Arts and Education Access Fund

Updated: Aug 14

Measure 26-146 was proposed as a legislative action, not an amendment to Portland’s city charter. This was done so that if unforeseen issues arose, the City Council could amend it. In 2013, keeping with the intent of the measure — that those under the federal poverty level are exempt from pay the $35 — the Portland City Council adjusted measure so that if you are a family with an income at or above the federal poverty level and one of your family members makes less than $1,000 of taxable income, that family member won’t have to pay the $35 tax.[i] [ii]

Because anti-tax activists continued to file suit in Oregon courts, contending the arts tax was unconstitutional there was unease whether to move forward to hire elementary school teachers as it intended. In 2013, the city council decided it would cover $2 million of the $3 million to schools in the first payment if the tax was deemed unconstitutional.[iii] The school districts would be responsible for the rest. Portland Public Schools hired 30 teachers instead of 45 and said it would use its reserves if the tax was struck down.[iv]

In May 2013, a new legal analysis showed some people who had received most or all of their income from Social Security or the Public Employees Retirement System had paid the tax. And those types of income are not taxable by the city. [v] The City decided to exempt those incomes from being subject to the tax. [vi] Between 2013 and 2016, the arts tax increased the amount it collected from $7.9 million to $10.8 million.[vii]

In July 2015, the Portland City Auditor issued a report on the city’s performance on the Arts Tax. The auditor came to two important conclusions. The first was simply that, yes, the money is going where it was intended to go. The public schools in the city hired enough arts teachers so that Portland kids, kindergarten through 5th grade, could receive one arts class per week. And the city’s larger arts organizations are receiving substantially more money than they used to get, in part to improve their outreach efforts to underserved communities.[viii]

About 72 percent of Portlanders who were required to pay the tax did in 2012, the first year of the tax. In pure dollar terms, collections averaged around $8.2 million for the first three years of the tax, well short of the $12 million the tax was supposed to bring in originally, but a little closer to the estimated $10.5 million or so it should have generated after City Council eliminated some payers from the tax (social security, government pensions, dependents earning less than $1,000 per year). Because the revenue had been missing its target, the administrative costs, to be capped at 5 percent, have been running a percentage point or two higher than that. [?]

In 2017, after four years of legal challenges, the Oregon Supreme Court ruled the City's arts tax legal.

  • November 2012: Voters approve ballot measure 26-146. This measure imposes a $35 annual tax on every Portland resident over the age of 18.

  • March 2013: City Council amended the Arts Tax language, creating an exemption for individuals who earn under $1,000 per year.

  • March 2013: Professor Jack Bogdanski filed a lawsuit in Oregon Tax Court against the City of Portland, arguing that this tax constituted a “poll tax”.

  • March 2013: Mr. George Wittemyer filed a lawsuit in the Oregon Circuit Court.

  • June 2013: Oregon Tax Court dismissed Mr. Bogdanski’s lawsuit due to a lack of jurisdiction.

  • July 2013: Oregon Circuit Court ruled against Mr. Wittemyer’s law suit, ruling that the Arts Tax does not violate the Oregon constitution, and is not a “poll tax”.

  • August 2013, Mr. Wittemyer appealed his lawsuit to the Oregon Court of Appeals.

  • June 2016: Oregon Court of Appeals affirmed the lower court’s ruling that the Arts Tax is not a “poll tax”, and rules in favor of the City of Portland.

  • July 2016, Mr. Wittemyer appealed his lawsuit to the Oregon Supreme Court.

  • March 2017: Oregon Supreme Court heard oral arguments Wittemyer v City of Portland at Lewis & Clark’s School Law School.

