A twist of property tax fate leaves westsiders with fewer city bucks
Portlanders who live and work in the urban core and on the west side paid more into the city's general fund than people on the east side of the Willamette River during the past fiscal year.
For the most part, however, they didn't get more services because of the higher payments. According to the city, the three major agencies largely financed by general fund dollars spent more of their budgets on eastside residents and workers. The general fund totaled $369.6 million in the 2010-11 fiscal year.
The three agencies are Portland Fire and Rescue, Parks and Recreation and the Police Bureau. The fire and police bureaus receive the majority of their budgets from the general fund, while about a third of the parks bureau budget comes from the fund. Each agency spent more on eastside residents and workers last year, according to the city's numbers. Northeast residents and workers just about broke even.
According to Mayor Sam Adams, the disparity in spending resulted from the City Council responding to greater needs for services in East, North and Northeast Portland. For example, those parts of town have more fire and police calls than the rest of the city, requiring more resources to be deployed there to maintain uniform response times.
'We survey Portlanders during every budget cycle and ask them whether we should spend our money on a per-capita basis or where the need is the greatest,' Adams says. 'Most of them always say, 'spend the money where the need is the greatest.''
The only exception is the parks bureau, which spent more in Southwest Portland, primarily because it operates four community centers there. The bureau still spent more per resident and worker in Southeast, North and Northeast Portland than Northwest Portland and the urban core.
The figures were generated by Adams' Budget Mapping project.
'This is the first time we've had this information and it will inform our decisions in future budgets, although I cannot say how at this point,' says Adams.
City budget officials say much of the revenue shift results from Portland's historic development pattern. The urban core and west side have more businesses and higher property values, both of which generate general fund revenue.
A portion of the disparity also results from Oregon's complex property tax limitation system. Fifteen years ago, Ballot Measure 47 cut taxable property values and limited future increases to 3 percent a year. As a result, property taxes collections have not kept pace with increasing values in those eastside areas that have become popular since then, such as the Northeast Alberta and North Mississippi neighborhoods.
Property taxes accounted for $192 million of the city's general fund budget last fiscal year.
Although the inequities set in place by Measure 47 have been repeatedly identified in state and local studies, the Oregon Legislature has yet to address them.
'Fairness is a core principle of any tax system, and if people are paying different amounts for the same services, it undermines the credibility of the system,' says State Treasurer Ted Wheeler, who first began warning about the unintended consequences of Ballot Measure 47 when he was Multnomah County chair.
Complaints lead to study
After he was elected mayor, Adams initiated the Budget Mapping project to help the council better understand where city agencies spend their money around town. The project broke down revenue collections and agency spending by the city's seven official neighborhood coalition areas and the Central City, which includes downtown, the Pearl District, South Waterfront and the inner east side.
Not all agencies participated in the first round, which covered the 2010-2011 fiscal year. In addition to the three major general fund agencies, the project looked at the Portland Bureau of Transportation, which is funded by a variety of dedicated funds, including state gasoline taxes. The Water Bureau and Bureau of Environmental Services did not participate. They are primarily supported by water and sewer rates.
Adams initiated the project in part because of the complaints from eastside activists. They believe the figures generated about the transportation bureau support their concerns. Although the bureau identified many substandard streets in East Portland and Southeast Portland, the council authorized spending over half of all transportation-related construction dollars in the Central City.
A review of the major agencies financed with general fund dollars tells a different story, however. Major sources of general fund dollars include property taxes, business license fees, hotel and motel taxes, utility license fees, and some funds that are not generated geographically, such as the city's share of state cigarette and liquor taxes.
The project breaks down the revenue collection and all-funds agency spending by each resident and worker in an area, a concept it calls a 'user.' According to the city figures, each Central City user paid $123 more general fund dollars last year than the fire, parks and police bureaus spent on them from all city funds. Northwest Portland generated $217 more per user than the bureaus spent on them. For Southwest Portland users, the difference was $133.
In comparison, the bureaus spent $40 more on East Portland users than general fund dollars they generated. For North Portland users, the additional spending amounted to $24. For Southeast Portland users, the difference was $26.
Users in Central Northeast Portland and Northeast Portland just about broke even.
City budget officials caution against reading too much into the agency user spending figures. They say the fire and police bureaus spend much of their general fund money within the city to guarantee equivalent call response times. The goal of the fire bureau is to respond to each incident within 5 minutes, 20 seconds 90 percent of the time. For police, the goal is responding to high priority calls in five minutes or less. The difference in user spending reflects such factors as geography and the number of calls in each part of town to routinely meet the goals, the officials say.
Parks spending is largely determined by the location and facilities at each park. A major push is underway to create more accessible parkland on the east side.
It is no surprise that the Central City and westside neighborhoods generate a disproportionate share of general fund dollars. Although the city does not collect income taxes, those have traditionally been the wealthiest parts of town. But the popularity of some neighborhoods on the eastside has increased in recent years, resulting in residential and business growth.
The increased value has not been reflected in general fund collections, however. Property tax payments have not kept pace with the increase in property values because of Ballot Measure 47. Although values are allowed to grow 3 percent a year for tax collection purposes, that is far less than the value by which some neighborhoods have grown during the past 15 years. Some of the growth has been supported by city urban renewal spending along North Interstate Avenue and Martin Luther King Jr. Boulevard.
The Office of Management and Finance estimates that if Measure 47 had not been approved, property tax collections would only be 2 percent to 3 percent higher in parts of Northeast Portland and Southeast Portland. But a 2008 study Wheeler showed significant differences between specific westside and eastside neighborhoods.
Wheeler's study compared four homes on Southwest 61st Avenue and four homes on Northeast 16th Avenue. All were valued between $307,980 and $392,540 at the time. But property taxes collections on the Southwest homes averaged $4,453, while the Northeast homes only averaged $1,197.
'It's a difference of $3,000, but no difference in services provided,' Wheeler told the Senate Revenue Committee on April 22, 2009.
State Sen. Ginny Burdick, who chaired the committee, was not surprised by the differences.
'It's absolutely unfair,' she says.
Burdick has long urged the Oregon Legislature to address the inequities caused by Measure 47. She says such inequities can also be found between homes on the same block. Although several measures to address the problem have been introduced in Salem, none has garnered enough support to be voted out of committee, Burdick says.
For more information on the Budget Mapping project, go to: portlandonline.com/omf/index.cfm?c=54416 and