Portland City Council Resolution 36939 and Exhibits and Additional Documents and Testimony

RESOLUTION No.
3 6 93 9 As Amended
Refer Portland City Code Changes to Title 3 and Title 5 regarding arts education and access to
City voters at the November 6, 2012, General Election ballot. (Resolution)
WHEREAS, arts and music are esscntial to a high quality, well-rounded cducation; and
WHEREAS, national research links access to arts and music education to improved test scores,
graduation ratcs and college admittance- particularly for lowcr-income students and students at-
risk. In 2010, 44% of Portland's high school students did not graduate with their class; and
WHEREAS, non-profit arts and culture organizations playa key role in the education of our
children, the economic vitality of our region, and the livability of our city; and
WHEREAS, budget cuts have resulted in a steep decline of arts and music education in Portland
schools, leaving over 11,500 students in 26 schools with no access to certified instruction in art,
music, dance or drama as of the most recent school year; and
WHEREAS, Portland schools have fallen behind with only 18% of our elcmentary schools
offering art instruction (compared to 83% nationally) and only 58% of our elementary schools
offering music (compared to 94% nationally); and
WHEREAS, cities with thriving arts and culture communities help attract businesses, develop a
creative workforce and create economic development opportunities across multiple sectors; and
WHEREAS, this proposal will restore arts and music education to our schools by providing
stable, long-term funding f()r certified arts and music teachers - ensuring access to the arts for
Portland school students; and
WHEREAS, this proposal will provide grant funding to schools and to non-profit organizations
that make arts and culture experiences widely available to school children and every Portland
resident; and
WHEREAS, the residents of the City of Portland should be allowed to vote to approve the Arts
Education and Access Fund.
NOW, THEREFORE, BE IT RESOLVED that the Council submits an act, attached hereto as
Exhibit A, entitled: "A Measure, amending the City of Portland Code, Titles 3, Legislation and
Election and Title 5, Revenue and Finance, by ordinance to provide for a limited income tax to
support arts education and access to the arts" and Exhibit A.I., new City Code
Sections 3.15.060, 5.04 and 5.73. Exhibit A, and attachments Exhibit A.I arc hereby submitted
to the legal voters of the City of Portland, Oregon, f()r adoption or rejection at the General
Election in the City of Portland, Multnomah County, Clackamas County and Washington County
to be held on November 6, 2012; and
Page 1 of2
PETITION FOR BALLOT TITLE REVIEW - EXHIBIT 1 - Page 1
36
BE IT FURTHER RESOLVED that the Council submits the ballot title for the November 6,
2012 General Election ballot, as shown in the attached Exhibit B; and
BE IT FURTHER RESOLVED that the City Council directs the City Auditor to publish the
ballot tile as shown in Exhibit B in accordance with City Code; and
BE IT FURTHER RESOLVED that a cap on the amount of start-up administrative expenses
shall be imposed as shown in Exhibit C; and
BE IT FURTHER RESOLVED that the City will execute Intergovernmental Agreements (IGAs)
with six school districts in a form similar to that shown in Exhibit D; and
BE IT FURTHER RESOLVED that the ballot measure shall either authorize a limited income
tax for arts education and arts access or reject a limited income tax for such purposes. Each voter
who votes upon said proposed measure shall vote "yes" or "no" in the space indicated for such
vote on the City ballot at said election. A "yes" vote shall approve the limited income tax while
a "no" vote shall reject a limited income tax; and
BE IT FURTHER RESOLVED that the Mayor may submit an explanatory statement to the City
Auditor for publication in each County's voters' pamphlet; and
BE IT FURTHER RESOLVED that the City Auditor is directed to forward to Multnomah,
Clackamas and Washington County Elections offices all materials necessary to place this
measure on the November 6,2012, General Election ballot.
LaVonne Griffin-Valade
Auditor of the City ofPorlland
B /I c/
.y /C/U>f-
Adopted by the Council: JUN 27 2012
Commissioner: Mayor Adams
Prepared by: Cary Clarke/cj
Date Prepared: June 21, 2012
Page 2 of2
/
Deputy
785
Agenda No.
RESOLUTION NO.
Title
36939 As Amended
Refer Portland City Code Changes to Title 3 and Title 5 regarding arts education and access to City voters at
the November 6,2012, General Election ballot. (Resolution)
INTRODUCED BY
CLERK USE: DATE FILED
JUN 22 2012
Commissioner/Auditor:
Mayor Sam Adams
COMMISSIONER APPROVAl.-
LaVonne Griffin-Valade
Mayor-Finance
Auditor of the City of Portland
,
/

Position 1/Utilities - Fritz
Position 2NVorks - Fish
By:
Deputy
Position 31Affairs - Saltzman
/
Position 4/Safety- Leonard ACTION TAKEN:
BUREAU APPROVAL
Bureau: Mayor's Office
Bureau Head: Mayor Adams
Prepared by: J.H. Van Dyke
Date Prepared: June 21,2012
Financial Imp.act & Public
Involvement Statement
Completed

Amends Budget 0
Portland Policd' Document
If "Yes" requires ity Policyparagraph stated
in doclint. IX]
Yes No
Council Meeting Date
June 27, 2012
City Attorney Approval:
required for contract code. easement, 'l)
franchise, charter, Comp Plan '\.J .
(
\
'-....-J
AGENDA
FOUR-FIFTHS AGENDA COMMISSIONERS VOTED
AS FOLLOWS:
TIME CERTAIN
Start time: 2:45
YEAS NAYS
1. Fritz
1. Fritz
V'
Total amount of time needed:
--
.J
(for presentation, Estiinony and discussion)
2. Fish
2. Fish
CONSENT 0 3. Saltzman 3. Saltzman
REGULAR 0
4. Leonard 4. Leonard
.J
Total amount of time needed:
--
(for presentation, testimony and discussion)
Adams Adams
-/
369
EXHIBIT A
AN ACT
A Measure, amending the City of Portland Code, Titles 3, Legislation and Election and
Title 5, Revenue and Finance, by ordinance to provide for a limited income tax to support
arts education and access to the arts.
BE IT ENACTED BY THE PEOPLE OF THE CITY OF PORTLAND, OREGON
The City of Portland ordains:
Section 1: Title 3, Legislation and Elections, and Title 5, Revenue and
Finance are hereby amended by the changes attached as Exhibit A.l.
Section 2: If any part of this Ordinance or any tax against any individual is
found unconstitutional, illegal or invalid, such unconstitutionality, illegality or invalidity
will affect only that part of this Section or tax and will not affect or impair any other
provision of the tax or Section.
Section 3: This ordinance and the Code changes attached as Exhibit A. I shall
be in full force and effect upon enactment by City of Portland voters at the election called
for November 6,2012.
36 939
EXHIBIT A.l
Changes to City Code
1. City Code Section 3.15.060 is amended as follows:
A. [1-5 no changes. ]
6. Manage, enforce and collect the Arts Education and Access
Income Tax.
67. Manage and enforce all regulatory programs formerly the
responsibility of the Bureau of Licenses, including the authority to
enact administrative rules and regulations.
18. Manage and collect assessments and liens formerly the
responsibility of the Auditor's 01Tice.
89. Perform business management functions including mail
processing, receipting and distribution; and perform overall
financial accounting of bureau revenues.
910. Audit functions including the Portland area business license tax
returns, transient lodging taxes and internal systems and processes,
as well as other special audits as deemed necessary.
WI I. In consultation with the requesting bureau, recommend systems for
new revenue or fee collection services.
1-112. Manage funds as assigned.
B. [no changes.]
2. City Code Chapter 5.04 is amended by adding a new section as follows:
5.04.510 Arts and Access Fund
The Arts Education and Access Fund is hereby created. The purpose of the Fund is to
receive Gross Revenues received from the Arts Education and Access Income Tax and
provide the Net Revenues to the School Districts and to the Regional Arts and Culture
Council solely for the purposes established in Chapter 5.73 of this Code. In no case shall
Net Revenues be transferred from the Arts Education and Access Fund to the City'S
General Fund, or any other fund, for any other purpose.
Exhibit A.l Page 1 01'6
3. City Code Title 5 is amended by adding a new chapter as follows:
Chapter 5.73 Arts Education and Access Income Tax
5.73.010
5.73.020
5.73.030
5.73.040
5.73.050
5.73.060
5.73.070
5.73.080
5.73.090
Definitions.
Tax Imposed.
