Less than a month after the Metro Council unanimously approved what it acknowledged at the time was a potentially hard-to-pass payroll tax on employers as the sole tool to raise money for a massive transportation package headed to voters this November, Council President Lynn Peterson appears ready to offer a different deal to business groups.

In a Thursday evening email to the head of Portlands chamber of commerce, Peterson said that she would support a potential compromise hammered out in recent weeks that would reduce a payroll tax on employers from 0.75% to 0.60%, if business groups agree to at least a neutral position on the measure and if the chamber actively lobbies for state funding for some projects.

Specifically, she wants Portland-area business leaders to encourage the state to tap its funds or find a new revenue source -- to backfill what amounts to a $50 million per year shortfall in project spending if the payroll tax were reduced. Peterson said that gap would grow by 3% every year for the first five years.

Peterson said that money would need to be directed to pay for repairs on state highways in the Portland area roads like 82nd Avenue, Oregon 213 and 99E. Those three signature corridors earmarked for significant transit, safety and maintenance work under the proposed package are all state highways.

The email marks a dramatic shift in tone from the celebratory and defiant public face put forth by Peterson and other Metro councilors during the vote to refer the $7 billion transportation package on July 16. In the days and weeks before that meeting, business groups, including the Portland Business Alliance, had asked the regional government to delay the tax due to the unprecedented dual crises of the pandemic and the economic recession.

Metro doesnt plan to collect the tax until 2022, but business groups said that was still too soon.

Peterson and other Metro officials said as they prepared to vote that there would never be a good time to pass a new tax. They unanimously approved the plan to create up to a .75% payroll tax on employers, while exempting entities with fewer than 25 employees as well as public agencies.

According to Petersons email, there have been additional conversations with local business leaders since the Metro vote last month.

In her email to Hoan, she said local advocates who helped shape the measure also supported a compromise. She also said the busines groups must lobby state lawmakers to allow Metro to tax public employers. The regional governments attorneys said last month that it is unclear whether Metro now has that power.

Peterson also said the business leaders must agree to lobby for a progressive regional or state vehicles miles traveled fee to funnel additional money needed for the work.

Willamette Week first reported on Petersons letter.

Peterson and Hoan did not immediately respond to calls.

Kari Schlosshauer, spokesperson for the civic group the Getting There Together Coalition which worked with Metro on the package and pushed for a regional transportation bond, said they have been part of the compromise discussions as well.

Theres a lot of concern that a really vocal anti-tax voice could be really detrimental to a lot of stuff on the ballot, she said in an interview, citing the tobacco tax and other issues on the ballot.

Schlosshauer said the business community isnt a monolith, and not everyone opposes the measure.

If its not well received and it doesnt go anywhere, she said of the floated compromise, then we still have a strong coalition who fought to put this package together and are willing to fight for it.

Heres the full email:

Dear Andrew,

In a continuing effort to bring our regional community to an agreement on a transportation funding measure for this Novembers ballot, we have had additional conversations with local business leaders to see if we can find a path forward.

After listening and brainstorming with many parties over the past few weeks, we think we have come up with a framework for a potential compromise between the Getting There Together Coalition (GTT), labor partners, other stakeholders, Metro Council, and the Portland Business Alliance and your stakeholders.

If agreed upon, this framework will be built into a resolution to be adopted by Metro Council as legislative policy.

1. Getting There Together, labor partners, other business stakeholders, and Metro Council would agree to set the payroll tax rate from .75% to .60% if and only if all parties, including PBA members and stakeholders, agree to at least a neutral position on the measure as PBA and lobby the legislature for Orphaned Highway funds, or other transportation funding, that will help fill the initial $50m hole created by lowering the rate from .75% to .60%.

These funds are justified because the state has neglected its upkeep responsibility to state routes like Hwy 99W and 99E and OR 213/82nd Ave for decades. It is also understood that PBA has been supportive of the Orphaned Highways Bill in the past.

Please note, the $50M gap would need to be increased by 3% every year past the first 5 years to cover the bond payments.

2. If the additional $50M (plus growth) in revenue is not finalized and authorized by federal or state sources by 2022, then a default ramp up in the tax rate would be imposed from .6% in 2022 to .75% in 2026 in order to pay off the bonds. This would allow the economy to return to a better position before the full tax rate is imposed.

3. All parties agree to lobby the legislature to grant Metro the authority to add local public employers to the payroll tax.

4. All parties agree to lobby the legislature for a progressive regional or state Vehicle Miles Traveled fee, with a portion directed to fill the $50M (plus growth) gap in funding past commitments to the Orphaned Highway Bill timeline.

We appreciate your willingness to convey this information to your Government Relations Committee members at tomorrows meeting. Our team can be standing by to answer questions before, during, or after the meeting.

If interested then a conversation would be required between business leaders from PBA and the proponents stakeholders mentioned above to finalize an agreement as soon as possible.

Sincerely,

Lynn Peterson

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-- Andrew Theen;atheen@oregonian.com; 503-294-4026;@andrewtheen

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Metros Lynn Peterson offers to reduce payroll tax rate in transportation package if business group remains - OregonLive