BLOG: Notes on Discussion of Jobs, Taxes, and Budget Reform at City Council Retreat
Sam Adams
Today the City Council held a budget planning retreat for the fiscal year 2006-2007.
Given that last year we were dealing with a $19 million two-year deficit, the good news is that more money is coming into the City’s coffers because of an uptick in transient lodging taxes and business license fee revenues.
We still await news as to what income the City will receive from property taxes but they are likely going to be up as well.
A hurricane Katrina-caused economic dip might be in our future but so far so good.
When I proposed last year to dedicate a portion of any unexpected city taxes to reduce the tax burden on mostly smaller, sole-proprietor-owned businesses, readers of my earlier website will remember that with a recovering local economy I predicted the City would get more revenues than were forecasted last year.
Commissioner Dan Saltzman supported my tax reform efforts.
But some of my other colleagues took me to task calling my proposal “premature.”
Well, the unexpected and unforecasted taxes are indeed now here.
Come on dear city council colleagues!
Let's compromise, say 50 to 75 cents of every dollar not forecasted last year and in years ahead will go towards raising the Owners Compensation Deduction until it gets to $125,000.
Raising the Owner’s Compensation Deduction has been a priority issue raised by the last three groups that looked at the City’s tax system.
Why am I pushing this?
Because I believe it will mean an increase in the number profitable businesses (the City’s tax is on net profits made from sales to Portland customers) to stay in Portland.
And, because with a 10 year, $880 million city government strategic deficit, we have to grow our economy to pay for public services in the future; I believe the best way to do that is support the business we already have.
Finally, with tens of millions in tax breaks (abatements) already on the books for developers, I think we need to look at tax help for non-developer businesses too.
Also on the jobs front, good news, the goal of “economic development” made it on to the City Council’s top five issues for next year.
I am sick of the emptiness of the feel good phrase “economic development” so I pushed for the goal to be written with more concrete language, “promoting businesses success and individual and family prosperity.”
The retreat facilitator thought that “promoting businesses success and individual and family prosperity” conflicted with another good goal called “family friendly.”
So the facilitator wrote, “Economic Development Prosperity.”
It's a start...
My proposal that city government add five voting citizens to the City’s Budget Committee, just like every other City government in the State of Oregon, received lukewarm support at the retreat.
No, my proposed reform (and it took me getting a state law changed to allow us to even consider doing this) would not take away the City Council’s budget making authority – citizens would be voting only on the draft (known as the “approved”) city budget; the City Council would still have to adopt a final city budget.
Mayor Tom Potter supports putting four voting citizen on the budget committee as a pilot effort for a year and everyone said they support more citizen involvement.
But concerns were expressed by three others that this might not be needed, that Portland is different than other Oregon cities in that we are the only city with full time elected city councilors. That adding citizens could deadlock the process with a 5 to 5 vote. That we are elected -- not appointed citizens -- to make budget decisions.
I respectfully disagree.
My pitch for budget committee reform:
• The nearly $2 billion city budget is also the workplan for the city and represents the single most important set of decisions we make each year;
• Our commission form of government is inherently politically incestuous and it would benefit from having non-elected commissioners-in-charge looking over our shoulders at budget time;
• That we can only empower citizens to their full potential as turf-busting budget watch dogs if we arm them with a vote just like us while both serving on the budget committee;
• Portland’s finances are dizzying in their complexity, we are only going to strengthen meaningful citizen input by giving citizens a seat at the table to learn over time how all the individual budget decisions come together at the Budget Committee;
• That five white guys on the City Council does not necessarily represent all the diversity of Portland;
• That as good as the current city council is, the gaps in it’s collective budget making abilities can be boosted with free outside talent;
• Last year’s experience of adding two non-voting citizens to the budget process was positive – Ted Wheeler, supports giving citizen budget representatives a vote.
Previously, some on the City Council did not believe we would find Portlanders who could put in the time and are interested in serving on the Budget Committee. So, at the retreat I handed out a list of people who had expressed to me an interest and knew the level of commitment needed.
I’ll keep at it!
Posted by Sam Adams on October 7, 2005
(6) Comments | Permalink | TrackBack (2)
Filed Under Blog, Front Page, Good Government
Comments by site visitors
Ben,
State law dictates most of the process: We would publicize the openings for some weeks; interested citizens would complete a detailed application (that includes background information, questions of why interested and potential conflicts of interest); the Mayor would nominate 5 applicants (assuming Portland does it like other Oregon cities); the applicants along with their applications would appear at a public meeting of the City Council for questioning; each applicant would have to confirmed by a majority of the City Council.
Thanks for asking.
Sam
Posted by: Sam Adams | Oct 9, 2005 11:11:31 AM
Sam,
I just want to thank you for your continuing efforts to reform the business income tax. As I've stated before, a sole proprietor making the exact same salary as you and your council colleagues pays $1200.00 per year in city and county tax. They pay it simply because they choose to work for themselves rather than working for others. Until Portland's business license fee structure becomes competitive with Washington and Clackamas Counties companies which are not location dependent will continue to move out of town.
Posted by: Dave Lister | Oct 10, 2005 10:10:06 AM
I LOVE the comment "That five white guys on the City Council does not necessarily represent all the diversity of Portland" - it's so true. Especially when tied to the political system that is in place. Thank you for having the cojones to say that in a public forum.
Posted by: Shawna | Oct 10, 2005 11:35:11 AM
Hi Sam:
I am impressed by your blog; thank you for keeping in touch with Portland as you have.
I am writing a story about the Oregon Health Care Bill and am interested in your position on the bill as well as on budget implications. Can you share your thoughts?
Thanks,
Giselle
Posted by: Giselle | Nov 9, 2005 3:36:59 PM
Small business is the engine that drives the economy. It responds quickly to local changes and takes on much risk.
In defining the Owners Compensation Deduction, entities incorporated as subchapter-S corporations with a sole shareholder should be included with entities incorporated as sole proprieterships. They are really the same in this case.
Your program of talking regularly to businesses is outstanding. I hope we never have another case like Columbia Sportswear just moving out of the city without a lot of engagement with City Hall to keep those jobs within city limits. Thanks!
Posted by: Rob W | Nov 14, 2005 12:55:30 PM
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How would we choose them, Sam?
http://portland.metblogs.com/archives/2005/10/reinfranchising.phtml
Posted by: Benjamin Kaplin | Oct 9, 2005 12:18:56 AM