Net Revenues Distribution.
Intergovernmental Agreements.
Citizen Oversight Committee.
Audits.
Effective Dates.
Revenue Bureau Responsibilities.
Limitation on Costs.
5.73.010 Definitions.
For the purposes of this paragraph, the following definitions apply unless the
context requires a different meaning.
A. "Catchment" means the geographical area from which an elementary
school within a District draws its students.
B. "Director" means the Director of the Revenue Bureau, or authorized
designee.
C. "Gross Revenues" means the total of all revenue l ~ c e i v e d by the City of
Portland from the Arts Education and Access Income Tax without regard
to collection, administrative or other costs.
D. "Net Revenues" means the revenue remaining after interest, collection,
administrative and other costs and refunds are deducted from Gross
Revenues.
E. "Portland K-5 Students" means students that reside within the
geographical boundary of the City of Portland, Oregon that attend
Kindergarten through 5
1h
grade in public schools.
F "Resident" or "resident of the City" means:
1. An individual who is domiciled in this City unless the individual:
Exhibit A.I
a.
b.
c.
Maintains no permanent place of abode in the City;
Does maintain a permanent place of abode elsewhere; and
Spends in the aggregate not more than 30 days in the
taxable year in the City; or
Page 2 of6
3 6 939
2. An individual who is not domiciled in this state but maintains a
permanent place of abode in this state and spends in the aggregate
more than 200 days of the taxable year in the City unless the
individual proves that the individual is in the City only for a
temporary or transitory purpose. I:'or purposes of this subsection, a
fraction of a calendar day shall be counted as a whole day.
G. "Resident" or "resident of the City" does not include:
1. An individual who is a qualified individual under section 911(d)(I)
of the Internal Revenue Code forthe tax year;
2. A spouse of a qualified individual under section 911 (d)(l) of the
Internal Revenue Code, if the spouse has a principal place of abode
for the tax year that is not located in the City; or
3. A resident alien under section 7701(b) of the Internal Revenue
Code who would be considered a qualified individuaLunder
section 911 (d)(l) of the Internal Revenue Code if the resident alien
were a citizen of the United States.
H. "Schools" means those educational institutions defined as schools by the
Oregon Department of Education, but do not include on-line schools.
I. "School Districts" means the Portland Public, David Douglas, Centennial,
Pat"krose, Reynolds and Riverdale school districts.
5.73.020 Tax Imposed.
A tax of $35 is imposed on the income of each income..,earning resident ofthe
City of Portland, Oregon who is at least eighteen years old. No tax will be
imposed on filer(s) within any household that is at or below the federal poverty
guidelines established by the federal Department of Health and I-Iuman Services
for that tax year.
5.73.030 Net Revenues Distribution.
Net Revenues will be paid by the Revenue Bureau to the Arts Education and
Access Fund for distribution by the City as follows:
A. First, funds shall be distributed to the School Districts for the purpose of
hiring certified arts or music education teachers for elementary school
students for Kindergarten through 5th grade (K-5). Distribution shall be
based on a ratio of one teacher for every 500 K-5 students at schools that
serve Portland K-5 students, except that Charter schools shall be funded
based on a ratio of one teacher for every 500 Portland K-5 students served
by the Charter school. Students attending schools that receive no
Exhibit A.l Page 3 of 6
36 939
distribution of funds shall not be counted. In the event that a school has
less than 500 K-5 students, or in the case of Charter schools, less than 500
Portland K-5 students, funds shall be distributed on a pro rata basis based
on the number of students attending that school. Funds shall not be
distributed to:
1. Elementary schools within the School Districts that have no
Portland K-5 students; and
2. Elementary schools within the School Districts that have Portland
K-5 students enrolled, but whose catchment does not overlap with
the City of Portland's geographical boundaries.
B. Any funds remaining after distribution to the School Districts shall be
distributed to the Regional Arts & Culture Council (RACC). 'rhe City
shall execute a contract amendment with RACC to ensure the funds are
spent as follows:
Exhibit A.I
1.
2.
Up to 95 percent of the remaining funds shall be distributed to
RACC for grants to support non-profit Portland arts organizations
that demonstrate artistic excellence, provide service to the
community, show administrative and fiscal competence and
provide a wide range of high-quality arts programs to the public.
RACC will make the determination as to which arts organizations
shall be supported, in accordance with their contract with the City.
In the event that RACC distributes less than 95 percent of the
funds to non-profit Portland arts organizations, the remaining
funds shall be distributed for the purpose of providing grants and
programs as described in subsection 2 below.
A minimum of 5 percent of the remaining funds shall be
distributed to RACC for the purpose of providing grants and
programs to non-profit arts organizations, other nonprofits and
schools that will give access to high-quality arts experiences to
Kindergarten through 12'h grade students (K-12) and for grants and
programs that will make arts and culture experiences available to
Portland residents, with particular emphasis on programs directed
to communities who are underserved by local arts providers.
These funds are in addition to existing and ongoing financial
support from the City to RACe.
Page 4 01'6
36 939
5.73.040 Intergovemmental Agreements.
The City will execute Intergovernmental Agreements (lGAs) with the School
Districts and will amend its contract with RACC and require them to provide
independently audited financial statements each year that show how the funds
received pursuant to this program are spent.
5.73.050 Citizen Oversight Committee.
The City will appoint a citizen oversight committee that is representative of the
City's diverse communities to ensure the Arts Education and Access Fund is
being implemented as required, to review expenditures made and to report their
findings in a public record to the City Council on an annual basis. The committee
shall be comprised ofa minimum of five and a maximum often members,
including, if possible, a member of the Tax Supervising and Conservation
Commission.
5.73.060 Audits.
The City will receive copies of annual independent audits or other documentation
regarding expenditures by RACC and the School Districts each year. The Arts
Education and Access Fund also will be part of the City's independent annual
audit report, the results of which will be made available to the public.
5.73.070 Effective Dates.
This tax will be effective beginning with the tax year 2012 and shall continue
each year thereafter. Payment of the tax each year is due on the date on which
state taxes are due, not including any extensions of time that might be requested
or received.
5.73.080 Revenue Bureau Responsibilities.
The Revenue Bureau shall:
A. Receive the Gross Revenues derived from the Arts Education and Access
Income Tax and distribute the Net Revenues in accordance with the IGAs
and RACC contract;
13. Keep accurate records of the funds;
C. Report to the City Council by way of a public record on all funds received
and directed to the School Districts and RACC;
D. Adopt administrative rules necessary to implement tax collection and
administration.
E. If necessary, contract with public or private agencies to fulfill any of its
duties in regard to this Arts Education and Access Income Tax and the
Arts Education and Access Fund; and
Exhibit A.I Page 5 of 6
F. Accept any and all gifts and donations to the Arts Education and Access
Fund.
5.73.090 Limitation on Costs.
A. The Revenue Bureau's first year start-up costs are capped at $500,000.
Ongoing administrative costs are capped at an average 5 percent or less of
Gross Revenues over a five year period.
B. The City's contract amendment with RACC will require RACC to:
36939
Exhibit A.I
1.
2.
,..,
.J.
4.
5.
Limit any additional RACC arts education coordination costs
incurred as a result of receiving funds to a maximum of 3 percent
of Net Revenues;
Ensure that highly qualified persons will coordinate and work with
the School Districts in the provision of high quality arts and/or
music education;
Seek additional funds from other sources for arts education and
access to supplement the goals of the Arts Education and Access
Fund;
Provide quality oversight to the programs of the School Districts as
well as the expenditures made by RACC; and
Coordinate between School Districts and arts organizations to
ensure high quality arts education for Portland students.
Page 601'6
EXHIBIT B
Ballot Title for Arts Education and Access Income Tax
CAPTION
Restore School Arts, Music Education; Fund Arts through Limited Tax (10 words)
QUESTION
Shall Portland restore arts, music for schools and fund arts through income tax capped at
35 dollars per year? (19 words)
SUMMARY
This measure creates a limited income tax capped at $35 for each adult income-earning
Portland resident. Individuals in households below federal poverty level pay no tax.
Tax can only be used for:
Arts and Music Teachers: Funds to hire arts and music teachers for kindergarten
through 5
th
grade students at local public schools attended by Portland students.
Distribution of funds based on school enrollment.
