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Portland City Commissioner Carmen Rubio on Wednesday released a plan to allocate to city bureaus an extra $540 million in unanticipated tax revenues from the Portland Clean Energy Fund during the next five years.
PCEF is funded by a tax on retailers with sales of more than $1 billion, including Target and Walmart. The fund has been awash in cash since the pandemic, when government aid put millions of dollars into the pockets of consumers, who very often spent it at big-box retailers.
Created by voters in 2018, PCEF’s original mission was to invest in climate projects that benefitted disadvantaged communities of color. Faced with a tidal wave of money, the City Council, on Rubio’s initiative, last year amended it to send millions to city agencies.
Earlier this month, a projection from the city economist showed PCEF pulling in an extra $540 million during the next five years, adding to the $750 million that the City Council approved in September for climate projects over the same period. That’s a whopping $1.3 billion over five years.
WW first reported Rubio’s intention to funnel PCEF dollars into city bureaus on Tuesday evening. Today Rubio outlined how the city should spend the Christmas cash.
Atop the list is housing. Under her plans, the Portland Housing Bureau would get an extra $100 million to add energy efficient features like heat pumps and solar to new and existing buildings.
“As you know, we’re in a housing crisis and a climate crisis, and this revenue could not have come at a better time,” Rubio, the city’s sustainability commissioner, said at a press conference at City Hall. “It presents a unique opportunity for even greater investments in the city’s climate work and to drive investments in the most climate friendly, affordable housing at a time when more affordable housing investments are desperately needed.”
Pressed on whether the money would create housing that isn’t already planned, instead of just adding green components, Donnie Oliveira, director of the Bureau of Planning and Sustainability, which oversees PCEF, said it would speed up construction.
“Any dollars are good dollars,” Oliveira said. “It helps us get there.”
Rubio also proposes sending an extra $116 million to the Portland Bureau of Transportation, an agency that’s reeling from budget woes, for its existing climate programs. As of now, the bureau faces a $32 million budget shortfall for the coming year.
Among marquee recipients of the new-found money is the Arlene Schnitzer Concert Hall, which would get an unspecified amount for a cooling tower (a climate friendly form of air conditioning) and a green roof, Rubio’s office said. The Keller Auditorium would get $28 million for climate-resilient improvements, should it be renovated or relocated, which has yet to be determined.
Rubio’s latest plans will go to the all-volunteer, nine-member PCEF committee in January, which was empowered by the ballot measure with overseeing PCEF spending. After that, the proposed spending will go before the City Council for approval. City Council has final say over where the PCEF dollars go.
PCEF’s success in collecting revenue has made it a lightning rod for critics who contrast its fat coffers with leaner ones at city agencies, most of which face budget cuts. A 2022 audit that found the program had lax oversight and little transparency.
The fund’s accounting is dynamic because it collects tax revenue from large retailers quarterly. As of today, then fund has collected $587 million from about 500 companies, each of which made an average payment of $370,000 in the fiscal year that began on July 1, 2022.
PCEF has committed $897.7 million to city agencies and to the small non-profits that it was originally set up to serve. That number is larger than PCEF’s tax receipts because commitments are made years out and will be funded by future revenue, PCEF officials said today. So far, just $165.5 million in PCEF funds have been distributed, they said.
The new money appeared in a December forecast by city economist Peter Hulseman that used different, more complete methodology than PCEF had been using before, said Jillian Schoene, Rubio’s chief of staff. That, combined with persistently strong retail sales, caused the increase.
Lenny Dee, a local activist and one of the original backers of the initiative that created PCEF, says he is fine with Rubio’s changes, as long as the money furthers the city’s climate action plans.
Authors of the PCEF initiative would have structured it differently had they known how much revenue it was going to raise. He blamed the surprise on the city’s tax agency.
“The revenue office gave us inaccurate information as to how much money it would bring in,” Dee said. “It would be a different initiative if we had had better data.”
The real message from the windfall, he said, is that large corporations are swimming in cash while communities, especially disadvantaged ones, struggle to fund services.
“It shows us how these billion-dollar corporations, 99% of which are out of state, are getting richer,” Dee said. “Our communities are hurting.”
Earlier this year, two nationwide retailers, Walmart and Target, announced plans to close stores in Portland. Target cited theft, and Walmart gave no reason. At the time, some PCEF critics speculated that PCEF’s 1% tax on gross revenue earned by those companies might have influenced their decision to leave.
Oliveira said that wasn’t the case. As long as they have sales of $500,000 or more in Portland, retailers like Walmart and Target pay the tax on online sales regardless of a physical presence.
Here are the projects and bureaus that Rubio proposes to fund with the PCEF excess:
$116 million to the Portland Bureau of Transportation
$40 million for the Portland Housing Bureau
$26 million for the Office of Management and Finance
$8.9 million for Portland Parks and Recreation
$17.8 for The Portland Water Bureau
A second tranche of dollars will got to specific projects:
$100 million for affordable housing production
$100 million for maintenance of 240,000 street trees
$28 million for the Keller Auditorium
$20 million for climate-friendly Fire Bureau infrastructure
Correction: A previous version of this story said that Target and Walmart cited theft as a reason for closing stores. Only Target cited theft. Walmart gave no reason. WW regrets the error.