Tenant advocates are calling for a new Multnomah County capital gains tax to pay lawyers fighting evictions. The PBA pushes back.

The last week of March may have marked a turning point in the willingness of high-income Portlanders to subsidize their less fortunate neighbors.

The latest example: Tenant advocates and the Portland-area’s largest business organization are gearing up to do battle over a proposed new tax measure.

The “Eviction Representation for All” initiative, filed with Multnomah County on March 3 by tenants’ rights and social justice nonprofits, is targeting the November ballot.

The measure proposes to levy a 0.75% tax on capital gains – which, generally speaking, are the profits investors make on the sale of assets such as stocks, bonds or real estate – to fund a new program, which would contract with five lawyers to provide free legal representation to tenants facing eviction. The promoters hope to raise between 12 and 15 million dollars per year.

“We see this protection as crucial to keeping people housed,” says Donovan Scribes, spokesperson for the Community Alliance of Tenants, which supports the proposed tax. “Tenants feel like the moment they receive a court summons, an eviction is inevitable, even when it’s not.”

On March 28, the Portland Business Alliance filed a challenge to the ballot title and statement of reasons for the proposed measure. PBA lobbyist Jon Isaacs says the tax is a bad idea that would make a tough economic situation worse.

“The Portland area is already facing an affordability crisis driven primarily by housing costs and taxes,” Isaacs says.

Supporters say they are “disappointed but not surprised” by the PBA’s challenge. “Our election measure would help stabilize a volatile housing market with a small tax increase,” campaign spokeswoman Colleen Carroll said. “Workers struggling to make ends meet would have a fighting chance.”

No one disputes that housing instability is a problem in Portland, which has one of the lowest rental vacancy rates in the country.

But the proposal comes at a time when passing a new tax, even in tax-loving Multnomah County, could be a challenge. In 2020, voters passed a slew of new taxes: a Portland Public Schools Bond, a new tax on the Multnomah County Library, a tax on Portland Parks and Recreation, a measure for homeless services. subway shelter and a county measure for kindergarten for all.

All of this has left high-income county residents paying one of the highest combined marginal tax rates in the nation. And the PBA’s challenge to the poll indicates that senior local business executives may have lost their appetite for making concessions to progressives.

The brewing flap comes on the heels of an independent group, People for Portland, filing a different ballot measure on March 25.

The measure would redirect money from the 2020 Metro Homeless Services Tax, mandating that 75% of the $250 million it raises annually in three counties be spent on homeless shelters — and forcing local governments to enforce anti-camping laws to get their money.

This tax also falls on people with high incomes. So the effort by a business-backed advocacy group to wrest control of how money is spent suggests Portland boardrooms are no longer willing to write blank checks.

Although business groups often lost at the polls, they easily defeated a multibillion-dollar subway transit measure in 2020, and some observers believe voter attitudes toward funding new services changed.

A variety of recent polls show voters are much grumpier than they were two years ago.

“There really is a resentment in the electorate against measures sponsored by people who want to expand the business of government,” political analyst Len Bergstein said. “If this predatory measure is successful, it may be the vote that will test the local electorate’s appetite for tax measures.”

Supporters of the Eviction Advocates Initiative, including the Portland Chapter of the Democratic Socialists of America, hope to replicate the programs they say have reduced evictions in New York, San Francisco and other cities.

They work from a successful playbook. In 2020, the DSA successfully collected signatures for what became Multnomah County’s Preschool for All measure. The bar to qualify an initiative for the county ballot is 6% of county voters who voted in the last gubernatorial election. This amounts to 22,686 valid signatures, a fairly low threshold.

The campaign weighed a number of options before landing on a capital gains tax. The stand-alone funding mechanism is more difficult to redirect to other uses than a general funding program.

Scribes, the spokesman for the Community Alliance of Tenants, says the measure could start to level the playing field. “Right now the system is designed in a way that creates barriers for tenants,” says Scribes. “The landlord can hire a lawyer and the tenant cannot.”

If the measure passes here, Scribes adds, advocates will seek to roll it out across the state.

Deborah Imse of Multifamily NW, which represents landlords, says her group doesn’t have a position on the proposal, but she’s not sure it’s the right solution. “We know from court records that most evictions in Portland and Multnomah County are due to non-payment of rent,” Imse says. “A robust tenancy assistance program for people who need help would likely have more impact in avoiding evictions.”

(There were 287 evictions filed in Multnomah County last month; 174 were for nonpayment.)

PBA hopes the idea will never reach voters. The group filed objections Monday in Multnomah County Circuit Court, saying “all parts of the ballot title are insufficient and unfair.”

He argues that the title of the ballot and the description of the measure do not reflect the wide range of legal services that the measure would provide.

Another concern of the PBA: the measure does not define “capital gains” and the tax rate of 0.75% “may be increased or decreased depending on annual reports”.

It’s alarming for a group representing regional business CEOs, who could see their tax bills fluctuate depending on what bureaucrats say is needed.

A 2020 study by accounting firm Ernst & Young found that with all the new taxes passed that year, high earners in Portland could pay a total of 14.6% in income taxes, one point percentage higher than San Francisco and nearly two points higher than New York.

Reactions from the three Multnomah County commissioners vying to become the next county chairman suggest officials are well aware of concerns over the high tax rate and may prefer other mechanisms to help tenants.

Commissioners Sharon Meieran, Jessica Vega Pederson and Lori Stegmann have all expressed support for the concept of legal tenant representation but oppose the mechanism.

“Using this type of tax measure to raise $15 million a year is like using a hammer to drive in a nail,” says Vega Pederson. “This is not the right solution.”