Arts Access: Remaining funds for grants to nonprofit arts organizations, other
nonprofits and schools. Will fund grants to provide high-quality arts access for
kindergarten through 12
th
grade students and to make arts, culture experiences available
to underserved communities. Funds administered by Regional Arts and Culture Council
(RACe).
Accountability measures include:
Administrative costs are capped.
Expenditures subject to oversight by citizen committee.
Independent financial audits of RACC and School District expenditures.
Estimated funds raised will be $12 million annually. The tax is effective beginning with
2012 tax year, with payment due when state taxes are due. (164 words)
36 939
Exhibit C
First year start-up costs are capped at $500,000 in the aggregate and are excluded from
the computation of the YYt> cap on administrative cost.
Examples of anticipated start-up costs:
Multiple informational mailings to all Portland households
Information technology (e.g. database, website, tclephones)
Total
$395,000
$105,000
$500,000
3 939
EXHIBIT D
INTERGOVERNMENTAL AGREEMENT
BETWEEN SCHOOL DISTRICT AND THE CITY OF PORTLAND FOR
ONE-TIME FUNDS AND ONGOING PARTNERSHIPS
This Intergovernmental Agreement ("IGA"), authorized pursuant to ORS 190.110, is
entered into School District, ("District") and the City ("City").
District and City may be referred to individually as a "party" and co as "the parties."
RECITALS
A. Education is one of the top four overarching
B. Arts and music are important parts of a
C. Non-profit arts and culture organizations
children, the economic vitality of our region, and the liva
D. Budget cuts have resulted in
schools leaving nearl y 12,000 students in
music, dance or drama as of 2012.
Plan;
our
1'1 -n1"'''''' education in Portland
t() instruction in art,
nati6 with only 18% of our
c0111ppre:c1 to 83(0; nationally) and 58% of our
nationally).
E. Portland SCIl,OOIIS l1a
1
elementary schools u
elementary schools "H,p."'1On ;ornp,arc:<1
F. National"(""'P'"I'{>h
graduation
color.
education to improved test scores,
for lower-income students and students of
high school students do not graduate with their class.
communities attract businesses, develop a
ee<)JlClmJIC development opportunities across multiple sectors.
rn"""1On arts
11. in restoring arts and music education to our schools by providing
stable, long-term certr1lec1 arts and music teachers - ensuring access to the arts for
every Portland SCl1001 student.
I. This IGA is intended to improve the quality, accessibility, diversity and stability of
arts and culture in Portland by providing general operating support to non-profit Portland arts
organizations that demonstrate artistic excellence, proven service to the community,
administrative and fiscal competence and provide a wide range of high quality arts programming
to the public.
36 939
]. This IGA will provide grant funding to schools and to non-profit organizations make
arts and culture experiences widely available to school children and every Portland resident,
regardless of income or neighborhood.
K. The City's Revenue Bureau is authorized to receive gross revenues collected as a
result of the Arts Education and Access Income Tax and distribute a portion of the net revenues
to District
AGREEMENT
,,"> 'H'''U teachers salaries
in full time administrative
mc:lu<Jll1g associated employer paid
but excluding premium or differential
per1c),nYlanICe of duties outside of teaching
a. "Average tcacher salary" 11ly(lns
within the District actually
positions, teachers'
payroll costs,
pay, or any
classes during
1. Recitals. The recitals above are hereby ,nr'{\ifl"ii\i"<itp,ri
3. Definitions:
L. District has agreed to spend the money to ensure that funds used to pay for the
costs of providing certified arts teachers and music teachers to within the
District.
2. Effective Date/Tenn. This IGA is ettective
executed this IGA. The term ofthis IGA is
each year for a period of three years thereafter so long
in effect.
of the City of Portland.
total of all revenue received by the City of
CC1UC,ltlCll1 and Access Income Tax without regard to collection,
means children in the School Districts in grades Kindergarten
K-5" students shall mcan students that reside within the
be)Ulll=Im"v of the City of Portland.
e. "Net Revenues" means the revenue remaining after collection, administrative
and other costs and refunds are deducted from Gross Revenues.
4. Payment Calculation: If the Arts Education and Access Income Tax is approved by
City voters the City's Revenue Bureau will receive the money collected and distribute a portion
of Net Revenues to District in the following manner:
a. District will provide its average teacher salary within the district and the
estimated average daily membership ("ADM") ofK-5 students for the 2013/2014 school year to
the Bureau by May 1,2013. Any ADM figure shall be adjusted in order to count each
kindergarten students as one student.
b. The Bureau initially will distribute Net Revenues to District based on the

Average teacher salary X (the estimated ADM of K-5 students
, Uf)datecl and
VY A',A "AVB reVIse
C'fJ''''''.VU figures
, funds already paid to District
\ remainder.
music education to all K-5
111t1c}1tlon of IGA is to add to the number of
financial problems District. To
time employee (FTE) of certified arts
that educates K-5 students.
ureau will subtnic
and pay Dis
its Comprehensive Audit and Final Report (CAFR)
uV'''UJb compliance with this IGA. The CAFR shall
expended pursuant to this program.
a. The Bureau will distribute 50% of the Net
determined by the calculation stated in Paragraph
b. By November 1, 2013, District
revised ADM ofK-5 students IDr the 2013
the amount of Net Revenues owed to Dish-ict
("the revised amount.")
c. By January 15,2014,
on October 1, 2013 from the revis
each
7.
existing certified <l1H'<'.H"
that end, District
and/or music ,nc,h-'''';-""n
5. Distribution of Funds:
6. Provision of services: District s
students in each of its elementary schools.
9.
elementary scl1o()l students
District must provide arts or music education to its
grade from Kindergarten through Iill grade.
10. RACC: District will coordinate with the Regional Arts and
Culture Council to ensure that District is providing high quality arts and music
education based on the resources available including those provided by the Arts Education and
Access Fund. In the event that RACC notifies the City that District is not meeting the
expectations of this provision, the parties will consider this to be a "dispute" under this IGA and
the City and District shall engage in dispute resolution as required by Paragraph 22.
11. Use of Funds/Indemnification: District will use the Net Revenues it receives from
the City in accordance with this IGA and shall not use the funds for any other purpose
S 6 939
whatsoever. District shall hold harmless, indemnify and pay back the City for any expenditure
of funds that is not in accordance with the requirements of this IGA.
12. Amendments. The terms of this lOA shall not be waived, altered, modified,
supplemented, or amended, in any manner whatsoever, except by written instrument signed by
both parties. The Mayor of the City of Portland, or designee, is authorized to amend this lOA
provided it does no increase the eost to the City.
13. Captions. The captions or headings in this lOA are for only and in no
way define, limit or describe the scope or intent of any provisions of
14. Law/Choice of Venue. Oregon law, without
provisions, shall govern this lOA and all rights, obligations '-'U"'JI-
Venue for all disputes and Litigation shall be in lV1l11tJ10111ilAl
e only parties to this IGA and
the entire GA between the parties. No
this lOA shall bind either party unless in
modification or change, if made, shall
purpose given. Thcre are no
not specified herein regarding this
15. Severability/Survival. If any of the nH)VlS!CmS contained in this are held
unconstitutional or unenforceable, the be
impaired. All provisions concerning the limitation and conflicts of interest
shall survive the termination of this lOA for any cause.
16. No Third Party Beneficial'
as such, are the only parties entitled to en
Sh,l11 be construed to give or provide any be
unless third persons are expressly described
lOA.
that they may COIl1C11Jct
means including
This lOA may be executed in any number of
shall constitute one lOA binding on all Parties,
not signatories to the same counterpart. The Parties agree
traJI);iactl,on, including any amendments or extension, by electronic
signatures.
19. No Party shall assign or transfer any interest in this lOA, nor assign
,Lly claims money or to become due under this lOA, without the prior written approval of
the other Parties. This lOA shall bind and inure to the benefit and be enforceable by, the
Parties hereto and their respective successors and permitted assigns.
20. Subsequent Years: After the school year 2013/2014, the parties shall take the
actions required above by the same dates in subsequent school years so long as the Arts
Education and Access Income Tax remains in dIect.
21. Termination: This lOA may be mutually terminated at any time by written consent
of the parties. The City may unilaterally terminate this lOA if District J ~ 1 i l s to use the Net
Revenues in accordance with his lOA.
22. Dispute Resolution: In the event a dispute arises regarding the use of the Net
Revenues by District or any other matter covered by this lOA, the parties agree to have high
level representatives of City and District to engage in discussions before taking any legal action.
