New survey provides further information for transportation funding working groups
(July 17, 2014) — A new survey provides some additional information on Portlanders’ attitudes about transportation funding options for the citizen working groups the City has convened to advise the City about funding mechanisms to address its significant transportation needs.
"Some business owners were concerned that the proposed non-residential fee, based on trip generation, didn't take into account the profitability of the business. So we tested people's attitudes toward increasing the tax on business profits," said City Commissioner Steve Novick. "The most common concern we heard about the residential fee was that it was regressive. So we tested new versions of a progressive income tax. We also tested a revised version of a sales tax, combined with a business profits tax," Novick said.
The survey, conducted by DHM Research on June 19 through 22, tested separate sets of 300 voters on each of 4 funding options. It found that:
- Portlanders were closely divided – 47% yes, 48% no - on the idea of raising the city tax on business profits to 4% from its current rate of 2.2%. (That option would raise the entire $53 million annual goal set by the Mayor and Commissioner Novick.)
- They supported, by 50% to 45%, the idea of an income tax of one-quarter of one percent on incomes below $100,000; 1% on the amount of income between $100,000 and $250,000; 2% on the amount of income between $250,000 and $500,000; and 3% on income above $500,000.
- And, Portlanders supported, by a margin of 60% to 37%, the idea of an income tax of 1% on incomes above $125,000, 2% on income above $250,000, and 3% on income above $500,000.
- The survey also tested the concept of combining a smaller increase in the business profits tax (to 3.1%) with a sales tax of one-quarter of one percent that would exclude uncooked food and have a rebate for low-income people. Portlanders disapproved of that option by a margin of 59% to 36%.
Mayor Hales and Commissioner Novick have set $53 million as a target for a new transportation funding mechanism. When we asked the State Legislative Revenue Office (LRO) for a rough estimate of the revenue that could be generated by these income tax options, LRO indicated that the “$125,000 and up” option would likely raise an amount in the $50-$55 million range and the option including an 0.25% rate on incomes under $100,000 would likely raise an amount in the $60-$65 million range.
Mayor Hales and Commissioner Novick have called for a transportation funding mechanism that splits the responsibility for new revenue between businesses and residents. Therefore, if the working group recommends and the City moves forward with one of the income tax options, the rates outlined above will likely be halved to yield the goal amount from residential payers. In that case, the first option above would be adjusted to become an income tax of 1/8 of 1% on incomes below $100,000, ½ of 1% on income between $100,000 and $250,000, 1% on income between $250,000 and $500,000, and 1.5% on income above $500,000. The second option would be adjusted to an income tax of ½ of 1% on income between $125,000 and $250,000, 1% on income between $250,000 and $500,000, and 1.5% on income above $500,000.
LRO used Oregon taxable income (not gross income) as the basis for its rough estimates. LRO said that a couple making $60,000 in gross income, with a typical amount of deductions, would likely pay about $50 a year – or slightly over $4 a month – under an income tax rate of 1/8 of 1%.
Novick said that he expected the working groups to take the information - as well as previous surveys - into account as they work to develop modifications or alternatives to the transportation user fee Mayor Hales and Novick had proposed. "One message I take from the survey is that a sales tax is unacceptable to such a large percentage of Portlanders that we can safely say that's off the table," Novick said.