A Portland sales tax to help low-income people access heat pumps and other climate change needs succeeded in raising more money than most expected in their wildest dreams – a projected $1.3 billion over the next five years.
Now, some city leaders want a piece of the Portland Clean Energy Community Benefits Fund pie – and in some cases, they want the money for projects that have nothing to do with the environment.
That subverts the intention of voters, who in 2018 overwhelmingly approved the 1% tax on in-person and online sales transactions with large retailers in the city.
The Oregonian/OregonLive detailed the evolution of the clean energy fund and designs by city commissioners to take over the direction of the fund and even to funnel some of the windfall to struggling city programs like Portland Street Response.
Here are five takeaways from our investigation:
THE FUND IS AWASH IN CASH
When it was created via a citizen-led initiative, the fund was projected to raise $30 million a year. When it officially launched in 2020, that projection was revised to $40 to $60 million annually. Since then, the revenue has grown exponentially every year.
The tax is now expected to raise more than $200 million annually.
And it’s not the only tax-based program that’s doing well – largely fueled by wealthy people and corporations getting richer during the pandemic. Other recent voter-approved measures – including Multnomah County’s universal preschool tax and the Metro regional government’s homeless services tax – have seen similar revenue surges.
THE GLUT OF MONEY HAS CREATED TENSION AT CITY HALL
The staggering amount of money has exposed a long-simmering tension among city leaders. Some believe the grant program’s funding mechanism is so successful and generating so much money that it should finance both climate justice initiatives and shore up some of Portland’s basic municipal services that have withered under long-term structural deficits.
HERE’S WHAT’S HAPPENED OVER TIME
City leaders – with Commissioner Carmen Rubio at the helm – have gradually pushed to transform the fund to allow the city to control and use part of the pot.
The fund began with an exclusive focus on nonprofits. A nine-member volunteer committee was tasked with soliciting community ideas and making funding recommendations to the City Council, which approves the spending from the fund.
In 2022, Rubio oversaw a major overhaul, expanding eligibility for grants to include city bureaus and other government entities as well as for-profit companies for climate-based projects.
Then in December, Rubio bypassed the committee and proposed that an additional and unexpected $540 million from the tax go directly to struggling bureaus, including for projects only nominally related to climate and environmental work.
She did not solicit ideas from the community and kept news of the surplus windfall from the public and committee members for more than two months.
And earlier this month, Rubio made a surprise announcement during a budget work session that she would seek to funnel $3 million in interest generated by the fund to Portland Street Response, a popular intervention program run by the Fire Bureau that faces significant cuts. The program sends mental health professionals to assist those in crisis on the streets and has no links to the environment or climate. Again, Rubio did not consult the community or the advisory committee.
City Commissioner Rene Gonzalez then proposed that all of the interest earned by the fund this year – an estimated $12 million – be used to cover the Fire Bureau’s entire budget gap.
THE FUND IS UNDER THREAT
Shah Smith, Gonzalez’s chief of staff, has floated the prospect of referring the fund back to voters this fall for changes and has directly pitched the idea to the staffs of Commissioners Mingus Mapps and Dan Ryan.
The proposal would cap the clean energy fund’s spending on climate and environmental justice initiatives to the $60 million a year forecast early on by the city and divert any remaining annual revenue either into Portland’s general fund or to specific public services.
Fund proponents say use of the fund outside of the environmental justice realm could open the city up to lawsuits from the wealthy corporations that pay into it.
But the Portland Metro Chamber, the region’s prominent business lobbying group, has signaled early support for using the money more widely.
THERE’S SO MUCH NEED
The fund has financed only a tiny percentage of the climate projects city leaders said would make low-income and other residents who are the fund’s intended beneficiaries more resilient to climate change.
It so far has awarded $155 million to more than 80 local nonprofits for projects including home energy retrofits, rooftop solar projects, installing energy efficient heat pumps, training for energy jobs and expanding refugees’ and immigrants’ access to community gardens.
The city has shown that many more such projects are needed – to the tune of $18 billion in funding – and at the current rate of revenue, it would take 90 years to complete them all.
Read the full story on OregonLive.com.
— Gosia Wozniacka covers environmental justice, climate change, the clean energy transition and other environmental issues. Reach her at gwozniacka@oregonian.com or 971-421-3154.
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