If discussions J ~ l i l to resolve the issue the parties shall engage in mandatory mediation in an
attempt to resolve the dispute. In the even of mediation the parties pay one-half of he
mediator's bill. If mediation fails to resolve the matter either party any legal action
permitted to it under the law ofthe State of Oregon.
IN WITNESS WHEREOF, the duly authorized rep1re$ntatrves
have executed this Contract as of the date and year Jirst
lwi,-, "t and District
CITY OF PORTLAND
36939
OFFICE OF MAYOR SAM ADAMS
CiTY OF PORTLAND
June 27, 2012
Dear Colleagues;
We have a growing problem in our city: despite our national reputation as a creative community,
arts and music education is rapidly disappearing from our schools. Currently, over 11,500
students in 26 schools have no access to certified instruction in art, music, dance or drama and
only 18% of our elementary schools offer art instruction (compared to 83% nationally.)
Our kids and communities deserve more. National research liliks access to arts and music
education to improved test scores, graduation rates and college admittance: this is particularly
true for lower-income and at-risk students. In 2010,44% of Portland's high school students did
not graduate with their class. We must do something about this.
The lack of arts education and funding holds our city back. Non-profit arts and culture
organizations playa key role in the education of our children, the economic vitality of our
region, and the livability of our city. We know that cities with thriving arts and culture
communities attract businesses, develop a creative workforce and create economic development
opportunities.
After years of extensive research and cOllllllunity outreach conducted in partnership with the
Creative Advocacy Network (CAN) that engaged thousands educators, nonprofit arts
organizations, business leaders, elected officials, parents and residents, [ am proud to bring this
proposal to Council that will help to address our City's education and access needs in a strategic
fashion to the benetit of all Portlanders.
We must ensure that every student has access to music and the arts and that the riches of
POItland's creative community are available to all of our citizens, regardless of income or
neighborhood. Referral of this plan to the voters of the City of Portland for their consideration on
the November 6,2012 General Election ballot will givc the citizens of this city the opportunity to
make that happen.
Respectfull y submitted,
~
Sam Adams
Mayor, City of Portland
122' SW FOURTH AVENUE, Sun E' 340 POl<lI I\ND, O!,Eli()N 97204
(503) 823-4120. mayorsamadams.com
Arts Education and Access Income Tax
June 2012
City of Portland Revenue Bureau
Office of Management and Finance
3 6 ~ } 9
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Background
The City of Portland, in partnership with the Creative Advocacy Network (CAN), is considering an art and
music education and access funding proposal that may be referred to voters by ballot measure on
November 6,2012.
1
This funding proposal, known as the Arts Education and Access Income Tax is
designed to create an equitable and predictable way to fund the arts with alow-burden to taxpayers. Money
would be dispersed to Portland schools and to the Regional Arts &Culture Council (RACC) to fund the arts
and art education.
Representatives from the Mayor's Office and CAN initiated discussions with the Revenue Bureau to seek
advice in the administration of the Arts Education and Access Income Tax. The Revenue Bureau's initial
recommendation was that the Oregon Department of Revenue (DOR) be the primary administrator of the
tax because that agency already has an income tax collection infrastructure. Conversations with DOR
management have resulted in that agency communicating it cannot collect this income tax at this time.
Structure
Under the proposed Arts Education and Access Income Tax, all income-earning adult residents of Portland
would be subject to an annual tax in the amount of $35. There would be an exemption available based on
100% of the Federal Poverty Level (updated annually) based on family size. "Income earning adults" would
include individuals with wage (W-2) income, self-employment income, rental income, retirement income
(including Social Security income), "flow-through" income from partnerships and S-corporations, investment
income (interest, dividends and capital gains) or any other income.
Under the current proposal, individuals would file an annual tax return which would be due on April 15, the
same time as their other income tax returns. If the Arts Education and Access Income Tax is approved by
voters in the November 6, 2012 election, the tax would be effective for the 2012 tax year and the first return
would be due on April 15, 2013. The return would be simple and would be no more than one page in. length.
There would be a simple online filing and payment option and its use would be strongly encouraged.
Taxpayers would have the option of paying with acredit card and they would likely be subject to a
"convenience fee" in addition to the $35 if they use acredit card. The amount of this convenience fee would
likely be less than $1 .
All adult residents would be required to file the one-page form. There would be asection of the form
dedicated to claiming the "poverty level exemption" and there would be arequirement to send in verification
(federal income tax returns, etc.) in lieu of the $35 payment if claiming the exemption. If an individual is
claiming that they had no income, they would sign astatement to that effect and their claim would be subject
to future verification.
The proposed Arts Education and Access Income Tax would use the same residency definition that the
State of Oregon uses in determining the residency of taxpayers for individual income tax purposes. If an
individual is notified of afiling requirement under the proposed tax and they claim that they are not a
resident of Portland, they would be required to provide verification such as a rental contract, utility bills, etc.
Taxpayers would be offered two payment options. The first option would be to pay the entire balance due.
($35) by April 15. The second option would be to pay $18 by April 15 and then pay asecond installment of
$18 by May 15. There would be no extension of time to file or pay. If aresident's federal and Oregon tax
returns have afiling deadline extension until October 15, they can request an extension of time to provide
1 CAN is anon-profit organization established to research and support funding and access to arts education and the arts in the
Portland area. See http://theartscan,orq/.
2
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supporting documentation. If aresident pays the $35 fee in error, they can request arefund of the overpaid
~ O O ~ .
As with any income tax, penalties would need to be used as atool to encourage compliance. An example of
an appropriate penalty structure would be to add a$15 penalty if the tax is paid after the April 15 due date
and then to add a$20 penalty if the return is more than six months late. There would be policies in place to
waive penalties in certain limited circumstances.
Figure 1. Payment Options
$35 Tax if paid by April 15
$36 $18 paid by April 15 and remaining $18 paid by May 15 ($35 tax plus $1 charge)
$50 Includes $15 penalty if paid from April 16 to October 15
$70 Includes additional $20 penalty if paid after October 15
$0 Adults (18 and over) under the poverty level
$0 Adults with no income
$0 Residents under 18 years of age
Projected Revenue
In order to project the revenue that would be generated by the proposed Arts Education and Access Income
Tax, the population of Portland must first be analyzed. Based on Census Bureau data, in 2010 there were
approximately 398,582 individuals that would have been responsible for paying the tax. See the table below
for asummary of eligible taxpayers.
Figure 2. Estimated Eligible Residents in Portland
2
583,776
472,253
73,671
398,582
City of Portland residents
Adult (18 and over) residents
Adults under the poverty level (15.6% of 18 and over pop.)
Estimated Eligible Residents in Portland
Based on the 2010 figures and more recent census figures and projections, the total Portland population
can be estimated for the first five years of the tax (2013 through 2017). See the table below.
Figure 3. Estimated/Projected Total City of Portland Population 2010.2017
3
2 Source: http://censusviewer.com/city/ORJPortland, American Community Survey
3 Sources:www.pdx.edu/prc/population-estimates-O (March 2012: 2011 Annual Population Report Tables)
www.oea.das.state.or.us/DAS/OEA/docs/economic/appendixc.pdf (Page 106)
3
Based on the 2010 US Census figures, 68.28% of all Portland Residents would be subject to the $35 tax
(398,582 eligible residents out of 583,776 total residents per Figure 2). This 68.28% figure can be used to
estimate the number of eligible taxpayers in future years as the poverty guidelines demonstrate that this
figure has been relatively stable over time.
4
See the table below for projected eligibility and revenue over
time.
Figure 4. Projected Total (After Full Collection Cycle) Gross Revenue by Tax Year 2012-2016
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Estimated Total Population 590,415 595,964 602,341 603,046 610,403
Eligible % 68.28% 68.28% 68.28% 68.28% 68.28%
Eligible Taxpayers 403,110 406,899 411,253 411,734 416,757
Compliance Rate
6
85% 87% 89.70% 89.70% 89.70%
Actual Taxpayers 342,643 354,002 368,894 369,325 373,831
Tax Amount $35 $35 $35 $35 $35
Revenue $11,992,516 $12,390,074 $12,911,282 $12,926,388 $13,084,090
Bureau experience with the Multnomah County Personal Income Tax (ITAX), administered by the Revenue
Bureau from 2003-2010, has indicated that the first year of atax will have alower initial and terminal
compliance rate than subsequent years; the percentage of total payments for the 2012 tax year that are
deposited by April 15, 2013 will be lower than the percentage of tax year 2013 payments that are deposited
prior to April 15, 2014. This difference will be much greater than the terminal compliance rate difference of
2%.7 This is due to the fact that there is normally initial confusion regarding filing requirements and that it
takes some time for enforcement mechanisms to compel non-filers to come into compliance. In addition to a
tax year analysis, an "actual deposits by fiscal year" analysis is important.
