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If Salem wont pay, taxpayers may

From payroll to property, Portland area leaders debate taxes of all kinds

Call it a vote of no confidence in Salem.

Since the Jan. 28 defeat of Measure 28, business and government leaders have been debating how to raise money locally not just for schools but for other services usually addressed by the state, including transportation, human services and law enforcement.

Portland leaders are searching for local solutions because they no longer believe they can count on the state Legislature to help maintain services.

As a result, local taxpayers may be asked to make up the difference.

'We are between the classic rock and the hard place,' said Portland city Commissioner Erik Sten. 'Either we depend on Salem to do the right thing, or we take matters into our own hands.'

Local tax talks are under way in city of Portland, Multnomah County and Metro offices and throughout the private sector.

No consensus has emerged as to the kind of tax or taxes that might be employed, who it would affect, who would administer it or even if a new tax should be attempted at all. But every kind of tax has come up for discussion, some in public venues, some not so public, including income taxes, property taxes, business taxes, payroll taxes, real estate transfer fees, bonds and Ñ yes Ñ even a sales tax.

Most of the proposals so far would be for limited time periods.

The debate will sharpen today at a meeting of the City Club of Portland at the Multnomah Athletic Club featuring three key players: Gregg Kantor of the Portland Business Alliance; Jim Scherzinger, superintendent of Portland Public Schools; and city Commissioner Jim Francesconi. Francesconi is expected to outline new proposals regarding schools and the business income tax.

Much of the talk, of course, centers on the schools. The most popular target for raising new money so far has been the payroll tax, which has been under discussion anyway as part of plans by Multnomah County and the city of Portland to revise business income taxes.

School advocates are pushing for the quickest solution, which they think would be a business payroll tax surcharge for schools. Multnomah County Commissioner Lisa Naito wants a temporary county income tax for schools, public safety and human services. City Commissioners Randy Leonard, Dan Saltzman and Erik Sten want a combination of the two, all for schools.

Mayor Vera Katz is quarterbacking the impassioned talks among the city, the county and business leaders. Officials hope the talks will produce one plan they all can agree on.

'The attitude in Multnomah County has been, 'Hey, if this is what it's going to take, then let's do this,' ' said Nancy Hamilton, a member of Help Out Public Education, a new parent group.

The proposals reach beyond schools. Naito's idea of a county income tax surcharge, introduced Wednesday, calls for the same three-year income tax increase as Measure 28, with 40 percent of the extra revenue going to schools in Multnomah County, 30 percent to public safety and 30 percent to human services.

Naito calls the plan, which could be put in place by the county board of commissioners without a public vote, the 'Daughter of Measure 28.' Measure 28 passed 57 percent to 43 percent in Multnomah County.

'We must be prepared to support our children, law enforcement and the most vulnerable people in our community if the Legislature fails to adequately fund these services,' Naito said in a letter to public officials.

She said her plan should be implemented only if the Legislature fails to come up with adequate financing.

More than survival

Sten, Saltzman and Leonard propose a payroll tax surcharge and a local income tax Ñ they haven't decided if it would be city or county Ñ all for schools. Their goal isn't just restoring the school year but making sure local schools flourish, with a full program of academics, art, music and sports.

On one level, local officials have been cautious about going forward with their local plans, worried that their efforts might lessen the urgency among lawmakers to come up with a state solution. But at the same time, they want quick changes to assure parents that Portland schools will be healthy by fall. They fear that further cuts and larger classes will prompt a stampede away from the public schools.

State legislators started the 2003 session last month with talk of tax reform. Gov. Ted Kulongoski sees a plan driven by the public, not by him or by lawmakers, and state Rep. Mary Nolan, D-Portland, said the Legislature wants to make schools less reliant on income taxes, which are unstable in a recession.

Sen. Ryan Deckert, D-Beaverton, chairman of the Senate Revenue Committee, said the best that school advocates can hope for this year isn't more money but permission for voters to increase school funding on their own, maybe through property taxes, a real estate transfer tax or income taxes.

Deckert isn't optimistic about anything happening quickly. Such a move would require a constitutional amendment, he said, and that means a two-thirds vote of each chamber and a statewide vote. Only then would local voters get to decide whether to raise more money.

State Rep. Lane Shetterly, R-Eugene, chairman of the House Revenue Committee, wants to move more quickly. He wants a measure on the May ballot to give school district voters greater authority to increase property taxes for schools. If passed, he said, districts could ask voters for new levies in September and collect some money through the November property tax bills.

Business plays part

Business, said Kantor of the Portland Business Alliance, will play a role in what happens.

'We promised the business community that we would focus on building a world-class work force and create an economy of the mind,' he said. 'And we did that. But now we are not living up to that promise, and we have to do something about it. This is not just some dirty secret we are whispering about here in Portland. The world is watching.'

Staff writers Todd Murphy and Jim Redden contributed to this story.