Portland Mayor Charlie Hales Goes For a (Tax) Hike

Despite record revenue, Hales pushes for an additional $8.7 million per year.

The weather's wonderful. His term is almost up, and Portland Mayor Charlie Hales wants to go for a hike—a tax hike, that is.

With eight months left as mayor, Hales is pushing an ambitious agenda to address homelessness and gun violence—and he wants to help fund it with a .3 percentage point increase in the city's business license fee, a hike on 25,000 city businesses, according to his office. The city last raised the business license fee, now proposed to be 2.5 percent, in 1977.

"I'm not naturally inclined to raising taxes on business," Hales says. "But this is a necessary increase to pay for services for a growing city at a critical juncture."

At the same time, Hales is giving a tax break to 2,000 businesses in the form of a higher owner's compensation deduction. If City Council approves Hales' plan, businesses wouldn't pay the business license fee on the first $125,000 of income, up from $100,000. Hales raised the deduction in 2013, piggybacking on an effort by former Mayor Sam Adams, who also raised the owner's compensation deduction in 2012. (It then stood at $87,000.)

The two changes amount to an annual net gain of $8.7 million, city officials estimate.

The announcement came Monday in a press conference to unveil Hales' budget proposal for 2016-17—his last as mayor since he decided in October not to run for a second term.

Hales faced flush coffers even before he announced his plan for a tax hike. Revenue from business license fees was already on the upswing. So was revenue from lodging taxes. That means Hales already had about $25 million in extra unexpected revenue.

Hales would like the additional money to pay for more 911 operators and cops with higher salaries, body cameras for police officers, and additional services for the homeless.

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