Based on experience administering the ITAx, we believe that 75% of the estimated potential revenue of
$11,992,516 will be received during the fiscal year ended (FYE) June 30, 2013. About 20% of the
$11,992,516 will be received during FYE June 30, 2014 and the remaining 5% will be received during FYE
June 30, 2015.
Also based on ITAX administration experience, we believe that all tax years subsequent to the first tax year
will be collected sooner than the first year. We believe that 85% of the estimated potential revenue
($12,390,074 for the 2013 tax year, $12,911,282 for the 2014 tax year, etc.) will be collected by June 30 of
the following year. We then estimate that 10% will be collected by the end of the next June 30 and then the
remaining 5% would be collected by the next June 30.
For example, atotal of $12,926,388 is estimated to be collected for the 2015 tax year (Figure 4). The tax
return will be due on April 15, 2016. We expect 85% of the $12,926,388 ($10,987,430) to be received by
4 Likewise, research indicates that the percentage of Portland's population that is 18 or over has historically been arelatively
constant figure (based on Multnomah County census information). Source: www.pdx.edu/prc/population-estimates-O.An
assumption has been made that this will continue into the future.
S Estimated revenues in this table and elsewhere in this document are not guaranteed revenues, but rather, represent the Bureau's
best effort at modeling aflat, capped income tax without any known comparable jurisdiction to benchmark against.
6 The estimated compliance rate of the Arts Education and Access Income Taxis modeled on past Revenue Bureau experience
administering the temporary Multnomah County Personal Income Tax (2003-2005 tax years). After considering arange of factors,
the Bureau estimates the compliance rate of the Arts Education and Access Income Tax will likely be about 2percentage points
below the final compliance rates of the 2003-2005 tax.
7 Ibid.
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June 30, 2016. We expect 10% of the $12,926,388 ($1,292,639) to be received by June 30, 2017. We
expect 5% of the $12,926,388 ($646,319) to be received by June 30,2018.
Based on these assumptions, the cash flow in the first five years of the program can be projected (Figure 5).
Figure 5. Projected Gross Revenue by Fiscal Year FYE.6/30/13-6/30/17
Projected Cost
The Revenue Bureau has formulated cost estimates based on information specific to the proposed Arts
Education and Access Income Tax based on experience in administering new and existing tax programs
with features similar to the Arts Education and Access Income Tax. The Revenue Bureau estimates that the
annual ongoing cost to the City of Portland to administer this program will be $525,000. This amount will
increase with inflation (principally personnel costs) and applicable General Fund Overhead Charges over
time.
Additionally, the Revenue Bureau estimates that there will be aone-time cost in the first year of the program
in the amount of $500,000 to mail materials to all Portland households and modify the ITAX database to
administer this tax. The ongoing annual cost estimate includes hiring 4.5 FTE to administer the program.
The total estimated cost in the first year of the program is $762,500 ($500,000 plus one half of $525,000).
The ongoing costs in the first year will be approximately 50% of the calculated amount (Figure 7) as the tax
will not have any significant costs prior to the November election results.
Figure 6. One-time (First-year) Costs
Total External Material & Services
Totallnternal Materials and Services
$105,000
$395,000
Figure 7. Annual (Ongoing) Costs - Unadjusted for Inflation or General Fund Overhead Charges
Total Personnel
Total External Material &Services
Total Internal Materials and Services
General Fund Overhead Charges
B
$366,382
$31,225
$127,393
Variable
Net Revenue Projection
When the revenues and costs are examined together and compared to the 5% planned "ceiling" for the
program's administration costs, it is clear that the costs will exceed 5% of revenues in the first year of the
8 E-mail from Sara Lowe, Financial Analyst, to Andrew Scott, Financial Planning Division Manager, 29 May 2012. "General Fund
Overhead projections [will] increase costs in FY 2012-13 by $11,700, FY 2013-14 by $20,700, and FY 2014-15 by $24,600." In
conversations subsequent to this e-mail, the FPO Manager indicated that first year overhead costs will probably be zero because
the models and rates have already been set by City Council ordinance. For purposes of the chart the most conservative, final/full
estimate is used. Actual costs will vary.
5
program. In the second year and in each subsequent year, the costs will be under 5% of the revenues, See
Figure 8below.
Figure 8. Combined Deposits and Costs over the First Five Fiscal Years (Ended June 30) of the Arts
Education and Access Income Tax (Table)
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Projected Cost (Adjusted by CPI
$762,500 $551,400 $574,972 $589,957 $600,134
and General Fund Overhead)
Projected Gross Revenues $8,994,387 $12,930,066 $12,813,223 $12,898,062 $13,059,680
Projected Net Revenues
$8,231,887 $12,378,666 $12,238,251 $12,308,105 $12,459,546
(Reduced b Pro'ected Costs)
5% of Projected Gross Revenues $449,719 $646,503 $640,661 $644,903 $652,984
Gap Between Projected Gross
Revenues and 5% of Gross -$312,781 $95,103 $65,689 $54,946 $52,850
Revenues
Costs as a Percentage of
8.5% 4.3% 4.5%' 4,6% 4.6%
Pro'ected Gross Revenues
Figure 9. Combined Revenue and Cost over the First Five Fiscal Years of the Arts Education and
Access Income Tax (Chart)
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
~ Projected Cost
- Projected Deposits
2013 2014 2015 2016 2017
6
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Figure 10. Combined Deposits and Costs over the First Five Calendar Years (Ended December 31) of
the Arts Education and Access Income Tax (Table)
Projected Cost (Adjusted by CPI
$1,025,000 $551,400 $574,972 $589,957 $600,134
and General Fund Overhead)
Projected Gross Revenues $9,953,788 $12,830,019 $12,847,235 $12,909,242 $13,067,867
Projected Net Deposits (Reduced
$8,928,788 $12,278,619 $12,272,263 $12,319,284 $12,467,733
b Pro"ected Costs)
5% of Projected Total Deposits $497,689 $641,501 $642,362 $645,462 $653,393
Gap Between Projected Gross
Revenues and 5% of Gross -$527,311 $90,101 $67,390 $55,505 $53,260
Revenues
Projected Costs as aPercentage
10.3% 4.3% 4.5% 4.6% 4.6%
of Pro"ected Total De osits
Figure 11. Combined Revenue and Cost over the First Five Calendar Years of the Arts Education and
Access Income Tax (Chart)
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
-+- Projected Cost
_ Projected Deposits
2013 2014 2015 2016 2017
Compliance Rate and Other Assumptions
One key assumption in this document is the compliance rate. The Revenue Bureau was the administrator of
the County ITAX passed by voters for the 2003, 2004 and 2005 tax years
9
. The terminal compliance rate for
the three years of the ITAX was 87% (2003), 89% (2004) and 91.7% (2005). These compliance rates were
used as apoint of reference in formulating an estimated compliance rate for the Arts Education and Access
Income Tax. Based on differences in the programs, including the available collection tools and the amount
of the tax, an assumption was made that the compliance rate for the proposed tax would be two percentage
points lower than the ITAX compliance rate. An assumption was also made that the compliance rate would
reach its maximum after three years atthe 89.7% level.
1O
9 The three-year (2003,2004 and 2005) Multnomah County Personal Income Tax (ITAX) was passed by Multnomah County voters
in May of 2003. In the November 2004 Multnomah County election, aballot measure to repeal the ITAX for the 2004 and 2005 tax
years was defeated.
10 This compliance rate assumption is also thought reasonable given data published by the Oregon Department of Revenue and the
U.S. Internal Revenue Service.
7
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An assumption that relates to the compliance rate assumption is the inventory of enforcement tools that will
be available during the administration of the proposed tax. The Revenue Bureau expects to have access to
Portland voter registration records and Oregon Department of Motor Vehicles records. The Revenue Bureau
also expects to have limited access to Internal Revenue Service (IRS) records for use to verify income
amounts and other relevant information reported on the taxpayer's federal Form 1040.
