Mayor Charlie Hales glad-hands before unveiling his budget.
Mayor Charlie Hales glad-hands before unveiling his budget.

Last Thursday, it became official: The budget Mayor Charlie Hales proposed for next year would include more general fund money than Hales has had to work with in any of his four years. In a dramatic reversal over the course of his time as mayor, Hales has gone from slashing the city's budget by around $21 million in 2013 to a $25 million surplus (one year after he had a whopping $49 million surplus on his hands).

Portland, you might have heard, is booming.

So what's the mayor's big play now that he's relatively flush? Hales wants to raise taxes on business.

In a move that's surprised a bunch of people—and which had City Hall staffers visibly nervous before it was announced—Hales said today Portland needs to hikes its business license fee for the the first time since 1977. By raising the fee from 2.2 percent of business profits to 2.5 percent, Hales says Portland can squeeze an additional $8.7 million into its already plush coffers.

"I'm not naturally inclined to raise taxes," Hales said this morning. "This is a necessary increase to pay for services that are critical."

Some of the highlights of the $42.9 million in new investments Hales is proposing:

•$3.3 million that would be used to pay cops more, and offer signing bonuses. That amount would require the approval, in formal bargaining, of the Portland Police Association, which is always a tricky deal. The stepped up payments would also balloon in coming years to closer to $9 million, Hales concedes. There's no indication where that extra money would come from.

•$1.3 million to finally bring 13 firefighter positions—imperiled by the expiration of a federal grant—onto the city budget.

•$31.8 million in new expenditures on housing and homelessness, including an $11.2 million infusion into the Portland Housing Bureau's budget, and a new program to better handle homeless Portlanders who commit low-level offenses. Here's the city's breakdown:


•Roughly $1.5 million to permanently change Naito Parkway under the Better Naito model. Hales said this morning those plans include building a protected bike lane—separated from traffic by a physical barrier. That would amount to downtown's first protected bike lane, a huge goal for Portland's cycling advocates, but might be a point of contention as City Council haggles over a final budget.

•Another $1.5 million for paving projects, among the lowest amount of general fund money Hales has put into what has, in the past, been one of his staples.

•$967,000 to fund bus passes for students—a frequent football during budget debates.

•$212,827 for stepped up City Hall security, which Hales says came at the behest of commissioners' offices. It'll pay for more security guards, new cameras, and a panic button system.

•Not-so-basic spending items that include $200,000 toward the planned James Beard Public Market; $30,000 for the city's continued management of Last Thursday on Alberta; $190,000 for Symphony in the Park; and $211,000 to help the Cully neighborhood transform shuttered strip club the Sugar Shack.

But back to the tax increase, which is the most-dramatic part of the proposal, and which raises the possibility this will be Hales' most controversial budget in office. To help soften the blow of the hike, Hales is suggesting increasing the deductions business owners can claim for their personal income—from $100,000 to $125,000. And he's making the case that most businesses—and particularly small businesses—will see little or no effect of the change. Instead, Hales says the brunt of the $8.7 million windfall will come from large corporations.

According to numbers the city provided, around 15,721 businesses would still pay the minimum fee of $100 per year. Another 25,236 businesses would see their rates increase between $61 and $1,532.

Hales' arguments are unlikely to sway some folks. Besides the avowed opposition of the Portland Business Alliance (who it's probably an understatement to say the mayor intensely dislikes at this point), Hales is also facing deep skepticism from some of the commissioners who'd have to approve the move.

Commissioner Dan Saltzman is said to be a strong "no" (though his office hasn't gotten back to us). And Steve Novick, who's trying to convince voters to enact a 10-cent gas tax in two weeks (with the help of the PBA), laid out a list of places he'd chop to avoid raising the business tax. They include skepticism over that $3.3 million for higher police pay, and dubiousness about "rushing" the Naito Parkway rushing a tax to pay for the Naito improvements.

"I think we can balance the budget responsibly without the tax increase the Mayor has proposed," Novick said in a statement..

Novick, in detailing a series of cuts, has anticipated Hales' rhetoric here. The mayor is framing this issue in a way where commissioners who don't support the tax hike will have to propose $8.7 million worth of cuts in the budget.

"I'm proposing a budget that I stand behind and I believe in," Hales said in a meeting with reporters. " I’ll be interested to hear if someone wants to articulate: 'If not that, this.'"

Here's a summary of Hales' new budget, which you can count on being chipped at—a little or a lot—before it gets final council approval.