Agency could request increase to pay for boost in services, revenue drop

TriMet may ask state lawmakers for permission to increase its payroll taxing authority for the first time since the agency was created in 1969.

The payroll tax provides the agency with its main source of operating money. TriMet has been discussing a tax increase with lawmakers, business leaders and local governments but hasn't decided whether to make a formal request of the Legislature, which must authorize the increase.

'We have begun discussions along that line and we will decide in the next month whether to move forward,' said Mary Fetsch, TriMet spokeswoman.

The payroll tax talk hadn't been made public until Thursday, when Metro released a report looking at new sources of money for transportation. It included, however, a sentence recommending that Metro encourage state lawmakers to authorize the payroll tax increase.

The tax requires employers within TriMet's service area to pay 0.628 percent of their gross payroll, or $6.28 for every $1,000, to TriMet. In the fiscal year that ended June 30, the payroll tax brought in $155 million, paying for 57 percent of TriMet's operating expenses. Fares accounted for 19 percent.

The agency isn't saying how much of an increase it may seek, but a spokesman from the Portland Business Alliance said discussions so far had involved a boost of one-hundredth of a percent a year for 10 years, or one-tenth of a percent overall.

The payroll tax has been TriMet's primary source of money since the Legislature created the agency in 1969. The tax ceiling was then set at six-tenths of a percent, a level reached in the mid-'70s. But under the law, the tax can proportionally increase to make up for revenue lost when jurisdictions withdraw from the agency. Wilsonville, Molalla and Happy Valley withdrew in 1989, Sandy in 2000 and Canby in 2002.

The Legislature would not increase the tax but rather increase the agency's authorized tax ceiling. Any increase would be enacted by the TriMet board of directors.

Talk of a payroll tax boost reflects the increasing service demands on the agency. The airport light-rail line opened in 2001, and next year the Interstate Avenue line will begin service. In addition, planning is under way for new light rail lines down Interstate 205 to Clackamas Town Center, through Southeast Portland to Milwaukie and perhaps north to Vancouver, Wash.

And the agency is planning to increase the number of 'frequent service' bus lines, which operate every 15 minutes or more seven days a week through most of the day.

'The Metro 2040 Plan and the Regional Transportation Plan call on transit service to increase by 4 percent a year to keep pace with growth and livability goals,' Fetsch said. 'We need to expand transit. The question is how to pay for it.'

For TriMet, the recession hit in late 2001. Since then, the agency has seen a drop of $25 million in payroll tax revenue over what they had expected to take in, Fetsch said. The agency has eliminated the projected shortfall by making $10 million worth of productivity improvements, which translates to $36 million in savings over the next five years, and reducing capital expenditures by another $15 million.

State Rep. Alan Brown, R-Newport, chairman of the House Transportation Committee, said he spoke with TriMet officials about the possibility of increasing the agency's taxing authority. He said he wants to know more about the issues and will hold a hearing if the effort goes forward.

'Small businesses don't have the parking issues that a large business has,' Brown said. 'They have considerable costs in parking lots and parking structures if their employees come in cars. A transit system helps control some of their costs.'

The idea has received some preliminary support among members of the Portland Business Alliance, said John Czarobski, a spokesman for the group. Any payroll tax increase, he said, has to be considered along with the larger tax issues faced by businesses in Portland. The city of Portland and Multnomah County, for example, have just started talking about reforming the business income tax.

'We have to ask three questions,' Czarobski said. 'First, are they operating as efficiently as they can? From what we've seen, that's a resounding yes. They've restructured and seem to be getting every dollar out they can. Second, is this service critical? Absolutely. And third, does it seem reasonable? Yes, one one-hundredth of a percent seems reasonable.'

Contact Don Hamilton at This email address is being protected from spambots. You need JavaScript enabled to view it..

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