Another assumption relates to the "poverty level exemption." The assumption was made that this level
would not dramatically fluctuate and would increase at afairly steady and predictable rate going into the
future. The assumption was based on historical data. The U.S. Family Poverty Level (Figure 12) has had
substantially alinear increase from 1983 to 2012. It has mirrored the U.S. CPI over those same years as the
U.S. Family Poverty Level changes are based on the U.S. CPI.11
Figure 12. The U.S. Family Poverty Level from 1983 to 2012
12
$25,000
$20,000
<ll
E
8 $15,000
s::
(;j
::l $10,000
s::
s::
$5,000
$0
~ ~ # ~ ~ ~ ~ ~ ~ ~
~ ~ ~ ~ ~ ~ ~ ~ ~ ~
__The U.S. Family Poverty
Level (for a Family of 4)
An assumption was also made regarding the marketing of the program. To maximize the success of the
program, steps must be taken to ensure that residents are aware of the filing requirement and the procedure
to file. There should be advertising, press releases, mailings to residents and other outreach efforts. There
should also be awell-branded and easily found website and this website should walk people through the
filing process and answer any questions about the tax in general as well as the specific filing requirements.
As alluded to earlier, acritical component to the success of this program is to offer and encourage asimple
online filing and payment option.
13
The effective administration of this tax needs to be based on the general rule that all residents of Portland
will be presumed to be subject to the tax until records are available or can be provided that verify that they
are not subject to the tax. Once apotential non-filing resident is identified using one of the available
compliance tools, the burden of proof should then shift to the resident when determining whether or not they
have atax obligation.
11 Per the Bureau of Labor Statistics CPllnflation Calculator at www.bls.gov/data/inflation_calculator.htm
12 Source: http://aspe,hhs.gov/poverty/figures-fed-reg.shtml
13 Per www.irs.gov/newsroom/articie/0..id=231381.00.html. IRS electronic filing (e-fiIe) is used by approximately 70% of taxpayers.
25% of taxpayers e-file from their home computer (using tax preparation software such as TurboTax) and 45% of taxpayers e-file
using apaid tax preparer's tax preparation software.
8
The revenue projections in this document are in part based on assumptions. For example, there will be a
number of taxpayers that have no income that will file ajoint return with aspouse that does have income. In
these cases, there would only be one person subject to the $35 tax. With the information available, it is
impossible to predict with any degree of certainty how many taxpayers will fall into this fact pattern. This
type of exempt individual will be fairly rare in our estimation, but we recognize that there will be an adverse
impact to the overall revenue when these individuals are considered.
There are also asignificant number of adults who live with their parents (or are away at college) and who do
not have any income. They also would be exempt from the tax, but it is difficult to determine the number of
individuals that would fit into this category. We have assumed that the number of these individuals is
relatively small.
Appendix A- Draft Contents of Tax Form
Taxpayer name
Social Security number
Address (residence and mailing)
Phone/contact info (name, date, signature)
Request for payment plan
Online filing instructions
Instructions for claiming exemption (tax return, etc. to verify no income/poverty level)
Information regarding policy, procedures, etc.
Names, social security numbers and years of birth of dependent children
Appendix B- Possible Supporting Documents for Poverty Level
Exemption
Federal income tax return
Free or reduced lunch approval documents
Oregon Trail Card
Federal Form W-2s
Medicaid qualification documents
Appendix C- Proposed Administration/Collection Timeline
11/6/2012 Election Day
1/15/2013
Informational mailer (with payment coupon, online filing instructions, etc.) sent to all
Portland households
4/15/2013 2012 tax year filinq deadline
5/15/2013 Second payment of $18 due (if payment plan option is chosen)
6/15/2013 First "non-filer" letter mailed
8/15/2013 $50 ($35 plus $15 penalty) billed to non-responders
9/15/2013 $50 billed to non-responders (second notice)
11/15/2013 Final notice of $70 billed ($50 plus $20 penalty)
1/15/2014 $70 balance due forwarded to collection agency
4/15/2014 2013 tax year filinq deadline
9
Appendix D- Outreach Examples
Informational mailer
Reminder postcard
Earned media (press releases, etc.)
Websites (City, CAN, etc.)
Social media
Emails
Tax return preparers
Curbsider newsletter
Water bill insert
Tax forms, etc. at post offices and libraries
Appendix E- Estimated Cost Breakdown of First-year Mailing
Projects
Informational mailer (one-page) to 244,803 households = $123,000
Postcard mailer/reminder to 244,803 households =$79,000
If one informational mailer and three postcard mailers were done in the first year of the tax, total estimated
(one-time) costs for mailers is $360,000
Appendix F- Workload Information
The 4.5 FTE for this program will provide data entry, customer service and collection services. As with any
tax system, there will be peak and reduced workload times for the program, which requires the Revenue
Bureau to shift internal resources between programs to meet demands. For example, during peak call
periods, as many as 10 staff, some from other program areas, could be assigned to handle the volume.
Overall, the workload requirements of the Arts Tax equates to 4.5 FTE.
Projected Workload Estimates:
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Telephone Calls
Emails
Documents
Poverty/Family verifications
16,000 annually
5,000 annually
220,000 annually
33,000 annually
Audit workload will include identifying non-filing taxpayers through data-matching with various government
records.
10
Appendix G- United States Department of Health and Human
Services 2012 Poverty Guidelines
2012 Poverty Guidelines for the 48 Contiguous
States and the District of Columbia14
Persons in
Poverty guideline
family/household
1 $11,170
2 15,130
3 19,090
4 23,050
5 27,010
6 30,970
7 34,930
8 38,890
For families/households with more than 8persons, add
$3,960 for each additional person.
Appendix H- Potential Compliance Tools
Department of Motor Vehicles (DMV) data
Voter registration data
Water billing data
Existing City of Portland mailing lists
Oregon Department of Revenue (DaR) data
Internal Revenue Service (IRS) data
14
Source: http://aspe.hhs.gov/poverty/12fedreg.shtml
11
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Appendix 1- Conceptual Model of Taxfiler.ldentification Methods
The outer double-lined box represents the total population of non-exempt residents; inner boxes represent
various means used to identify them.
Remaining non-
"Voluntary filers"
filers (estimated
at about 10.3%)
(voluntary
DOR and IRS
data
compliance)
Water billing data
Voter registration
Existing City of
DMV data
data
Portland mailing
lists
Appendix J- Clarifying Examples of Exemptions
Example 1. Joint taxfilers with sole wage earner and no other income
One spouse earns $100,000 in wages. The other spouse has no income whatsoever. There are no joint
incomes earned by both spouses. The household income is not at or below the federal poverty guidelines.
The $35 tax is imposed upon the single income earner.
Example 2. Joint taxfilers with, sole wage earner and joint ihcome
One spouse earns $100,000 in wages. Ajointly held savings account earns $50 in interest.
Both spouses are deemed "income earning residents". The household income is not at or below the federal
poverty guidelines. The $35 tax is imposed upon each spouse for atotal of $70.
Example 3. Dependent student 18 years and over
This household is not at or below the poverty level. Adependent student, age 19, attends college outside of
Portland. The student returns annually to Portland and earns some income from apart-time summer job.
The student has maintained residency status in Portland and has income. The student owes a$35 tax
despite being adependent for federal and state tax purposes. This is in addition to the tax that may be
imposed upon the parents of the student.
TOTAL ANNUAL TAXES DUE
Example 1(Joint taxfilers with sinqle income) $35
Example 2(Joint taxfilers with joint income) $70
Example 3(Joint taxfilers with joint income plus liable student) $105
CONDITIONAL DECISION MATRIX
1. Is income earned (including joint incomes)? If not, no tax is due.
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2. Is household income (for the entire household) less than federal poverty guidelines? If less than federal
poverty guidelines, no tax is due.
3. Is the taxpayer alegal resident of Portland? If not, no tax is due.
4. If none of the three conditions above are met for exemption from tax, tax is due.
13
o North
o East
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Portland, Oregon
FINANCIAL IMPACT and PUBLIC INVOLVEMENT STATEMENT
For Council Action Items
(Deliver original to Financial Planning Division Retain copy)
I. Name of Initiator 2. Telephone No. 3. Bureau/Office/Dept.
Sam Adams 503-823-1 126
Mayor's Office
4a. To be filed (date): 4b. Calendar (Check One) 5. Date Submitted to
Commissioner's otTice
June 21, 2012
Regular Consent 4/5ths and FPD Budget Analyst:
~ 0 0
6a. Financial Impact Section: 6b. Public Involvement Section:
~
Financial impact section completed
~
Public involvement section completed
1) Legislation Title:
Refer Portland City Code Changes to Title 3 and Title 5 regarding arts education and access to
City voters at the November 6, 2012 General Election ballot (Resolution)
2) Purpose of the Proposed Legislation:
To give Portland voters the opportunity to create a dedicated fund for arts education and access.
