As a coalition of Portland cultural and climate change groups plots a new business tax to pay for renewable energy projects, the city's number crunchers are urging caution.
In a report issued earlier this month, the city's Revenue Division says a single company could wind up paying more than $3.7 million a year under the tax proposal, as written. Several others would pay upwards of $2 million a year, leading the analysis to conclude there's a risk of businesses leaving Portland.
"The Measure as written is estimated to raise between $35 and $51 million," the report says, in the first official prediction of the proposal's revenue potential. "However, the Revenue Division does not recommend implementing the Measure as written..."
The proposal in question—being circulated as the "Clean Energy and Justice Measure"—would slap a one percent tax on the Portland-based revenues of "large retailers" operating in the city. To qualify, companies would have to have global sales of more than $1 billion (or be a subsidiary or franchisee of such a company), and in-city sales of $500,000 or more. Willamette Week first reported on the idea last month.
The proposal is a gross receipts tax similar to Measure 97, the proposed corporate tax hike that failed on the statewide ballot last year, but passed in Multnomah County. It's being pushed by a coalition that includes the Native American Youth and Family Center (NAYA), Asian Pacific American Network of Oregon (APANO), Verde, the Sierra Club, and 350 PDX.
As the proposal stands in draft form, the money raised by the tax would be placed in a new fund that pays for renewable energy programs (including a specific carve-out for projects that benefit low-income Portlanders), job training "aimed at communities of color, women, and other traditionally under-represented and disadvantaged workers," local food production, and more.
In order to address its concerns with the tax proposal, the Revenue Division has suggested an altered model. It proposed applying the tax to all large businesses—not just retailers—in order to capture operations that contribute to carbon emissions, like construction companies or petroleum refineries. It also suggests capping the maximum tax a business might pay under the proposal at $1 million. By making those tweaks and lowering the tax rate to 0.5 percent (down from 1 percent) the city says the tax might raise between $66.9 million and $81.7 million a year.
The report further suggests such a model would be more simple to administer, requiring fewer city staffers. And it offers a tidbit that's likely to be repeated endlessly by any opponents that pop up. "Some businesses will partially or wholly pass the [gross receipts tax] on to consumers in the form of a price increase," the report reads.
Most community-driven proposals like this wouldn't get the benefit of a city-authored revenue study, but the coalition behind the tax has an ally in Commissioner Chloe Eudaly, who ordered up the report, and who's also asked the City Attorney's Office to explore the legal implications of such a tax, her office says.
Even so, the coalition pushing the measure might not heed the warnings of the report. Jo Ann Hardesty, a local NAACP leader who's serving as a public face of the group, said members are looking at the study, and will vote on any proposed changes to their proposal in mid-July.
"Their approach is not one I’m excited about," Hardesty told the Mercury on Thursday. "I don't think most of our folks are excited about it. I think it's a very convoluted proposal that they've given to us."
While Hardesty says her group is committed to getting something passed, the way forward for the proposal is unclear. It's possible the tax could be passed via a city council vote, though that's likely to spur a challenge that would result in voters deciding its fate. Council could also refer the tax to the ballot itself, but Hardesty says she'd rather have her coalition selling the measure to voters than Portland's elected officials. That would mean supporters collecting signatures themselves to land the tax on the ballot—either in May or November of 2018.
"I think our coalition has much more credibility than city council," Hardesty says.