Street roots
Nov. 8, 2013
Por Hand can avoid its next fiscal crisis now
BY ROBIN HAHNEL
C O N T R IB U T IN G C O L U M N IS T
ast spring all the conversation was
what to do about the city budget
shortfall. Public hearings were
scheduled where thousands of angry
constituents turned out to testify why their
favorite city program should not be on the
chopping block. After some last minute
reprieves an austerity budget was finally
passed and many in the popular coalition
against austerity budgets turned their
attention to other matters.
Despite optimistic projections that the
worst is over, when “budget season” opens
again in a few months we will be told, at best,
that there is too little revenue to restore full
funding to all the programs, which were only
to be cut “temporarily,” and may well hear
that new cuts are necessary. Now is the time
to look for new sources of revenues to avoid
a repeat of last year’s tragedy.
Admittedly, our local elected officials are
in a tough spot because federal and state
level decisions have dramatically reduced
their room for maneuver.
Our Congress and President have
prioritized deficit reduction over fiscal
stimulus ever since the Great Recession
began, and irresponsible brinksmanship in
Washington has now reached new extremes
virtually guaranteeing counterproductive
fiscal austerity, instead of needed stimulus, at
the federal level.
The Oregon constitution is interpreted as
barring the state government from running
deficits and includes both the “kicker,” which
requires the state to rebate “excess” tax
collections, and property tax limitations. The
recent “grand bargain” negotiated behind
closed doors and passed by a special session
of the legislature was arguably a bad deal, but
in any case just kicked the can down the road
12 to 18 months.
Clearly, our elected city officials need to
press Portland’s delegations in both
L
Robin Hahnel is a
political activist and
retired visiting
professor o f economics
at Portland State
University. He is a
co-creator o f the post
capitalist economic
model known as
participatory
economics, along
with Z Magazine
editor Michael Albert.
He is also Professor
E m eritus at
American University
in Washington, D.C.
Washington and Salem to cease their
counterproductive behavior and remove
constraints that hamstring local officials.
Otherwise Portlanders will find ourselves
facing ever worsening budget trade-offs, year
after year.
Still, our elected city officials do not have
to settle for self-defeating austerity budgets.
It was lack of leadership on the part of
elected city officials that led to the debacle of
a hastily drafted ballot measure authorizing a
highly regressive head tax to keep art
teachers in the schools — with nary a thought
about how to collect it, or handle restrictions
on who could legally be required to pay it.
City officials need to focus now on how to
raise local revenues in reliable ways that do
not further penalize those who can least
afford to pay. Here are some suggestions:
■ Implement a progressive and permanent
county income tax. A temporary flat tax won
voter support in 2003. Portland is by and
large a progressive city, and a progressive
income tax is the best way to put our city
budget on a sound fiscal footing,
permanently.
■ Implement a progressive business tax.
Right now small and large businesses alike
pay the same 2.2 percent profit tax if they
have more than $50,000 in revenues. This
means a food cart owner who would be hard
pressed to take home $12,000 a year in
income from $50,000 in sales pays the same
2.2 percent on his or her meager profits as
Bank of America pays on its considerable
profits. We could easily exempt many more
small businesses from the business tax
entirely and still raise more revenue by
increasing the percentage larger businesses
are charged.
■ Implement a cellphone tax. Eugene has
one, and a sales tax on cellphones is not
regressive.
■ Expand the range of businesses subject
to fees. Restaurants pay fees for health
inspections. There is no reason Portland
cannot charge for-profit financial institutions
fees. After all, it is more likely that
irresponsible behavior on the part of banks
will harm Portlanders than it is that we will
suffer from food poisoning.
■ Raise public utility license fees and
partner with regulatory agencies to minimize
rate increases. Privately owned utility
stockholders should shoulder more of the
cost of maintaining
a healthy city.
■ Restructure
Portland
We need our local elected
Development
o fficia ls to be proactive,
Commission policies
to ensure that gains because otherwise they w ill
from redevelopment increasingly become
are shared. At
handmaids of austerity
present property
budgets«
taxes collected in
areas designated for
redevelopment,
such as the Pearl District, can only be
reinvested in the same area and are therefore
not available for the General Fund, which is
where shortfalls lead to counterproductive
cuts in city services.
Put a city carbon tax on “fast-track.” A
carbon tax would help the city achieve its
own Climate Action Plan targets, as well as
provide a new source of tax revenue.
In sum: We need our local elected officials
to be proactive. Otherwise they will
increasingly become handmaids of austerity
budgets. We need them to help us put the
heat on Portland’s delegations in Washington
and Salem, and tell them in no uncertain
terms that the federal and state governments
are making it impossible for local politicians
to do their job, which is to provide decent
public services for the citizens of Portland.
And finally, we need elected city officials to
focus now on revenue enhancement from
those most able to pay, rather than wait until
it is too late and there is no choice left but to
cut programs of great social value.
MlR-ADOB.
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