Metro: Homeless measure will raise less than estimated
Metro now predicts that its homeless services ballot measure will not raise as much money as previously estimated.
Metro predicted the measure would raise $250 million a year for 10 years when it referred the measure to the May 2020 ballot, where voters approved it. But when the COVID-19 pandemic hit shortly before the election, Metro said it might not raise that much. In October 2020, Metro said it might raise as little as $115 million in the first year.
Now, in a recent memo, Metro said the measure is expected to raise $151 million in the first year and $180 million a year after that. It is unclear whether it will ever raise $250 million a year before it expires.
The May 18 memo said the lower estimate was the result of "changes made by the Metro Council to address potential double taxation and other issues. Those changes are anticipated to reduce revenues by 10-16% or $25-$40 million per year. In addition, the pandemic has impacted income of some businesses and individuals subject to these taxes, and Metro has lowered the tax revenue estimated as a result."
The memo was sent to the chief financial officers of Multnomah, Washington and Clackamas counties, which will receive shares of the money to fund homeless services.
The measure was approved at the May 2020 election by a majority of voters in all three counties within Metro's jurisdiction. It will collect a 1% marginal income tax from people who make $125,000 annually or couples who earn $200,000 combined. It also includes a 1% marginal income tax on businesses that generate $5 million annually.
Based on how much of the revenue they are expected to generate, Multnomah County will receive 45% of the total funds, Washington County 33% and Clackamas County 21%. According to the memo, in the first year, Multnomah County will receive $68.4 million, Washington County will receive $50.3 million and Clackamas County will receive $32.2 million.
The measure is intended to reduce homelessness by helping to keep people at risk of eviction in their homes and providing one-on-one services to the chronically homeless so they stay housed. Many of the services will be provided to chronically homeless people who will be housed in the new affordable units being built by Portland and Metro affordable housing bond funds.
The measure took effect Jan. 1. Metro is contracting with the city of Portland to collect the taxes on its behalf. The counties had to submit plans for spending the money to be approved by the Metro Council.
In additional, a Multnomah County Circuit Court judge is considering the legality of the rules adopted by Metro to collect its new income tax for homeless services.
Judge Steffan Alexander held a remote hearing on Metro's request to validate its collection rules Friday, May 21. The legality of the rules had been challenged by a coalition of businesses and business organizations because they are different than those approved by Oregon to collect state income taxes.
The elected regional government agrees its rules are different than those of the state. But attorneys representing Metro argued their rules are legal because they were adopted under the regional government's home rule charter, which was approved by voters in 1992.
Attorneys representing the business interests argued that even though Metro has its own charter, Oregon law requires the rules to be the same as those approved by the state.
Both sides cited different Oregon court cases to support their positions.
Alexander did not rule at the end of the hearing but said he would take the matter under advisement. He did not say when he would issue a ruling.
The ruling will not affect Metro's ability to collect the taxes but could change the amount collected every year.
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