Mayor Hales’ budget plan includes a contentious business tax hike

Charlie Hales wants to raise Portland’s business tax from 2.2% of net income to 2.5%, which would add $8.7 million to the city’s budget.

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Despite a flashy press conference outside City Hall, where advocates praised his plan, Hales’ $510 million budget landed with a thud inside the building. Two city commissioners out of five immediately refused to support a tax increase.

“It’s hard either way. There’s controversy either way,” Hales said Monday afternoon. “But I would rather have controversy over doing the right thing, and taking care of the most vulnerable people in the community, versus the controversy of, ‘Oh my god, you’re raising my taxes.'”

The fireworks represent a remarkable turn of events in what easily could have been a cheerful budget with an already-big surplus.

(READ MORE: Oregon Live)

The funds that would be generated from a business license fees are intended to address homelessness and community outreach programs.

“I’m not naturally inclined to raising taxes on business,” Hales says. “But this is a necessary increase to pay for services for a growing city at a critical juncture.”

At the same time, Hales is giving a tax break to 2,000 businesses in the form of a higher owner’s compensation deduction. If City Council approves Hales’ plan, businesses wouldn’t pay the business license fee on the first $125,000 of income, up from $100,000. Hales raised the deduction in 2013, piggybacking on an effort by former Mayor Sam Adams, who also raised the owner’s compensation deduction in 2012. (It then stood at $87,000.)

(READ MORE: Willamette Week)

The overall budget is expected to reach $4.2 billion.

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