3) Which area(s) of the city are affected by this Council item? (Check all that apply-areas
are based on formal neighborhood coalition boundaries)?
~ City-wide/Regional 0 Northeast 0 Northwest
o Central Northeast 0 Southeast 0 Southwest
o Central City
o Internal City Government Services
FINANCIAL IMPACT
4) Revenue: Will this legislation generate or reduce current or future revenue coming to
the City? If so, by how much? If so, please identify the source.
This new tax is expected to generate approximately $12 million annually from City of Portland
income-earning residents (18 and over) who are above the federal poverty level. The tax is a flat
$35 per income-earning resident. Since the net revenues are primarily dedicated to increasing
arts education in the schools and arts access funding through competitive grants, the revenues
will be deposited into a Special Revenue Fund.
In the first tax year, initial revenue collection is expected to be approximately $8 million.
Because this is a new tax, it will take longer to contact residents and collect the full tax in the
first year. Year 2 and 3 are expected to see the remainder of the initial year collections, in
Version effective In[.v 1,2011
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addition to the annual expected revenue.
5) Expense: What are the costs to the City related to this legislation'? What is the source of
funding for the expense'? (Please include costs in the current fiscal year as well as costs in
future years. I[the action is related to a grant or contract please include the local contribution
or match required {[there is a p f ( ~ j e c t estimate, please ident(fY the level of confidence.)
The Revenue Bureau will be administering this tax. Annual administrative costs are estimated to
be approximately $525,000. One-time start up costs are estimated to be $500,000. One-time
costs include existing tax application modifications and 3-4 mailings to City of Portland
residents in the first year to notify them about the tax, provide them with a simple tax form and a
postcard reminder prior to the April 15, 2013 payment due date. After the first year collections
expenses will be capped at an average of 5% over five years. All collection costs will be paid for
from the Arts Education and Access Fund.
6) Staffing Requirements:
Will any positions be created, eliminated or re-c1assified in the current year as a
result of this legislation? Ulnew positions are createdplease include whether they will
be part-time, full-time, limited term, or permanent positions. Ifthe position is limited
term please indicate the end q[the term.)
During FY 12-13, four Revenue and Taxation Specialist II positions will be created and a
half-time Revenue Auditor position will be created.
Will positions be created or eliminated infuture years as a result of this legislation?
Since this would be an ongoing tax, the positions that would be created during FY 12-13
would be continued in future years. No additional positions beyond the 4.5 created in FY
12-13 are anticipated.
(Complete the following section only if an amendment to the budget is proposed.)
7) Change in Appropriations a[the accompanying ordinance amends' the budget please reflect
the dollar amount to be appropriated by this legislation. Include the appropriate cost elements
that are to be loaded by accounting. Indicate "new" in Fund Center column ([new center needs
to be created Use additional ,space ifneeded)
Fund Fund Commitment Functional Funded Gmnt Sponsored Amount
Centel' Item Area Program Progmm
..-
-- --
--
I
--
Version effective July 1, 2011 2
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(proceed to Public Involvement Section - REQUIRED as of July 1,2011]
PUBLIC INVOLVEMENT
8) Was public involvement included in the development of this Council item (e.g.
ordinance, resolution, or report)? Please check the appropriate box below:
rgj YES: Please proceed to Question #9.
o NO: Please, explain why below; and proceed to Question #10.
9) If "YES," please answer the following questions:
a) What impacts are anticipated in the community from this proposed Council
item?
Anticipated impacts are the needed restoration of arts and music instruction and access to every
eligible public elementary school in the City of Portland, the provision of funding for our highest
quality arts and culture organizations to produce free and low-cost arts experiences, and
increased access to arts and culture for school children and residents across income levels and
neighborhoods. The arts are linked with improved educational outcomes, economic prosperity,
neighborhood vitality, and increased graduation rates.
b) Which community and business groups, undel-represented groups,
organizations, external government entities, and other interested parties were
involved in this effort, and when and how were they involved?
This initiative is the result of many years of extensive community outreach, involvement,
planning and consultation. Over 10,000 individual supporters contributed to this plan including
1,500 residents who worked with then-Commissioner Sam Adams' office on a creative capacity
planning initiative beginning in 2008.
This initial planning process resulted in Actfor Art - the regions Creative Action Plan - and
seeded the creation of the Creative Advocacy Network, a nonprofit entity advocating for this
effort. Over 5,000 copies of the A c t f ( ) l ~ Art plan were printed and distributed region-wide.
Hundreds of individual arts advocates, educators, parents, business leaders and community
advocates contributed to this process plus these organizations and entities:
Portland Public Schools, David Douglas School District, Centennial School District,
Pat'krose School District, Reynolds School District, Riverdale School District Regional
Arts & Culture Council, Multnomah County, Washington County, Clackamas County,
Metro, Clackamas County Arts Alliance, City of Beaverton, City of Hillsboro, Oregon
City Portland Association of Teachers, Cultural Advocacy Coalition, Portland Art
Dealers Association, Right Brain Initiative, Business for Culture & the Arts, Travel
Version effective July 1,2011 3
Portland, Working Artists Network, Oregon Business Council, and the Music Access
Project of Portland.
Outreach, Planning and Advocacy Highlights
2008
City Commissioner Adams' creative capacity planning effort, involving input from 1,500
residents region-wide, results in the establishment of the Creative Advocacy Network
Survey conducted to better understand our region-wide interest, needs and current
investments in arts and arts education
2009
Creative Capacity Strategy Town Hall presents Act for Art - the region's new Creative
Action Plan - and introduces CAN to the community
Act for Art is published, with 5,000 copies distributed region-wide
Follow-up survey conducted
Regional Steering Committee recruited and convened
Arts, Business and Education Advisory Councils recruited
529 community members complete questionnaire on cultural investment options
2010
Regional Steering Committee Meetings in January, February, March, June and November
Public Forums conducted in Multnomah, Washington and Clackamas counties draw 121
community members who complete 104 completed surveys
127 arts and culture organizations are surveyed
Three 6-Member County Leadership Teams are tasked with building a regional investment
plan
93 arts, education, civic and business leaders collaborate to finalize a tri-county arts
investment plan
Arts education investment discussions with K-12 administrators and elected officials spark a
plan to invest in three major components of a strong arts education: certified teachers, arts
integration and professional arts experiences.
Portland Plan Arts Town Hall held to solicit public feedback on arts investments
In total, 645 residents participate in public meetings and surveys
27 arts organizations join CAN
CAN attends and presents at 39 arts and culture events
2011
Local Initiative advisors including City of Portland staff and elected officials, Multnomah
County staff and elected ofTicials, Regional Arts & Culture Council board and staff leaders,
Portland school district superintendents, administrators and s t a f f ~ CAN's Advisory Councils
and CAN's Board provide ongoing guidance and input
Investment options and funding mechanisms are surveyed in the city of Portland
Version effective July 1, 2011 4
Partnerships are developed with all six Portland school districts during multiple work
sessions with district superintendents
Ten arts and culture organizations host CAN presentations at their board meetings
CAN' s roster of member organizations swells to 60
CAN attends and presents at 79 arts and culture events
CAN's social media efforts draw 2,000+ Facebook friends and 2,678 Twitter followers
2012
Investment options and funding mechanisms are again surveyed in the city of Portland
CAN reaches (and passes) the 10,000 supporter mark
CAN attends and presents at dozens of arts and culture events, parades, festivals, PTA
meetings, and other community events
CAN reaches a membership of 67 partner organizations
Regular meetings take place with school district superintendents and staff to inform the arts
education investment plan.
c) How did public involvement shape the outcome of this Council item'?
This initiative was driven and directed by the public. Portlanders' support for arts education
shaped the primary focus of the Arts Education and Access Fund - strengthening the three major
components of a strong arts education: certified teachers, arts integration, and professional arts
experiences. The focus on providing greater access and opportunity for citizens of all
backgrounds and means to have mis experiences and education - especially in currently
underserved communities - was greatly informed by public involvement.
d) Who designed and implemented the public involvement related to this Council
item'?
