The head of Portland’s largest chamber of commerce is taking the city to court for hiking the city’s arts tax without voter approval.

“Cities have to talk to their voters about taxes,” Portland Metro Chamber President Andrew Hoan told OPB. “Maybe the councilors who want to raise this tax are right. Then they should ask voters. It really isn’t that complicated when you boil it down.”

Lawyers with Tonkon Torp LLP representing Hoan and Portland coffee shop owner Loretta Guzman filed the lawsuit in Oregon Tax Court Thursday. That state court exclusively hears complaints related to tax law, with appeals going directly to the Oregon Supreme Court.

Portland voters approved the Arts Education and Access Tax, commonly called the arts tax, in 2012, with the measure passing with nearly 62% of the vote. The $35 tax on Portlanders who earn more than $1,000 annually goes toward public school art programs and art nonprofits. In the years since its passage, the tax has been criticized for its onerous collection process and for not going far enough to cover arts programs.

In May, Portland City Council voted to increase the tax by 43%, while also exempting roughly 40% of lower-income tax filers from paying. The vote also allowed the tax to be indexed to inflation in the future, meaning additional increases down the line.

Hoan’s attorneys say that this vote was illegal. They argue the city’s charter doesn’t grant councilors the legal authority to raise taxes — a requirement they believe the Oregon Constitution and prior case law uphold.

The city’s legal team has taken a different stance. Before the tax was adopted in May, City Attorney Robert Taylor told councilors he believes the city has the authority to tweak the arts tax.

“When the voters approve it, they are exercising their legislative authority as voters,” Taylor said, referring to the passage of the 2012 measure. “This council has concurrent legislative authority and so this council can make changes.”

The city has a policy of not commenting on pending litigation.

As part of the legal complaint, Guzman and Hoan are asking a judge to prohibit the city from enforcing its arts tax increase while the litigation plays out in court.

Guzman, who owns Bison Coffeehouse in Northeast Portland, said she supports the city funding arts programs.

“I believe in support for the arts,” she said in an email to OPB. “I am an artist myself and made tribal beadwork for two years to save up for the shop. But it’s not right that City Council has made major changes to the arts tax without approval from voters.”

Hoan said he’s not calling on the arts tax to be abolished.

“If we’re successful in our lawsuit, nothing will happen,” he said. “The existing arts tax will remain. It will continue to fund the things that it funded before. And so our success is simply to say that you have to have a conversation with voters when you’re raising taxes.

The arts tax has brought in around $12 million annually for years. But, since the tax hasn’t increased to match inflation, that money has been funding fewer and fewer programs. Councilors who supported the recent change — which adjusts the tax to inflation — said the update would ensure the fund delivered on voters’ intent when they approved the tax in 2012.

“We’re now actually looking back to what the voters told us to do,” said Council President Jamie Dunphy, who proposed the recent arts tax changes at an April meeting. “And we’re doing it.”

The Portland Metro Chamber’s members, which include many of the city’s largest companies, have increasingly questioned the city’s taxing authority — both as a way to set legal precedent in City Hall and to challenge new tax hikes that could push companies and high-income residents out of Portland.

In 2016, the business group strongly opposed the creation of a different tax, this time on companies that pay their chief executives at least 100 times higher than the median wage paid to employees. Yet councilors adopted that policy. Last year, the chamber sent a letter to Mayor Keith Wilson and councilors opposing a pitch to increase another voter-approved tax, the clean energy fund, as a way to fill budget gaps.

And the group’s leaders raised similar concerns last week, when two city councilors floated a proposal to increase the 2016 CEO pay ratio tax.

A victory in court for Hoan could have a chilling effect on any future taxes proposed by City Council that aren’t explicitly allowed in the city’s charter.

News Source : https://www.opb.org/article/2026/10/01/portland-metro-chamber-ceo-sues-city-arts-tax-increase/