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On July 2, employees of the city of Portland’s Revenue Division drove an hour into the Columbia River Gorge. Their destination? The luxe Skamania Lodge outside Stevenson, Wash., for a retreat to talk about the city’s handling of taxes—its own and those it collects for other area governments.
The retreat’s theme: “Improving the taxpayer experience.”
Before lunch on the patio, the division’s employees engaged in an hourlong discussion, “Brainstorming a taxpayer’s paradise: what would an idyllic world look like?” After lunch: another hour dedicated to “examining the barriers to paradise.” The chief financial officers for Multnomah County and the regional government Metro also attended for an hour in the morning.
The retreat was the culmination of years of displeasure festering at Multnomah County and the regional government Metro with how the city collects and reports on two mammoth taxes that fund other government agencies.
Portland collects the county’s Preschool for All tax, a 1.5% levy on income over $125,000 for individuals and $200,000 for joint filers. Portland also collects Metro’s supportive housing services tax, a 1% tax on income above $125,000 for individuals and above $200,000 for joint filers. Combined, the two taxes haul in about $500 million a year.
Records obtained by WW stretching back to 2022 suggest that officials from Multnomah County and Metro have asked the city for years to provide them more detailed, accurate reporting and data on the two taxes. The records also show that the two governments have gotten little of what they asked for, such as data that would enable them to see whether people are fleeing their jurisdictions to avoid the tax burden.
Metro and Multnomah County economists need basic facts about the taxes: how many people are paying them; how much of the tax has gone unpaid and been referred to collection agencies; and whether the biggest taxpayers are moving across county lines, which would lower the tax base.
And records show the county and Metro have come to doubt they’re getting reliable numbers and enough data to make informed decisions.
In a May 3 letter, Metro’s fiscal and tax policy director, Josh Harwood, wrote to the city’s interim revenue director, Tyler Wallace, that he was “deeply concerned” about the integrity of the tax data the city was providing to Metro.
“If we cannot have confidence in the data we are being provided,” Harwood wrote, “then we cannot confidently analyze and forecast these taxes to help inform regional decision making about homeless services programming.”
Portland’s Revenue Division is already disliked by taxpayers. Multiple news outlets have reported instances of tax collectors demanding that taxpayers pony up taxes they didn’t owe.
But the new records suggest that the city’s uncertainty about who is and isn’t paying also creates an unstable foundation for two of the region’s biggest public initiatives, intended to help the destitute find housing and provide free preschool for children of working parents, respectively.
Spokeswoman Carrie Belding says the city is “working closely with Metro and Multnomah County to clarify and implement reporting solutions which may include supplemental software.” Belding added: “It is important to note there is no inaccuracy in the taxpayer data itself; our understanding of Metro’s concerns are that they center on internal management reports, such as the reports used for trend analysis and revenue forecasting.”
Metro will soon write a $9 million check to the city of Portland for its work collecting the regional government’s supportive housing services tax for the tax year that ended June 30. Multnomah County will soon pay the city $7 million for collecting the Preschool for All tax.
The pair of taxes has brought in far more revenue than government economists first projected when voters approved both taxes at the ballot box in November 2020. Preschool tax returns since 2021 are nearing half a billion dollars; homeless services returns so far have topped $930 million.
Yet figures from the U.S. Census Bureau show that people have been leaving Portland for three straight fiscal years, and Preschool for All tax filings suggest that high earners may be among them. The number of people earning enough to pay the tax fell 19%, from 6,063 in tax year 2021 to 4,919 in 2022. Late filing could explain the decline. Or wealthy people could be less rich. Or they could be leaving.
Records show the two governments receiving the proceeds feel as if they’re sometimes operating the money spigot in the dark.
Communications stretching as far back as spring 2022 show officials at Metro and Multnomah County are unhappy with the quality of the data and reporting coming from the city on the two taxes. Documents show the two governments have consistently complained of late reports, requested reports that were never completed, and reports with flawed or inaccurate data.
In spring 2023, for example, county staff asked for more detailed reporting on the preschool tax, including monthly returns and refunds, amount of tax uncollected, and a list of businesses that withhold the tax for their employees.
A staffer in the city’s revenue division responded, expressing reluctance in sharing some of the data the county requested: “We go to extremes over here to ensure that the data is safe and not improperly disclosed,” the city staffer wrote. “We realize it’s your data, but we both have a strong interest in keeping it locked down.”
The frustration reached a boiling point in May.
That’s when Harwood at Metro wrote a two-page letter to Wallace at the city expressing displeasure. “There are concerns,” he concluded, “that some revenue division staff do not understand all of the data that they are pulling.”
Harwood requested that the city start producing regular reports and data, such as “more complete taxpayer info including residency and type of return,” the full address of taxpayers so Metro could conduct spatial reports, and a longitudinal analysis that “allows us to quickly look at the behavior of the largest taxpayers.”
Harwood also complained of the city’s tax enforcement practices: The Portland Revenue Division “has changed course on these actions repeatedly without informing Metro, resulting in confusion over what is being done and any potential remedies are unclear.”
The city responded to Metro’s letter by launching a committee to work between the government agencies, a group that’s met several times since then.
“We have heard your frustration, from both Metro and Multnomah County, in pursuit of better or different data to analyze revenue collection,” wrote Rachele Harless, a manager within the city’s Revenue Division.
Yet problems persisted. On May 29, a staffer inside the Revenue Division told county officials that it hadn’t yet asked for access to W-2 data from the state’s Department of Revenue for businesses within the tax boundaries. Because the housing services and preschool income taxes apply to those who live outside of the taxed district but whose employer is within it, W-2s from businesses help the city know which nonresidents are subject to the tax—and whether they paid it.
A city employee wrote to the county that it would ask for W-2 data in July, an answer that was met with frustration within the county, emails show.
Metro spokesman Nick Christensen says the incomplete data the city provides results in a “higher likelihood that the analyses will have large levels of uncertainty, which in turn makes it more difficult to manage the programs that receive [supportive housing services] funding.” The city, he says, provided the requested reports to Metro last week.
County spokesman Denis Theriault says inconsistent reporting by the city has at times “limited us in providing detailed tax information to policymakers, and curtailed our ability to inform the community about the tax and to update our modeling.”
But Theriault says the city has “mitigated” most of the county’s concerns in recent months: “The city has shown urgency.”