Portland's business lobby is taking the city to court over a $15 bump in the arts tax, arguing that the City Council had no business raising a voter-approved levy without asking voters first. The Portland Metro Chamber filed a complaint in Oregon Tax Court on behalf of its president and CEO, Andrew Hoan, and small business owner Loretta Guzman, challenging the council's changes to the Arts Education and Access Tax.
The lawsuit, filed Thursday and first reported by OPB, argues that the Portland City Charter and the Oregon Constitution do not give the council authority to alter a tax that voters originally approved at the ballot box without putting any changes back before those same voters. The Chamber contends the council's May vote amounted to an end-run around the democratic process that created the tax in the first place.
Portland voters approved the Arts Education and Access Tax in 2012, with nearly 62 percent in favor, according to OPB. The tax has generated more than $150 million since its introduction, per the seed reporting from The Portland Tribune, with the money funding arts teachers in Portland-area school districts along with nonprofit arts organizations and arts-access programs.
What the Council Changed in May
Portland City Council voted 7-5 in May to overhaul the tax structure, raising the annual rate for most single filers from $35 to $50 beginning with the 2027 tax year, while joint filers will see their rate rise to $100, per the Tribune's reporting. The council also expanded who qualifies for an exemption, a change the Chamber is not contesting.
Under the new rules, residents earning less than $20,000 individually, or $40,000 jointly, are exempt from paying the tax at all, a shift OPB reported would relieve roughly 214,000 current filers from the obligation. Previously, Portland residents earning more than $1,000 in gross income were required to file or pay the tax. The council also voted to index both the tax and the filing threshold to inflation going forward, meaning future increases would happen automatically rather than through another council vote, according to The Oregonian/OregonLive.
Chamber Zeroes In on Two Specific Provisions
The Chamber's complaint does not challenge the wider income-eligibility change. Instead it targets two pieces of the package: the $15 increase itself for single filers and the provision tying future arts tax increases to inflation without further voter input. The group argues that both changes alter the fundamental terms voters approved back in 2012, and that only voters can authorize that kind of alteration.
Hoan and Guzman are asking a judge to block the city from enforcing the increase while the litigation moves forward, according to the same OPB report. The Chamber says that if it prevails, the tax would return to $35 for single filers. The group also says it warned the city before the May vote that it would pursue legal action if the council raised the tax without putting the change before voters, according to OPB's account.
City Says It Had the Authority
City Attorney Robert Taylor had told councilors ahead of the vote that the council possessed the authority to make the changes, OPB reported. The city has since adopted a policy of not commenting on pending litigation, and did not respond further when the lawsuit was filed, per the station's report.
Portland's Ordinance 192185, which codified the changes, frames the amendment as providing tax relief, promoting the long-term sustainability of the Arts Access Fund, defining key terms and responding to community and audit recommendations, according to the City of Portland. Separately, Oregon legislative materials note that a prohibited poll or head tax must be assessed per capita at a uniform, fixed amount — and state that because the Arts Tax's exemptions depend on individual and household income, it is not considered a per-capita tax under that provision.
A Pattern of Pushback From the Chamber
This is not the Chamber's first clash with the city over taxation. In 2016, the business group strongly opposed a separate tax on companies whose chief executives earn at least 100 times the median employee wage, though the council adopted it anyway, per the same account. Last year, the Chamber sent city leaders a letter opposing a proposal to increase the voter-approved clean energy fund tax.
The stakes of this case extend beyond the arts tax itself. OPB reports that a win for Hoan could have a chilling effect on future Portland taxes that are not explicitly spelled out in the city charter. That matters now because Portland councilors Mitch Green and Angelita Morillo have proposed hiking the city's existing CEO tax on hundreds of large corporations, a change the sponsors say could raise about $88 million annually, according to The Oregonian/OregonLive.
What the Tax Has Funded
The Arts Access Fund, built from the $35-per-year tax voters approved in 2012, has raised more than $147 million and provided more than $85 million to Portland school districts, according to the City of Portland. The fund supports arts and music education in kindergarten through fifth grade classrooms along with grants to local nonprofit arts organizations, the city says, and the tax has brought in around $12 million annually for years, per OPB's reporting.
It remains unresolved whether a judge will grant the request to block enforcement of the increase while the case proceeds. For now, both sides are waiting on the Oregon Tax Court as the arts tax's higher rate is set to take effect with the 2027 tax year.
