Fee For All

City Commissioner Steve Novick has led the parade for new road funding into a blind alley.

He's the architect of a plan to raise at least $40 million a year for transportation projects by creating a street fee that would charge households $144 a year, and could hit businesses for even more. 

His plan unleashed a flood of opposition and vitriol—hundreds of comments to the City Council by everyone from business owners to social-service providers, running better than 20-to-1 against. The backlash has been so great that Novick and Mayor Charlie Hales have postponed a June 4 council vote on the fee until November, pledging to rethink the plan.

It's unfamiliar territory for Novick, who has enjoyed citywide popularity as a social liberal with a clever solution to any policy puzzle.

Novick and Hales insist the fee is the only way to solve a $1.3 billion backlog of road maintenance—a problem that has festered for decades. Previous attempts to create a street fee cratered in 2001 and 2008.

"I think this is a big enough issue, it's worth losing the next election over," Novick says. "Most of us don't confront issues in general unless they're in front of our faces. Posting a deadline brought people out."

But Novick has made a hard job even more difficult, in part by appearing to disregard growing opposition to the street fee. Despite his best efforts to avoid it, Novick may still have to face down voters to win approval of the plan.

If he wants his street fee to succeed, here are some missteps Novick will have to correct.

1. Seeks new money before deciding how to spend it. 

Novick made fiscal responsibility a major theme when he ran for the U.S. Senate in 2008. But last fall, he convened a task force to look for new ways to raise street funding, without attacking a root cause of the Portland Bureau of Transportation's cash crunch: the failure to prioritize spending. City Auditor LaVonne Griffin-Valade scolded the City Council in March 2013 for not ranking projects by importance. Under Novick's oversight, PBOT still hasn't created that list. Novick's chief of staff, Chris Warner, says prioritizing spending "doesn't even come close to solving the problem."

2. Taxes the poor.

In 2012, Novick denounced the $35-a-person Portland Arts Tax as "beyond regressive" because it hit people without regard to their income level. But his residential street fee is also regressive—by 2017, it would charge up to $144 a year per household, including renters. Even low-income housing residents would pay at least $59 a year. "When you say it's regressive and you vote it through anyway," says Ann Sanderson, a Woodstock hair salon owner who has led an online campaign against the fee, "you're hurting the people who can't fight back."

3. Thwarts a public vote. 

City surveys this spring showed voters probably wouldn't approve any new taxes or fees. So Novick and Hales decided to have the City Council pass the fee without taking it to voters. Their proposal would allow voters to decide whether half the street fee should be reserved for maintenance and safety—but it still denies the public an up-or-down vote on the fee itself.  "People want us to solve the problem, but none of the ways to solve the problem would pass," Novick said at a May 29 hearing. "And the problem would get worse and worse and worse.” 

4. Rushes to pass a plan even he doesn't like.

Novick and Hales debuted the fee while admitting the plan wasn't one they preferred. They also unveiled the plan before PBOT had finished calculating how much many businesses would pay. "Things don't work out well in Portland," says Rich Rodgers, a former City Hall staffer, "when you try to jam it like that."

5. Puts the financial burden on small businesses, schools and churches.

Portland Public Schools, for example, was blindsided by the news it would owe up to $400,000 next year. Churches would have to pay up, too—all because it's a "fee," not a tax from which they would be exempt. The sticker shock of the fee for businesses gets worse, because it's structured in such a way that mom-and-pop stores would pay a larger relative share than corporations. "This is a town that loves small businesses,” says Sanderson. “You will cripple them.” 

6. Writes the plan in fear of powerful interests.

Novick built his reputation as a politician who wouldn't cater to special interests. But he admits he chose a flat fee over options like an income tax because it was less likely to inflame the powerful, who could refer it to a public vote. "The income tax would affect rich people more," he said May 29. "All it would take is a few disgruntled rich people to raise money and defeat it." When the business lobby howled about the fees, Novick and Hales delayed the vote on charging businesses. Novick now says he was taking too defensive an approach, and will reconsider income and sales taxes. "We've been playing not to lose," he says. "That's always a mistake. From here on out, I play to win."

7. Challenges voters to a duel.

Novick announced the fee with a challenge to the public: "If the voters are really mad at us, [Hales and I are] both up for re-election in 2016, and they can throw us out." That looked to some observers like conviction—and to others like arrogance. "He's telling the voters, 'Come at me, bro,'" says Eric Fruits, recent chairman of the Laurelhurst Neighborhood Association. Novick says he didn't mean to sound combative. "I don't matter," he says. "It doesn't matter if I'm a political idiot sometimes. What matters is we get to the end goal.” 

WWeek 2015