By Don MacGillivray
The Arts Tax remains a subject of concern and debate. It has never been popular and only partially successful.
The Arts Education and Access Income Tax (Measure 26-146) passed with a 62% voting majority in November 2012 due to the need for arts funding in schools and the community.
It is intended to fund arts teachers in Portland schools, provide grant funding to non-profit arts organizations, and increase public access to arts activities.
The program, initiated by Mayor Sam Adams administration, was created at the City Revenue Bureau and in February of 2013 with the Portland Arts and Culture Council (RACC) supervising the fund. The annual Arts Tax is $35 per person per year.
After three years, the Arts Tax has generally been successful, but its implementation has been challenging and some of the promises made by City Council have yet to be fully accomplished.
Funds collected are lower than anticipated and decreasing, administrative costs are higher than expected, and oversight remains a challenge. The distribution of the funds is proceeding as mandated.
The Arts Tax became more complex when changes were made to the rules to exempt taxpayers on Public Employee Retirement incomes and those earning less that $1,000 per year.
There were about 350,000 eligible taxpayers in 2012 and about 75,000 low income taxpayers that were exempt. In 2012 the Arts Tax collected $7.8 million with 13% going to the RACC for distribution to the arts community, 50% to Portland Public Schools, and 27% to the other five school districts.
The City seems to have underestimated the complexity of creating a new tax successfully. The expected compliance rate was expected to be 85%, but the actual rates have been 72% in 2012, 68% in 2013, and 61% in 2014.
Administrative costs were expected to be five percent, but they are slightly over ten percent and this will grow if a collection agency becomes involved. The city is planning to send non-compliant accounts to an outside collection agency.
Something must be done to improve these rates so that it works as the City Council promised.
Some taxpayers believe the Arts Tax is unfair and this affects their willingness to participate. After all, it is a regressive income tax and therefore unfair to low income voters.
It is only a question of time before City Council considers new taxes as well. Road repair, development fees, police budget increases, among others may be in the foreseeable future.
It is likely more review will occur before another tax is proposed.