The City of Portland and the Creative Advocacy Network, a 501(c)(3) organization.
e) Primary contact for more information on this public involvement process (name,
title, phone, email):
Jessica Jarratt Miller
Executive Director, Creative Advocacy Network
(503) 781-8538
Jessica@theArtsCAN.org
10) Is any future public involvement anticipated or necessary for this Council item'? Please
describe why or why not.
If approved by Council, this item will be referred to the ballot for the November General
Election.
I Mayor Sam Adams
Version effective July 1,2011 5
BUREAU DIRECTOR (Typed name and signature)
Version effective July 1, 2011
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36 939
2:45 PM TIME CERTAIN
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TESTIMONY
ARTS EDUCATION AND ACCESS
IF YOU WISH TO SPEAK TO CITY COUNCIL, PRINT YOUR NAME, ADDRESS, AND EMAIL.
NAME (print) ADDRESS AND ZIP CODE Email
Date 06-27-12
Agenda Item 785
Agenda Item 785 TESTIMONY
ARTS EDUCATION AND ACCESS
36 939
2:45 PM TIME CERTAIN
IF YOU WISH TO SPEAK TO CITY COUNCIL, PRINT YOUR NAME, ADDRESS, AND EMAIL.
NAME (print) ADDRESS AND ZIP CODE Email
6l{Lf'L Sl:: I ~ ' l yto c:; \
ofZ. Ql20J-,
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Date 06-27-12 Page :2. of -Z-
TERRY PARKER
P.O. BOX 13503
PORTlAND, OREGON 97213-{)5()3
36 939
Subject: Testimony to the Portland City Council on the proposed arts head tax, June 27, 2012
When I received my education attending Portland Public Schools in the 1950s and 60s,
the average boomer class size was in the range of 35 students - 32 on the low end and
up to 40 on the high end. Fifth grade through eighth grade was at the iconic Rose City
Park School. With the exception of the classroom lighting and the newer gymnasiums
that were added before my time there, the inside of this classic, well built now century
old structure was still for the most part, the same as originally constructed. Art
instruction was taught by the same classroom teachers who taught the basic three R's;
reading writing and arithmetic, along with anything else that was part of the regular
curriculum. The same was true in the primary grades. Only when I entered high school,
was art taught by a separate teacher, and that was an elective class.
With the expanse of the internet at their fingertips, and smaller to mini class sizes, the
current generation of students have a much easier road to navigate for an overall high
quality and meaningful education. As I stand here today, the economy is stumbling, in
part due to government intervention and social engineering. Incomes are not keeping up
with both inflation, and the continual proliferation of tax and fee increases - including
those assessed by the City of Portland.
Now is not the time to increase taxes even more when the specific purpose is for a
luxury that is excessive to the basic needs of our schools. Furthermore, there two
principal tribulations with the proposed head tax:
First, a head tax is regressive. A person with a fixed or modest income pays the same
amount as a person with a high income. Likewise, it doesn't take into consideration
what other financial conditions, obligations, responsibilities or dependants a person may
have. Moreover, there are privacy issues with how the city will determine who will pay
and who will be exempt. So much for all the rhetoric about an equity commission
because this tax proposal lacks equity in any form.
Second, having the city collect a portion of a tax specifically designed to be distributed
to a very select number of non-profit organizations is beyond the reach and scope of
city government. It is an attempt to legislate what should be a choice by individuals - if
or what organizations they freely choose to financially support. Where is the equity to all
the other educational 501 C3 organizations in Portland? Using the schools as a front to
implement a tax to fund specific non-profits is an attempt by this administration - using
other people's money - to pick winners and losers. That smacks of socialism
Finally, it is up to the individual school boards to place a school funding tax measure
ballot, not the responsibility of this council. Likewise. it is not the responsibility of this
council to place a tax measure before the voters to specifically fund their personal picks
of non-profit organizations. Therefore Mr. Mayor, this tax proposal is out of order!
Respectfully,
Terry Parker
Moore-Love. Karla
From: Susan Millhauser [susancm@spiretech.com]
Sent: Tuesday, June 26, 2012 1:43 PM
To: Adams, Mayor; Commissioner Fish; Commissioner Fritz; Leonard, Randy; Commissioner Saltzman
Cc: Moore-Love, Karla
Subject: Agenda Item 785 - Arts education and access resolution should include public charter schools
Dear Mayor Adams and Commissioners,
I am writing in regard to agenda item 785 - Refer Portland City Code Changes to Title 3 and
Title 5 regarding arts education and access to City voters at the November 6, 2012 General
Election ballot, which you will be considering at your June 27 Council meeting.
I applaud the City and its CAN partners for exploring innovative solutions to funds the arts and
music in our public schools. However, as a parent of two PPS charter students, I was very
disappointed to learn that the proposal specifically excludes public charter school students
from accessing these funds, if approved. Why specifically exclude a small percentage of PPS
students fl.'om receiving the benefits fl.'om these funds? I see in the resolution that charter schools
would not be required to teach art and music. However, it is clear that all K-5 students would
benefit from consistently funded art and music instruction, and I want my children and their
peers to have equal access and opportunity.
Why would the City Council want to deny access to the arts for a small percentage of the K-5
students in Portland's public charter schools? Is this something the PPS board asked for? This
makes no sense... especially as public charter schools in PPS are already operating on a slimmer
blldget / per-pupil funding formula than our neighborhood school counterparts.
I would be very disappointed that my kids and their peers will not have the same mis and music
opportunity as every other PPS K-5 student. This is wrong and should be rectified!!
BTW, I plan to vote in favor of the upcoming PPS bond measure even though PPS public
charters will not receive any benefit. It's for the good of all students, our neighborhoods, and the
broader POliland community. Arts funding should be the same!
Thank you for consideration.
Susan Millhauser
5834 NE 23rd Ave
Portland, OR 972 I 1
susancm@sp-iretech.com
June 26,2012
6/26/2012
Page 1 of I
Page 1 of 1
36 939
Moore-Love, Karla
From: Jim McLaughlin [jjim.mclaughlin@gmail.com]
Sent: Tuesday, June 26, 2012 10:24 AM
To: Adams, Sam; Commissioner Fish; Commissioner Fritz; Leonard, Randy; Moore-Love, Karla; Commissioner Saltzman
Subject: Per Capita Arts Tax
Folks -
The "Arts Tax" is a non starter.
Not only is it unconstitutional under the Oregon Constitution, it is administratively unworkable.
More importantly, though, fundingarts teachers in the Dunthorpe grade school, and paying
welfare to artists is not a core city mission or responsibility.
You are each urged to just say "No".
If you want to work on the nitty gritty of schools funding, there are lots of openings each year for
school board elections in each of the 6 districts in the city. Run for one.
Inthe interim, please pay attention to actual core city missions and programs.
I'd appreciate a response from eaeh of you.
Thank you.
Jim McLaughlin
4601 SW Vesta Street
Portland, OR
97219-7340
503 3334329
6/26/2012
Moore-Love. Karla
From: tony@milagrosboutique.com
Sent: Tuesday, June 26, 2012 10:21 AM
To: Commissioner Fish; Commissioner Fritz; dan@ci.portland.or.us; Leonard, Randy; Adams, Sam
Cc: Moore-Love, Karla
Subject: Proposed Art Funding Income Tax
June 26,2012
Honorable City Council Members,
Thank you for taking the initiative to craft solutions for our on-going challenges with funding for
arts and other core fundamentals for effective education and development of a creative and
effective local work force. I am writing today to ask that you amend the proposal to ensure that
public chmier schools receive a fair share of this potential funding source. At present, the
proposal discriminates against these public schools that already must struggle for funds.
Charter school families are not more affluent that families at other public schools, charter
schools families value arts education as much as families at other public schools, and chmier
school families will be paying the same tax as other Portland families if this proposal passes in
November.
Generally, speaking, the Council should ensure that any city tax or fee is applied and used in a
manner that is fair, equitable, and reasonable. An amendment of the arts tax proposal to ensure
that charter schools are awarded funding at the same level as other public schools is in line with
this simple expectation. You immediate action to ensure fairness in the arts fund proposal is very
welcome.
Please contact me at 971-570-6930 if you have any questions.
All the best,
Tony Fuentes
6504 NE 22nd Avenue
Portland, OR 97211
6/2612012
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