Following a tense public hearing and weeks of discussion, Multnomah County will postpone voting on a proposal to change the tax that funds its tuition-free preschool program.
Commissioner Julia Brim-Edwards, who has advocated for the tax to be indexed to inflation since last year, said Thursday that the board would make a decision on changes to the tax after other proposed improvements to the program have been discussed.
“We don’t have everything all synced up, so I think it’s important this morning we have a hearing, we put it on the table, have an opportunity to ask questions not in a work session format but in a public hearing format,” Brim-Edwards said, “and that the commission make a decision on when is the best time to have this and how it integrates into the other work around Preschool for All.”
The delay comes after dozens of Preschool for All supporters filled the board room Wednesday night to defend the program. Parents, people who pay the tax and education advocates blasted Brim-Edwards’ proposal, saying it would cut funds from a crucial program for working families in the county. The coalition Friends of Preschool for All, which includes groups like APANO, Latino Network, Portland for All and others, mobilized supporters last week to speak out for the program.
“I am here today to ask you to vote no on cuts to the Preschool for All program,” Alli Holmes told the board through tears Wednesday. “I am a parent of a child who was just accepted to Preschool for All. When we found out she was accepted into this program I burst into tears in the middle of a meeting. It has brought an immense relief to our family.”
The board voted three to two to pick up the discussion on indexing at a later date.
Under current rules, which voters passed overwhelmingly in 2020, individuals pay 1.5% on taxable income earned over $125,000. That same rate applies to any taxable income couples make over $200,000. That tax rate jumps to 3% on taxable income over $250,000 for individuals and over $400,000 for joint filers.
Brim-Edwards’ proposal would not only raise those thresholds each year to keep up with inflation, but it would also rebase the current income floor to account for the years the tax wasn’t indexed. If the change is ultimately made, the 1.5% tax would only kick in for single filers on taxable income over $153,000 and over $245,000 for joint filers. The 3% tax would apply to individuals on taxable income over $307,000 and over $491,000 for joint filers.
The new tax brackets wouldn’t apply to the county’s highest income earners, Brim-Edwards said. They would still be taxed the same way they are now. County forecasts show the preschool program will run out of money, despite its over $400 million in reserves, before the 2033-2034 fiscal year. Brim-Edwards’ proposal would drain those funds roughly one year sooner.
Commissioners raised concerns about how the tax change would impact the county’s ability to offer 11,000 tuition-free preschool seats by 2030, saying the true impact on revenue wasn’t clear.
The current discussions come as the county has faced pressure to alter the tax.
A Portland-area group made up of primarily business representatives convened by Gov. Tina Kotek in 2023 released sweeping recommendations on overhauls to local taxes Tuesday. In its report, the Portland Central City Task Force advised the county to halt collections of the tax for up to three years while “reassessing the program’s design, scope, and cost structure.”
Earlier this year, Kotek slammed the preschool initiative for underspending and low enrollment. She said the high taxes could be pushing high-income earners out of the county and encouraged commissioners to reduce the tax rate or pause the tax entirely. State lawmakers also lambasted the program this year, at one point threatening to end it completely.
Vega Pederson emphasized that Brim-Edwards’ indexing proposal wasn’t an attempt to end the tax or undercut the program, like lawmakers had threatened to do. In a letter to the governor, Vega Pederson, who spearheaded the county’s efforts to win support from voters for the preschool tax, expressed support for identifying “consensus around possible next steps to index the income threshold.”
“My hope is that the consensus that we find is to consider indexing as part of a more comprehensive review of Preschool for All,” Vega Pederson said. “I want to be clear that in my opinion the proposal brought forward by Commissioner Brim-Edwards is completely different and not at all related to what the governor and the Legislature attempted to do earlier this summer.”
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