Metro’s Last Minute Tax Exemption for State and Local Government Covers a Lot of Workers

State figures show that state and local governments provide more than 10 percent of area jobs.

Downtown MAX train. (Roger Bong)
By Nigel Jaquiss

On July 16, the Metro Council voted unanimously to refer a $4 billion transportation funding measure to the November ballot. Without notice or explanation, Metro included a last-minute exemption for state and local governments from the 0.75% payroll tax to be levied on all employers with 25 or more workers.

Metro offered no guidance on the impact of the exemption, but figures from the Oregon Employment Department show that pre-COVID-19, state and local governments in the tri-county region employed about 104,000 workers, more than 10 percent of all area jobs.

"Everyone uses our streets, sidewalks and transit," says Andrew Hoan, CEO of the Portland Business Alliance, which wants the measure delayed. "The fact that 10% of the workforce is excluded in covering the cost of the measure, without any analysis or process, raises significant concerns."

Metro government relations manager Andy Shaw attributes the exemption to "limitations in state law around the ability of local governments to tax each other, which creates ambiguity." Shaw says the council decided to remove that ambiguity and adds that because Metro's revenue projections didn't include taxing the state or school districts the revenue reduction should be around 5%.

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