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Commissioner Steve Novick

Official Website for Commissioner Steve Novick

Phone: 503-823-4682

fax: 503-823-4019

1221 SW 4th Ave. Suite 210, Portland, OR 97204

Novick announces two-part strategy to fund safety and maintenance

As a year of debate over city transportation funding draws to a close, City Commissioner Steve Novick today announced a two-part strategy to ensure funding for transportation maintenance and safety priorities.

“We are proposing a revised residential user fee, with a hearing on January 8 at 6 p.m. and a vote scheduled for January 14. If that fails, either in Council or through a subsequent referral to the ballot, we will prepare to campaign for a progressive income tax in 2016,” Novick said. The proposed non-residential fee is unchanged.

The proposed user fee will vary by income, based on national statistics showing the extent to which gasoline consumption varies by income quintile. “Gasoline use is one proxy for ‘road use,’ and gasoline use varies somewhat by income level,” Novick said.

Under the proposed fee, residents in the lowest fifth of the income distribution would pay $3 a month; filers in the second fifth would pay $5 a month; residents in the middle fifth would pay $7.45 a month; residents in the second-highest fifth would pay $9 a month; and filers in the top fifth would pay $12 a month. The fee is projected to raise $23 million per year.

If the user fee fails, Novick said, he plans to propose a progressive income tax to be sent to the ballot in May or November of 2016. “What I would propose is an income tax that, for married filers, exempts the first $35,000 in income, and then applies graduated rates as follows: one-tenth of one percent of income between $35,000 and $60,000; two-tenths of one percent of income between $60,000 and $100,000; three-tenths of one percent of income between $100,000 and $250,000; and four-tenths of one percent of income above $250,000.” Such a tax is also projected to raise $23 million a year. That proposal includes a $5000 per dependent deduction and is tax deductible on the state and federal returns.

“My personal preference is for a progressive income tax, which is also the most popular option among Portlanders generally. But pursuing that option would involve a campaign that would not end until at least May, and possibly November of 2016 – which means postponing actual work to repair streets and make them safer. As the Mayor and I have repeatedly said, the longer we wait, the worse the problem gets. It seems possible that we could pass a user fee in Council that would not require a campaign, which would mean that we could get to work much sooner,” Novick said.

Table 1 shows the monthly fee that would be charged under the Residential Transportation User Fee. This proposal will be presented to the City Council at a public hearing Jan. 8.

Table 2 shows the monthly charge estimated for a residential income tax that may be introduced to voters if the Residential Transportation User Fee proposal is not approved.

Table 1: Residential Transportation User Fee proposal

Annual Income Range

Average Annual Gas Spending

Monthly Fee

≤$13,000

$1,231

$3.00

>$13,000 - $27,000

$1,850

$5.00

>$27,000 - $46,000

$2,622

$7.45

>$46,000 - $82,000

$3,284

$9.00

>$82,000

$4,071

$12.00

Notes: Income ranges apply to single filers and married or joint filers. Average Annual Gas Spending is based on national averages calculated by the U.S. Bureau of Labor Statistics..

Table 2: Residential Income Tax proposal

Annual Income Range

Annual Transportation Income Tax Rate

Annual Income Examples for Couples Filing Jointly

Examples of Income Tax Per Income Example

$0 - $35,000

Exempt

$35,000

Exempt

$35,000 - $60,000

1/10 of 1%

$50,000

$1

$60,000 - $100,000

2/10 of 1%

$80,000

$5

$100,000 - $250,000

3/10 of 1%

$100,000

$9

> $250,000

4/10 of 1%

$300,000

$63

Notes: A $5,000 deduction per dependent would reduce tax bill. Income ranges apply to single filers and married or joint filers, based on Adjusted Gross Income. Average Annual Gas Spending is based on national averages calculated by the U.S. Bureau of Labor Statistics.

January 8, 2015 Council Documents: