Portland Has a $35 Tax For Arts Education—Here’s Why It’s So Controversial
As a nation-wide debate continues following the proposed elimination of the National Endowment for the Arts, a separate fight over arts funding played out in the city of Portland, Oregon, this week. The city’s controversial “arts tax” survived a potentially fatal legal challenge—but that is unlikely to quell criticism of the measure, with even proponents advocating that the levy needs to change.
Passed as a ballot initiative with the support of 62% of Portland voters in 2012, the arts tax requires most city residents to pay a flat fee of $35 annually to support and expand arts education in the city’s schools. So why has a relatively small charge for a worthy cause resulted in years of pushback?
Retired Attorney George Wittemyer, who sued Portland over the issue in March of 2013, found legal, rather than ideological, problems with the tax. While stating that he is personally unopposed to arts education (indeed, the tax helps pay for his grandson to learn the trumpet), Wittemyer charged that it violated Oregon’s prohibition on flat per-person taxes levied without regard to income—what is known as a poll or head tax.
But a unanimous ruling by Oregon’s Supreme Court Thursday shot down that argument. In a 31-page opinion, the high court echoed the rationale of lower courts that also sided against Wittemyer, finding that the art tax is not a poll tax because it includes exceptions based on income. The tax only applies to individuals older than 18 earning above $1,000 and whose household income is above the federal poverty line. Those falling below the federal threshold—currently defined for single income households as earning less than $11,880 per year—are exempt.
“Today’s decision is a big win for Portland’s kids,” City Commissioner Nick Fish said in a statement. “Thanks to the ruling of the Oregon Supreme Court, over 30,000 Portland children will continue to have arts education in school.”
Funds from the tax are distributed among Portland’s six school districts. The cash infusion enabled the city to nearly triple the number of arts and music teachers from 31 to 91, according to the Regional Arts & Culture Council (RACC), a local arts advocacy group. That amounts to one arts teacher for every 380 K–5 students in the city’s public school system.
Even with the tax’s successes in schools, accounting concerns remain. The cost of administering the tax has risen above the allowed limits, while returns still have yet to reach the expected $12 million annually estimated at the time of passage.
In a memo to the city council last week published by the Portland Mercury, Thomas Lannom, Portland’s revenue division director, detailed some of the challenges—namely, that 7.7% of the total funds raised over five years has gone to administrative expenses related to collecting the tax. Averaged over the last three years, that figure is an even higher 8.9%.
Under the existing law, only 5% of the total raised by the tax should go to administering it. Think of it this way: Since the art tax began in 2013, the city has spent $3.69 million to collect a total of $47.99 million. Under the official cost cap, the city should have spent, at most, $2.4 million.
Lannom points to the “complex and time-consuming undertaking” of collecting a small fee from 360,000 taxpayers each year. Residents are mailed at least one notice of the tax annually, and must pay the $35 separately from federal and state tax filings, through a special website or mailer. They can request a waiver if they are exempt from the tax, but failure to pay or request a waiver results in an additional $15 penalty, which can rise to $20 if not settled after six months.
The process is partly to blame for relatively low compliance with the arts tax. Original estimates predicted that 85% of Portlanders would fork over the funds. But only 73% of residents on average paid in the first three years of the art tax. There are signs of improvement: The highest amount raised annually was $10.8 million in 2016, a steady increase from the $7.9 million raised in 2013. But that rise comes as additional funds are spent to collect the tax, pushing up against the limits for administrative costs.
There are numerous proposed solutions to the problem: Do away with that 5% cap; direct more of Portland’s general revenue towards the arts to supplement the tax; increase the cost collection budget. One major question, though, is which changes would have to be put to voters again. “No one wants to dare ask the voters to reconsider the arts tax,” City Commissioner Dan Saltzman said. Given the controversy that has ensnared the the tax since passage, asking voters to reconsider it does not seem to be a politically palatable move.
Some arts advocates argue that the tax needs to be made progressive, rather than flat, so that those with higher incomes pay more, allowing more grants to be awarded to minority and lower-income areas of Portland. The long-term goal of the RACC is to put a progressive art tax on the ballot in 2020—should that measure fail, the current art tax would stay on the books. What would happen after that is anyone’s guess.