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The Portland Metro Chamber added pressure Thursday afternoon to a volatile budget season by sending a research paper it funded to the Portland City Council and Mayor Keith Wilson, claiming that the council does not possess the authority to raise taxes without voter approval.
The chamber’s email—which serves as a thinly veiled threat to the council not to attempt to raise taxes—comes as some of the council’s more progressive members are floating various tax increases, including raising the Portland Clean Energy Fund corporate tax rate and hiking the tax on large CEO salaries.
The Metro Chamber, the regional chamber of commerce whose members include many of Portland’s largest boardrooms, dislikes both of those proposals, taking the position that any increase in taxes would drive companies and high-earners out of the city.
“We are providing this to you as a service, and to transparently communicate the basis for the Chamber’s firm position that the city council must refer any new or increased taxes to voters,” wrote Jon Isaacs, the chamber’s executive vice president of public affairs. “The white paper analysis will guide the Chamber’s advocacy and related actions in the future.”
The policy paper, commissioned by the chamber and written by policy and tax consultants Jeff Newgard and Nikki Dobay of Peak Advocacy and Policy Consulting and Greenberg Traurig, respectively, takes the position that the City Council does not have the legal authority to raise a current city tax. Only voters can opt to raise a curent tax, the consultants write—through a ballot measure.
The research paper, Newgard and Dobay write, “is rooted in a single, foundational question: Can the City Council unilaterally create or expand tax obligations without first seeking voter authorization?”
They write the council cannot. “The legal framework, supported by case law and constitutional principles, makes the answer abundantly clear—it cannot."
The consultants wrote that the city’s adoption of various taxes over the past 10 years, created “with little regard for the constraints imposed by the charter on its municipal powers…exceed the City’s legal authority, exposing the City to escalating litigation risk, constitutional challenges, and, ultimately, substantial financial liabilities.”
They write that the city’s charter “does not contain a plenary grant of taxing authority” and refer to an Oregon Supreme Court ruling over 100 years ago that found the charter “did not provide the ‘power of taxation at large.’”
“That conclusion remains controlling precedent and reflects a clear boundary: unless the City’s voters specifically authorize a tax, the City Council may not impose or expand it,” Newgard and Dobay wrote.
Isaacs in his Thursday morning email to the city’s elected officials does not explicitly say the Metro Chamber would seek legal action if the council increases taxes. But the chamber made it clear that the paper’s position was the chamber’s position. And the paper alludes often to legal challenges that may emerge if the council opts to raise taxes.
“As the city now considers passing further tax increases by ordinance, including proposals to increase the CES and CEO Pay Ratio Tax, additional lawsuits are likely to become a reality,” the paper reads. “This analysis outlines the City’s legal exposures and provides context and considerations for taxpayers to evaluate as they consider potential legal challenges.”
Isaacs declined to say how much the chamber paid for the research paper.
In the email to Wilson and city councilors, Isaacs wrote that the chamber does not have plans to legally challenge past taxes approved without a ballot measure even though the chamber believes the council raised taxes “without the authority to do so under its charter.”
City Councilor Steve Novick wasn’t impressed. In a written response to the Metro Chamber, he told WW the paper is a “joke.”
“Oregon Revised Statues 221.410(1) provides, ‘Except as limited by express provision or necessary implication of general law, a city may take all action necessary or convenient for the government of its local affairs.’ The power to tax is a pretty darned ‘necessary’ power of any government,” Novick wrote. “It’s also disingenuous of them to say ‘hey, you’ve raised revenue in all sorts of illegal ways, but we’re not going to challenge any of those retroactively.’ Maybe they won’t, but they’re inviting other people to bring lawsuits that, if successful (which they wouldn’t be) would blow holes in the city budget.”
Councilor Angelita Morillo was similarly nonplussed. “It’s always illuminating to see corporate interests investing in policy interpretation when it suits their bottom line,” she wrote to WW. “As a City Councilor I’ll continue taking the advice of the City Attorney over consultants hired by an organization that has historically opposed nearly every attempt to hold corporations accountable for their fair share.”
The Metro Chamber has long been a powerful player in City Hall. And it perked up earlier this spring when councilors began discussing various tax increases.
Two weeks ago, after the council voted on a budget amendment to divert $2 million in new Police Bureau funding to backfill cuts to outdoor parks maintenance, the Metro Chamber said it would only support an increased Parks Levy (which parks leaders say is necessary if the city wants to avoid massive cuts to its parks) if the council restored the $2 million in police funding.
It’s not yet clear if any councilors will propose an amendment by June 11—when the council must vote on the final budget—to restore the $2 million that Mayor Wilson earmarked for the Police Bureau in the upcoming fiscal year.
The Metro Chamber seems to have picked a broker for such a compromise, though: Councilor Steve Novick, who first brought up the chamber’s threat from the dais on May 28, saying he’d spoken to the chamber and it had made clear that it would support an increased Parks Levy only if the Police Bureau’s proposed budget remained untouched.
That, of course, wasn’t taken well by some of the more progressive members of the City Council, one of whom said the chamber shouldn’t be allowed to strong-arm the council into making decisions that appease the business community. Councilor Angelita Morillo on the dais told Novick, a fellow District 3 councilor, that she hoped one “measly call” with the chamber wouldn’t “shiver your timbers”.
Recent polling on voters’ appetite for doubling the current Parks Levy would suggest that any opposition campaign—like one launched by the Metro Chamber—could swiftly kill the measure at the ballot box. In the absence of any opposition, the polling showed, support for doubling the levy was in the low 50 percentage points. That’s a bad start for any measure.
The full paper commissioned by the Metro Chamber can be read here.