A group of Portland-area business leaders, financial managers, and nonprofit heads is calling for sweeping changes to local taxes and the way new ones are adopted. The recommendations come from a tax advisory group convened by Gov. Tina Kotek, who tasked the team with examining the city’s financial challenges and proposing reforms.

Taxes under review

The group has focused its attention on three high-profile local taxes that have collected far more money than originally anticipated:

• Portland Clean Energy Fund (PCEF): A 1% levy on large retailers intended to fund carbon-reduction projects and strengthen climate resiliency. It is projected to raise $1.6 billion in its first five years, five times the original estimate.
• Preschool for All: An income tax on high earners designed to fund universal preschool in Multnomah County. Critics say the program is sitting on hundreds of millions in reserves that won’t be used until 2034.
• Supportive Housing Services Fund: A tax on wealthy residents to finance homelessness programs. It is expected to generate $1 billion more than expected by 2029.

The report argues that these taxes have not met their promises to voters while straining the local tax base.

Read More: European Union Plans Major Rollback in Climate Reporting Rules

Key reform proposals

Among the group’s recommendations are the following:

• Redirect excess PCEF revenue to Portland’s general fund or convert the program into a sales tax.
• Halt Preschool for All collections until the program undergoes a full review, with potential reforms to mirror Oregon’s state-funded Preschool Promise.
• Cut the tax rate for the Supportive Housing Services Fund, allow its use for construction, and create a new oversight body.

The advisory group also suggests tightening how new tax measures are introduced. Ideas include requiring ballot measures to be reviewed by a five-person panel, limiting new taxes to a 10-year lifespan unless they demonstrate progress, and increasing the number of petition signatures required to qualify a measure for the ballot.

Pushback and dissent

Not all members agreed with the report’s conclusions. The Coalition of Communities of Color (CCC), which represents 18 organizations in Multnomah County, dissented from several recommendations. CCC argued that factors such as housing costs, wages, and workplace changes, not just taxes, contribute to residents leaving the area. The nonprofit also warned that restricting how new taxes reach the ballot could create “unnecessary barriers to direct democracy.”

Concerns about economic future

The advisory group warned that without changes, Portland risks losing more residents and companies, which could erode the city’s ability to fund essential services.

“The implications are serious,” the report states. “If the erosion of Portland’s taxable capacity continues, it will constrain the resources needed to serve those who rely most on public systems.”

Gov. Kotek welcomed the group’s work, emphasizing the need to ensure local tax revenue delivers clear results. “We must ensure local taxes deliver the outcomes Portlanders expect,” she said. “With more families struggling and economic uncertainty ahead, we can’t take our prosperity for granted. This report builds on post-pandemic progress and will help keep our region moving forward.”

Also Read: Weightmans Establishes New ESG Advisory Group

What comes next

Most of the suggested changes would require approval from elected officials or voters. The report urges city and county leaders to act quickly, noting that decisions in the coming months could shape Portland’s ability to restore public confidence, improve housing and education programs, and ensure investments in climate resiliency achieve their intended impact.

Follow more news and views via our Regulators and Featured Articles sections, and stay updated on the top ESG events to attend in 2025 for industry insights and networking.

Source: OPB