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UPDATE: Board told 2015 Oregon Legislature could increase transit funds but final decision uncertain

PAMPLIN MEDIA GROUP: CHASE ALLGOOD - TriMet could use part of the proposed payroll tax increase to help fund community shuttle bus operations, like GroveLink that is currently operating in Forest Grove.TriMet is on track to raise its payroll tax to fund service enhancements next year.

The regional transit agency’s Board of Directors was briefed Wednesday on a proposal to raise the tax on most employers by one-tenth of 1 percent over 10 years. The first public hearing is scheduled for August, and the board could approve the increase at its September meeting.

The increase would raise approximately $4.3 million in the first year and $43 million in the 10th year. The graduated increases would start January 2016.

During Wednesday morning's meeting, board Chair Bruce Warner said he had been please so far with the feedback from the business community. Warner said the business people he had heard from understand the need to increase service to reduce congestion and provide their employees with alternative ways to get to work.

The board was also told that the tenatively transportation funding package being considered by the 2015 Oregon legislature currently includes a tax on employees that could generate $70 million a year within TriMet's service district. The fate of the package is very much up in the air, however, because environmental groups are opposed to compromises it makes to secure Republican votes.

The increased revenue would fund Service Enhancement Plans (SEPs) in five regions within the TriMet district, which encompasses most of the urbanized areas of Multnomah, Washington and Clackamas counties. You can see a map of the regions here.

TriMet staff members have been meeting with community, businesses and neighborhood organizations within each region for the past few years to assess their needs and develop the plans.

Agency officials also recently began meeting with large employers and business associations to present the plans and discuss the proposed increase. Discussions have taken place with representatives of Intel, Nike, the Portland Business Alliance and the Westside Economic Alliance, among others, even though the board does not need their approval to pass the increase.

“Everyone wants more service, so we have been talking with employers and business organizations about it,” says TriMet General Manager Neal McFarlane.

According to TriMet, a large employer with a $150 million payroll would pay $15,000 a year more in the first year of the increase, and $150,000 more after it is fully phased in. A small employer with a $1.5 million payroll would pay $150 more in the first year and $1,500 in the 10th year. A very small employer with a $200,000 payroll would pay $20 more in the first year and $200 more in the last year.

When considering all eligible employers in today’s dollars, if the increase is approved, the median employer will pay an additional $8.19 in the first year and an additional $82 in 10 years. The median self-employed business will pay an additional $1.62 in the first year and an additional $16.17 in 10 years.

The payroll tax is TriMet’s largest source of revenue, accounting for a little over 50 percent of all funds in recent years. It is currently seven-tenths of 1 percent and would increase to eight-tenths of 1 percent under the proposal presented Wednesday.

The Oregon Legislature authorized TriMet to approve the increase in 2009. General Manager Neil McFarlane was repeatedly asked about it when TriMet cut service during the Great Recession. He consistently said the agency would not pursue it until the economy had recovered, TriMet had settled its long-running contract dispute with Amalgamated Transit Union 757, and the agency had specific plans for spending the additional revenue on service enhancements.

The regional economy is now recovering, even though not everyone looking for full-time work has found it yet. Many businesses are still struggling, too, although some segments like the software industry in Portland are doing well. The TriMet board will receive a briefing on the economy at its July meeting from the ECONorthwest consulting firm.

Positive changes

TriMet and ATU 757 agreed on a new contract late last year. Among other things, it reduces TriMet’s share of covered employee health costs, a previous commitment which had threatened the agency’s financial future.

“The settlement was a life-changing event for TriMet,” says McFarlane.

TriMet is also completing work on service enhancement plans that respond to historic and projected housing and employment changes in the region.

In addition, TriMet has increased farebox revenue in recent years by eliminating Fareless Square and cracking down on fare evaders. Fares now account for around 28 percent of the agency’s revenue. The other major source is the federal government at about 15 percent. Miscellaneous revenue sources make up the balance.

TriMet was created by the Oregon Legislature in 1969 to replace five bus companies in the region. Commuting patterns at that time reflected the traditional suburban model — many people lived outside downtown Portland and traveled there for work. Because of that, TriMet’s service lines were initially designed to funnel people from the suburbs to downtown in the morning and back home in the afternoon.

However, much has changed during the past four decades. Now many suburban cities are also employment centers. Two examples are Beaverton, near where Nike is based, and Hillsboro, where Intel anchors the booming Silicon Forest. As a result, commuting patterns have changed substantially over the years. Nowadays it is not uncommon for people to live in Portland and work in the suburbs, or for people to commute between suburbs for work.

In addition, because of gentrification, many low-income residents who rely on TriMet have moved from their traditional neighborhoods in North and Northeast Portland to outlying parts of town and even suburban communities.

Such trends are expected to continue as the region adds 400,000 more people and 260,000 more jobs by 2035.

Each SEP calls for starting new bus lines within and between the cities in the five regions. In addition, TriMet envisions contracting with other parties to operate shuttle services in areas where the need is not great enough to justify a new bus line. TriMet is already helping to fund such a service with federal dollars in Forest Grove called GroveLink. It is operated by Ride Connection, a nonprofit organization.

TriMet last raised the payroll tax in 2003. Like the new proposal, the one-tenth of 1 percent increase was phased in over 10 years. Among other things, it helped pay the operating expenses of the MAX Green Line between Portland and Oregon City.

The proposed increase would not pay for any new rail service, but could cover part of operating the Powell-Division Bus Rapid Transit line being studied between Portland and Gresham. Construction costs will have to come from other sources, which is the same situation facing the high-capacity transit line being studied between Portland and Tualatin as part of the Southwest Corridor Plan.

The proposal could complicate plans by Mayor Charlie Hales and Commissioner Steve Novick to restart discussions about creating a new Portland street fee when the 2015 Legislature adjourns. Their last proposal included a fee on businesses based in part on size. If TriMet approves the payroll tax increase, business owners opposed to the fee will be able to argue they are already paying more for transportation-related services.

Service Enhancement Plans

TriMet General Manager Neal McFarlane says the SEP plans represent a “rebalancing” of the transit system. The cover the following five regions:

• Eastside includes portions of East Portland (generally east of I-205), the cities of Fairview, Gresham, Happy Valley, Troutdale, and Wood Village.

• North/Central Portland includes Northwest Portland, North Portland, downtown Portland, Southeast neighborhoods north of Division and extending east to I-205, and Northeast neighborhoods extending east to I-205.

• Southeast includes portions of Southeast Portland (generally south of Division Street), the cities of Estacada, Gladstone, Happy Valley, Milwaukie and Oregon City and unincorporated urban Clackamas County.

• Southwest includes portions of Southwest Portland and the cities of Beaverton, Durham, King City, Lake Oswego, Sherwood, Tigard, Tualatin and West Linn.

• Westside includes portions of West Portland and the cities of Beaverton, Cornelius, Forest Grove and Hillsboro.

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