponderance of the revenues, up to 75%, collected through a transportation user fee to be focused on the identified need to maintain and repair city streets. Safety is also important and this still provides substantial dollars for important safety projects like Safe Routes to Schools that have matching dollars. A focus on paving will save money in the long run, which will free up resources for other important transportation priorities by avoiding more costly maintenance projects.

Second, on the residential side, our strong preference is for a fee that is tied to utilization of the system, as was originally proposed. We support an exemption for low income residents with the least ability to pay. The transportation system has always been funded based on use of the system, or a proxy for use of the system through gas taxes and registration fees. We are concerned with efforts to move toward an income tax based approach with all the inequities that brings, such as the issue with those with PERS income. A flat fee, or a modified flat fee, such as the proposal for a structured $4, $8, $12, $20 fee, while not ideal, is more in line with traditional funding models related to use of the system. We are concerned with additional unintended consequences, complications and administrative costs associated with instituting a never before used tax, such as the proposed income tax, in the city of Portland.

Third, we believe the non-residential mechanism is vastly improved and has reached an acceptable structure. While there may be technical issues that still need to be ironed out related to LLCs, we believe mechanisms are available to do so. We very much appreciate the sincere effort to accommodate the impact of the transportation user fee on businesses large and small.

Finally, we are still very interested in pursuing assurances that new and existing dollars for maintenance are restricted for that purpose so that we avoid finding ourselves in this situation in the future. We believe that is entirely doable and commit to continuing to work with the city in that regard.

The Alliance sincerely thanks the city and PBOT staff for taking the additional time this summer and fall to work toward an improved transportation user fee. We believe we are on the precipice of a proposal that will address the agreed upon problem – deterioration of the city’s largest asset, our road network. We appreciate being involved in the process and look forward to additional engagement as this conversation continues.