Metro bungles math for regional income tax, admits error
In a stunning reversal, Metro Council President Lynn Peterson announced late Tuesday evening that the regional government had for days been relying on the wrong revenue numbers for its proposed income tax to address homelessness.
It was a $40 million error.
"A miscommunication led to an inaccurate estimate of what a regional income tax on high earners would raise," Peterson said in a statement sent to the Tribune. "I want to apologize to the coalition for the confusion and look forward to following up and getting it right."
As it turns out, Metro's looming 1% income tax on high-earners is projected to only raise $135 million — not the $175 million promised during the Tuesday, Feb. 18, work session. The mistake wasn't just a slip of the tongue: the incorrect number was printed in official documents distributed at the meeting.
Sources close to Metro say the error was due to a miscommunication between ECONorthwest analysts and government staff working over the weekend.
The proposed tax plan has been on an extremely fast timeline, as Metro officials rush to beat the deadline for getting the measure on the May primary ballot.
The mistake was first reported by Willamette Week.
"The goal remains the same: To provide supportive housing services for every person experiencing chronic homelessness in our region, and help as many people as possible who are on the brink of homelessness around greater Portland," the statement continues. "Metro will continue to work with our partners because it is so important."
Most money measures take more than a year to craft, but earnest drafting of the Metro proposal began only in January.
In recent weeks, the editorial boards of both the Pamplin Media Group and the Oregonian have urged Metro to slow down. Haste in public-policy planning can lead to embarrassing errors such as the typo in a recent Columbia County 911 levy that caused the measure to assess value at 1/100th of the intended rate.
Even before the inaccuracy was discovered, the Metro money measure was getting a haircut — with the expected revenue estimated at about 30% less than the $250 million originally projected. Despite the downsize, Metro predicts the tax would provide supportive housing to virtually everyone who is chronically homeless in the region.
These are "large estimations, but widely accepted," said Jes Larson, Metro's housing policy manager, at the Tuesday meeting. "The opportunity before us will have an enormous impact on the community."
Metro Council hashed out the specifics of the marginal income tax, which will apply to all earned income above $125,000 for individuals and $250,000 for families at a rate of 1%, during the work session.
But with just two days to go until the expected decision to refer the measure to the voters, the seven-person council had little time to tweak the measure. The most notable change at the meeting was the expiration date.
Instead of requiring voters to reauthorize the tax in 10 years, the council opted for a soft sunset, with "a 10 year review, with a council action to continue," according to Peterson.
"If we move forward with this program, and it's successful, we run the risk of the region saying, 'the problem has been solved,'" said Councilor Craig Dirksen.
The tax, if approved, also would apply to nonresidents who earn their income within the tri-county region governed by Metro. An 18-person oversight committee would monitor the fund and issue annual reports, with all members appointed by the Metro Council. Five percent of the proceeds would be dedicated to administration after revenue collection begins in 2021.
Metro expects to distribute the revenue to local governments based on population. That means about 49% of the money would flow to Multnomah County, 34% to Washington County and 18% to Clackamas County.
"There's real need in my district as well," said Councilor Christine Lewis, who represents much of Clackamas County. "There's folks camping in parks in Oregon City that have no place to go in our current system."
According to a meeting memo, Metro anticipates spending $10,000 on average for each household's supportive housing services, such as mental health and addiction treatment, plus another $10,000 in average rental assistance per household.
By the numbers:
3,125 to 4,935: the estimated number of chronically homeless people in the region who need supportive housing, according to PSU's homelessness research center.
$62.5 million to $98.7 million: The estimated cost to provide supportive housing to that population.
17,000: The estimated number of people who are homeless or are at risk of homelessness due to economic factors.
$10,000: The average amount of rental assistance needed for each household at risk of homelessness.
$170 million: The amount needed to serve 17,000 households who are homeless or at risk due to economic factors.
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