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Multnomah County commissioners will soon embark on another summer of Preschool for All revenue discussions—and an early draft report from a key group of advisers provides some insight into what might be on the table.
There are two notable points in the draft recommendations issued by the program’s technical advisory group, or TAG. First, the majority of TAG members recommend the board again delay a scheduled 0.8% tax increase, this time until fiscal year 2029, before once again reassessing. (Preschool for All currently derives its revenue from marginal income taxes of 1.5% on income over $125,000 for single filers or $200,000 for joint filers, and an additional 1.5% on income over $250,000 for single filers or $400,000 for joint filers.)
The second big takeaway is that the TAG does not yet recommend commissioners index the tax to inflation, an option popular among some of the program’s critics.
In short, the advisory body recommended leaving the tax essentially untouched—neither raising the tax rate nor indexing it to inflation.
Preschool for All, the county’s initiative to establish universal preschool by 2030, has consistently hauled in more tax revenue than anticipated. But that hasn’t made county officials any more confident of its long-term financial future. Last August, county commissioners tabled a number of proposals to adjust the program’s revenue stream, instead waiting for more detailed recommendations by the technical advisory group. The group of seven includes economists, a demographer and some policy experts, and convened over recent months, discussing how the program could remain sustainable.
The TAG has wrapped up the bulk of its work, and its recommendations will go to county commissioners in April, who will then have time to weigh them before making final decisions for the upcoming tax year. A draft of the recommendations was presented on Wednesday to the program advisory group, a body of preschool providers and education experts who will work alongside the TAG to edit them. It is ultimately up to commissioners to make any changes to the program’s revenue stream.
The TAG’s recommendation to delay the tax increase is largely informed by financial modeling by ECOnorthwest, which has modeled several economic scenarios for the advisory body’s consideration. At the TAG’s most recent meeting on Feb. 4, most members were confident that a two-year delay would not affect the program’s short-term revenue, and would allow it to scale to universality.
“TAG members felt the program’s current cash reserves give it enough of a buffer against recession or other headwinds to delay the automatic tax increase scheduled for 2027,” the draft recommendation reads.
The recommendation against indexing—or, more precisely, tabling the conversation around it for now—is perhaps the most surprising recommendation from the TAG. That’s because multiple members were eager to suggest indexing back in August. (The group did not ultimately recommend anything to commissioners then, as it was in a deadlock.) At the Feb. 4 meeting, the TAG unanimously voted not to recommend indexing in the immediate future, effectively tabling the discussion.
Why? TAG members spotted too many known unknowns. That’s why the TAG’s recommendations also urge county commissioners to commission a demographic model in response to the revelation that the county relied on population forecasts that vastly overprojected the number of students who Preschool for All would likely serve. The group alsos wants the board to commission a cost study to understand how much it will cost providers and the county to deliver preschool services. (County commissioners are already acting on the latter point.) There is also strong consensus on the TAG that the county must better forecast the program’s participation rate.
TAG member Mark McMullen, who was among the TAG members in August who favored indexing, tells WW his change in heart came in part because the longer process allowed the TAG to consider a bigger “menu of options.” McMullen says that modeling showed him that indexing in the near term did not have much of an impact on the program’s revenue. He says he made postponing a tax increase a higher priority.
A tax increase ”would not necessarily be very well received by folks in Multnomah County, but also could be the worst time in the world given that we are in a period of economic weakness,” says McMullen, a vice president of policy and research at Common Sense Institute Oregon who served as the state’s chief economist under three governors. “That is the worst time to increase taxes, when the economy is struggling.”
Meanwhile, others on the committee feared that indexing the tax to inflation would be a difficult action to reverse.
Graphs presented to the TAG on Feb. 4 indicated that under some scenarios, indexing now may leave the program financially unsustainable in future decades, especially under a “high-cost” scenario where seat costs grow at a rate faster than anticipated. (Preschool providers, for their part, have consistently said reimbursement rates are not high enough.) It could also subject the program to consequences if there were a recession in the immediate future.
The subject of a recession was of great concern to a couple of TAG members, though county officials said they did not anticipate the consequences would be so dire. “TAG members expressed concerns about the short-term threat of a recession and the long-term budget dynamics in the program if major changes were adopted in 2026,” the draft recommendation reads.
The TAG also weighed but did not ultimately recommend having some parents share the costs of a 10-hour day of preschool (the auditor previously flagged that 10-hour care is meant for families above the county’s self-sufficiency standard.) The body also recommended against instating a nonrefundable credit for taxpayers who can’t access Preschool for All either because they lived outside Multnomah County or were unable to secure a seat for their child.
Most members of the TAG agreed that another technical advisory body would need to reassess the program in coming years.
“I think there was a pretty strong consensus that we need to get a little bit of data and see what’s going on in terms of how this evolves over time,” McMullen says. “It would be nice, once some of this uncertainty starts to clear up, to talk about potential reforms.”
