Proposed TriMet tax may finally be palatable
Business people dont cheer wildly when TriMet talks about increasing taxes on their companies. However, in the case of a TriMet payroll tax hike now being contemplated, they at least can be assured the regional transit agency is taking a thoughtful approach.
For one thing, the pain of this particular tax increase would be about as minimal as they come. Plus, it would be dedicated solely to improving not maintaining transit service in a region that needs all the help it can get to manage growth and traffic in the future.
This week, TriMet is publicly talking about phasing in a payroll tax increase first authorized by the state Legislature in 2009. TriMet wisely delayed implementation of the increase until after the end of the Great Recession.
Now, six years later, agency leaders believe the economy finally has recovered. Of equal importance, though, is their belief that TriMet has a firmer grip on its employee and operating expenses, which means they can pledge that new revenues wont be absorbed by existing operations. Instead, the money largely will go toward added bus service, mostly outside Portlands core, to accommodate an expanding population.
TriMet already levies a tax on business payrolls and many government payrolls of more than 0.7 percent. If it moves ahead with the proposed increase, that amount will go up by one-hundredth of a percent per year for 10 years, eventually reaching just more than 0.8 percent.
If one-hundredth of a percent sounds tiny, thats because it is. For example, a small business with an annual payroll of $200,000 would pay an additional $20 per year in payroll taxes. That amount would go up for 10 years, until the total increase reaches $200 per year. A larger business with a payroll of $10 million per year would pay $1,000 more in the first year, and $10,000 more when the tax is fully implemented.
Even those minimal increases wouldnt be justified, though, if we did not feel confident that TriMet has cleaned up its own operations. A labor agreement reached this year with union employees has reduced the cost of what had been an unsustainable health-care plan. TriMet now can say with a straight face that its projected revenues and expenses are in line for years to come.
That balance means TriMet can dedicate any new revenue to enhanced service. The graduated payroll tax increases will boost TriMets budget by $4.3 million each year, eventually reaching $43 million per year in todays dollars. All of that money will be directed toward the goal of moving more people by transit.
In some cases, that will mean more frequent bus service or greater coverage with new routes. This additional money would not be used for expanding light rail, but for filling in the gaps in the existing system particularly in suburban areas where service is less concentrated than Portland.
TriMet has developed detailed plans for the future of transit, and its leaders point out that the regions population is expected to increase by 400,000 people in the next 20 years. If transit service doesnt expand to meet the need, then roads will become even more congested, commuters will waste more of their lives stuck in traffic and quality of life will suffer.
Tax talk is never popular, but TriMet General Manager Neil McFarlane and other TriMet officials are at least addressing the issue head-on. Theyve made the rounds to visit with major employers and business groups to discuss the payroll tax increase and how TriMet can help manage the regions growing transportation needs.
Their methodical process is a good one for others to follow if they want to raise money for transportation. (Mayor Charlie Hales and Commissioner Steve Novick, take note.) TriMet officials have made very precise promises that must be honored if the TriMet board approves the payroll tax increase in September. Real credibility will come from using the money for the stated purposes, and nothing more.
That means spending these new dollars on services that are visible to the riding and nonriding public and particularly to the employers who are footing the bill.