  • September 2017: Oregon Supreme Court ruled against Mr. Wittemyer, affirming the lower court’s rulings that the Arts Tax is not a “poll tax” and is constitutional.[ix]

Because of adjustments made early on by the City Council and compliance rates that have not yet peaked, the arts tax has not fulfilled its goal of providing sufficient funding for the arts via grants to arts institutions, minority arts organization and individual artists that are distributed through the Regional Arts and Culture Council (RACC). [x]

But, by the end of 2017, collections approached $10 million annually, with $7 million used to pay for restoring elementary arts teachers. In the first five years of the tax, the schools have been fully funded, providing 92 arts teachers in the six Portland school districts compared to 31 prior to the tax. The ratio of students to arts teachers, which was 997:1 before the tax, in 2016 was now 381:1, well below the measure’s requirement of 500:1.[xi]

Prior to 2012, Portland invested about $6 per capita in the council for the nonprofit arts sector. Today, with additional revenue from the arts tax, Portland’s investment is $9.38 per capita. That’s still below the national average and trailing other cities that compete for creative talent, including $12 per capita in Austin, Texas, and almost $14 per capita in Seattle. These new public investments in the arts and arts education are yielding local economic dividends. In 2016, the city and Multnomah County invested a combined $8 million in RACC that was distributed in grants and services. Those investments resulted in more than $294 million of economic activity, supporting 10,146 full time jobs with taxable income that returned $12.5 million back into local government coffers, according to the Arts & Economic Prosperity 5 study recently published with Americans for the Arts. That’s a 156 percent return on investment, supporting other vital city and county services.[xii]


Footnotes


[i] Revenue Bureau, City of Portland (May 16, 2013). "More egg on face for Portland arts tax; deadline to pay unclear." https://www.blogger.com/profile/11952394767212085011 T.D. Retrieved 2018-27-2. [ii] Schmidt, Brad (May 14, 2013). "Arts tax compromise: City of Portland will cover $2 million for teachers even if tax shot down." http://www.oregonlive.com/portland/index.ssf/2013/05/arts_tax_compromise_city_of_po.html#incart_flyout_news. The Oregonian. Retrieved 28-23-2. [iii] Dungca, Nicole (May 13, 2013). “Portland Public Schools to use $1.5 million in reserves if arts tax is struck down.” http://www.oregonlive.com/portland/index.ssf/2013/05/portland_public_schools_to_use.html The Oregonian. Retrieved 2028-25-2. [iv] Anderson, Jennifer (May 7, 2013). "Refunds, legal challenges put city arts tax in limbo." http://portlandtribune.com/pt/9-news/151856-refunds-legal-challenges-put-city-arts-tax-in-limbo Portland Tribune. Retrieved 2018-28-2. [v] Schmidt, Brad (May 7, 2013). "Arts tax flip-flop: Portland says tax won't apply to residents' Social Security income." The Oregonian. [vi] Monahan, Rachel (September 21, 2017). "Oregon Supreme Court Upholds Portland’s Arts Tax, Mayor Sam Adams' 2012 initiative to help fund art teachers withstood legal challenge." http://www.wweek.com/news/city/2017/09/21/oregon-supreme-court-upholds-portlands-arts-tax/ Willamette Week. [vii] Kaplan, Isaac (September 22, 2017). "Portland Has a $35 Tax for Arts Education—Here’s Why It’s So Controversial." Portland Herald Press. [viii] Caballero, Mary Hull (July 2015). "Arts tax: Promises to voters only partly fulfilled." https://www.portlandoregon.gov/auditservices/article/538935. Office of the Auditor. Retrieved 2018-6-3. [ix] Fish, Nick (September 21, 2017). " Commissioner Fish Statement on Oregon Supreme Court Affirming Portland Arts Tax is Constitutional." City Commissioner Nick Fish website. [x] Penkin, Stanley (October 12, 2017). "My View: Portland, let's embrace the arts tax." Portland Tribune. [xi] Penkin, Stanley (October 12, 2017). "My View: Portland, let's embrace the arts tax." Portland Tribune. [xii] Hawthorne, Jeff (October 8, 2017). "Portland’s arts tax is a good deal." The Oregonian.

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