Portland leaders are expressing relief over the Oregon Supreme Court decision to reject a constitutional challenge to Portland’s Arts Education and Access fund — better known as the arts tax.
Plaintiff George Wittemeyer went head-to-head with Portland over its $35-per-adult yearly levy. His beef: an Oregon constitutional provision that says state and city governments can’t apply flat taxes across the board, regardless of income. Those taxes are sometimes referred to as poll or head taxes.
Wittemeyer admitted the city has some poverty exemptions. But, he said, that just determines whether you pay.
“The consideration of income here,” Wittemeyer said, “is before any levy or assessment of the tax.”
The 31-page Supreme Court opinion, issued Thursday, is heady stuff — it includes a digression about whether zero income is, in fact, a numeric amount, and digs all the way back into Babylonian tax laws.
In short, the justices concluded, a tax that takes into account income, property or other resources does not violate Oregon's Constitution.
Wittemeyer expressed surprise at the decision.
“I thought at least there would be some dissent," he said of the unanimous decision. "They’ve obviously narrowed the definition to poll or head tax to the point where nobody will ever use it again. This will be the standard."
Portland Commissioner Nick Fish spoke for a lot of people at City Hall when he expressed his gratitude and relief.
“We now know it’s on firm constitutional ground,” he said, “and there’s no excuse not to pay it.”
But lack of payment is the much larger issue for the arts tax.
The city's tax collectors estimate each year thousands of Portlanders just skip the filing, which can’t be done within federal and state tax returns.
And, each year, arts advocates remind the City Council that thousands of kids’ art and music teachers rely on the tax for funding.
Parkrose Elementary music teacher Carolynn Langston is a fan of the tax.
“We went from having one elementary music specialist in the entire district, to having one in every building,” Langston said.
Lose the arts tax, and you lose a lot of art in the schools.
Under the law, Portland can spend no more than 5 percent of arts tax revenues on collections and administrative costs. Some years, the city's Revenue Bureau has spent as much as 9 percent trying to get more of the $35 checks from residents.
City Council is deeply divided on what to do and whether the 5 percent cap on collection should be adjusted without sending the tax back to the ballot.
Last week, Mayor Ted Wheeler and Commissioner Dan Saltzman were visibly skeptical as an oversight committee chair suggested it might not be possible to honor the 5 percent cap while boosting collections.
“I’m not sure I buy where you’re going with this,” Saltzman said.
“I want to second that,” Wheeler added. “I’m not going to agree to that statement.”
Saltzman continued: “When voters think 95 percent of the money’s going toward programs, and we’re telling them it’s not 95 percent anymore, that begs the question maybe we should go back to voters with the proper numbers.”
Revenue Director Thomas Lannom stepped into the discussion to point out the city has increased collections.
Hiring a consulting agency for $186,000 brought in more than $2 million in outstanding payments, Lannom said.
One-in-four Portlanders who should have paid the tax last year simply didn't. But, Lannom said, even the IRS — with all its robust enforcement — gets only about an 85 percent voluntary compliance on income tax.
“I’ll be very candid,” Lannom told the commissioners, “I think 5 percent polled very well in 2012, but it was never realistic. I think that’s all come home to roost now.”
Wheeler alluded to mistakes of the past as he suggested further discussion in a coming weeks. Lannom sent a memo to council a few weeks ago outlining possible remedies.
Fish, who oversees the arts portfolio, said he’s hopeful council will agree to spending general fund money or other cash to boost collections.
He acknowledged, there’s work to do, but said no one’s suggesting money to staff new committees or produce glossy literature.
The problem is as simple as getting people to pay on time.
“If I told you for $1 of general fund investment, we could collect $5 for the arts, you’d consider it a pretty good deal,” Fish said.
The reason arts advocates went to bat for this tax in the first place was to spare everyone the painful annual wrangling to carve money out of the city budget for art.
But now city leaders may end up having to take on just those kinds of battles to get the arts tax collected.