March 27th, 2013 | Aaron Mesh News | Posted In: City Hall, PDX Votes, Schools

UPDATED: Arts Tax Fix Could Raise Administrative Costs Above Cap

Deadline for paying will be pushed back until May; Bojack lawsuit may cause more delays

     
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news2_ballet_3918ILLUSTRATION: Tim Lahan
Mayor Charlie Hales wants to fix the Portland arts tax. But if he has his way, the administrative costs could exceed the cap promised to voters in the ballot measure. 

Those new costs? Mailing taxpayers a letter explaining the new rules, and giving them a form to ask for a refund.

Hales has placed an emergency ordinance before City Council this morning. It would fix what the mayor has called a "silly" flaw in the arts tax passed by voters in November: a requirement that all city residents living in households above the poverty line pay $35, even if their annual income was less than that.

Hales' fix raises the minimum personal income to $1,000.

But the ordinance notes that the change will cost the city $277,000 to $700,000 in tax revenue, while creating another $100,000 in start-up expenses as the city mails a letter to explain the new rules and mails a refund request form.

That creates the risk that administrative costs will exceed the 5 percent limit over five years promised to voters in the ballot measure.

City Council is expected to discuss several additional fixes to the arts tax this morning. Follow wweek.com as the story develops.

UPDATE, 12:10 pm: Revenue bureau director Thomas Lannom told City Council this morning that the tweaks to the Portland arts tax mean an extension of the filing deadline from April 15 to May 15.

He said personal gifts are now exempt from the tax.

Lannom also told the council that the Hales-backed fix probably wouldn't push the tax administration over the 5-percent cap, but any further tweaks could.

Lannom said a further discussion of the tax could become complicated and take months: "It's not going to be a quick one."

UPDATE, 1:45 pm: City Council has unanimously passed a resolution to further examine the tax, and moved the emergency ordinance to second reading.

The vote followed testimony from supporters, and a warning that Jack Bogdanski's legal challenge could keep money from reaching teachers and arts organizations.

PHAME Academy director Stephen Marc Beaudoin brought Anne-Marie Plass, an adult with developmental disabilities who attends the arts academy, to thank the council for sending the arts tax to voters. Beaudoin said he hoped new council members Hales and Steve Novick would be as helpful: "We have faith in your support of this tax." (Novick, who does not support the tax, slowly shook his head at him.)

Commissioner Nick Fish warned that Lewis & Clark Law School professor and blogger Jack Bogdanski's lawsuit against the city in Oregon Tax Court could legally prevent the city from distributing tax revenues to schools and arts organizations.

That was fine with Portland State University professor Eric Fruits, who lost a legal challenge to the tax last summer. He testified against the "cancerous" tax again today.

"Saying we can save the tax with this tweak," Fruits said, "is like saying you could've saved the Titanic by having one more lifeboat."
 
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