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County commissioners heard final recommendations April 14 on the Preschool for All tax from a seven-member technical advisory group of economic, demographic and policy experts who have for months weighed the universal preschool program’s financial future.
The tax on high earners is a polarizing one. Critics have long called for pausing the tax or indexing it to inflation, and supporters have argued the county needs more money to successfully maintain the program. (The program 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.)
In many ways, the TAG’s final meeting reflected those tensions. The final report did not change much from a draft WW reported on in February, which most notably suggested that commissioners again pause a scheduled 0.8% tax increase until fiscal year 2029 before reassessing. The TAG’s final report also made no recommendation on indexing the tax to inflation, noting that the policy option was discussed but not recommended for advancement.
“Although indexing preserves the real value of voter-approved thresholds and should not be interpreted as a discretionary tax cut, it also removes a source of automatic revenue growth that helps buffer uncertainty,” the report reads.
The report also recommended that commissioners study actual child care costs and how many children are going to use the program. Perhaps one of the most significant contributions of the TAG was the finding that the county may be significantly overestimating how many 3- and 4-year-olds will take advantage of Preschool for All’s services. The county has thus far assumed it would need to serve 11,200 students by 2030 to reach universal capacity, but new demographic modeling shared in December found that number closer to 7,500.
The recommendations do little to change the tax as it stands, and seemed to appease almost none of the TAG’s members. At their final meeting April 1, six of the seven members voted to approve the recommendations, with five of them approving them “with reservation.” Overall, the newness of the program, coupled with a number of unknowns (including aforementioned child care costs and demographic numbers) left the advisory body hesitant to recommend sweeping changes in the program’s early years.
A number of members expressed their preference to delay the tax increase for much longer, at least “until we have more certainty about the program costs and participation,” said TAG member Mark McMullen, the vice president of policy and research at Common Sense Institute.
“In particular given the economic uncertainty, it’s bad timing in terms of raising taxes into a recession,” McMullen said.
One TAG member, Mary King, an emerita professor of economics at Portland State University, went as far to vote against the group’s recommendations, citing concerns about recession and noting she thought the county had underestimated the true cost of running Preschool for All.
“We can’t afford to delay and I think it’s irresponsible to delay given the promise to the voters, families, and small business providers,” she said.
County commissioners must make any changes for tax year 2027 by late August. They heard the TAG’s recommendations for the first time on April 14.
Commissioners have already gotten the ball rolling on a study that will help identify the true cost of operating costs for Preschool for All. County officials said that study should conclude in June. Another population assumption study should conclude either at the same time or before the cost of care study.
