Portland officials warn arts tax revenue is falling as arts and parks leaders outline services and budget pressures

The Office of Arts and Culture and Portland Parks & Recreation presented to the Portland City Council Arts and Economy Committee on April 22, outlining the scope of their work, economic impacts and looming budget pressures tied to falling arts-tax revenue and rising program costs.

The presentations described a large portfolio of grants, public art, performing-arts venues and recreation services while warning that the voter-approved $35 arts tax — which funds the Arts Access Fund — is not indexed to inflation and is producing less revenue for grants and coordination. “The arts tax is a flat $35. It does not index for inflation, so its buying power has been decreasing since 02/2012,” Charity Montes, director of the Office of Arts and Culture, told the committee.

Why it matters: City and nonprofit speakers said arts and parks programs drive downtown activity, support jobs and provide life‑saving services such as swim instruction and free meals. Committee members pressed city revenue staff for detail after the Office of Arts and Culture showed projected drops in available discretionary arts-access dollars for the next fiscal year.

Office of Arts and Culture: scope and shortfalls

Charity Montes said the newly established Office of Arts and Culture (launched July 2024) runs grantmaking, arts education coordination, public art, performing-arts venue oversight and cultural planning with a small core staff and partner contracts. Montes said the office disperses about $5.5 million in grants this year through a mix of Arts Access Fund and general‑fund dollars and that it manages general operating support payments to 80 arts organizations totaling roughly $4.1 million in fiscal 24–25.

Montes told the committee the office also administers small grants (ranging roughly $500–$5,000) and that partners distributed about $1.36 million in small‑grants funding in fiscal 24–25. She said the Arts Access Fund, collected by the city’s Revenue Bureau under the voter‑approved $35 arts tax, yields on average about $11 million a year for schools and arts grants but is showing recent declines: the city was budgeted to receive $3.5 million for the office in the current fiscal year but actually received about $2.1 million, and the Revenue Bureau projects roughly $1.8 million for the office in FY 25–26.

Montes also outlined the public‑art portfolio: a 1,700‑work collection, a percent‑for‑art program that can allocate up to 2% of eligible capital improvement costs, and approximately 25 key pieces that need deep conservation estimated at about $1 million with no dedicated maintenance funding yet. She said a 20‑person work group is studying operational models for the city‑owned performing arts venues (the Portland 5 centers for the arts, which include the Arlene Schnitzer Concert Hall, Keller Auditorium and Antoinette Hatfield Hall) with recommendations due to the city administrator in June.

Revenue and collections questions

Thomas Lanham, revenue-division director, told the committee the structure of arts‑tax disbursement creates a three‑bucket flow: collection costs for the revenue division, required school district disbursements, and leftover funds for the city’s arts grants. He said rising teacher salary obligations have consumed more of the fund, contributing to the drop in monies available for arts grants, and that collection costs for the arts tax are relatively high: “In a typical year, the cost of collections is around 11 or 12%,” Lanham said. He added that revenue collection costs rose modestly but that expanding teacher FTE and salary increases were the primary drivers of the decline in the third bucket of funds the arts office receives.

Lanham said the Revenue Bureau expects improvements when third‑party tax‑preparation platforms better integrate the city tax and the bureau fully integrates Oregon Department of Revenue data to identify nonresponding taxpayers; he said the bureau has been working with multiple private tax‑preparation products and that bringing local taxes into those platforms is a long process.

Performing venues and P5 work group

Montes and others said commercial shows — particularly at the Keller Auditorium — help subsidize nonprofit programming across P5 venues. Montes said the work group is reviewing a range of operational models, including nonprofit, for‑profit and public‑private partnership options, and that next steps likely include revisiting the intergovernmental agreement (IGA) between the city and Metro that governs those venues.

Parks and Recreation: services, reach and funding

Adina Long, director of Portland Parks and Recreation, told the committee the bureau manages about 15% of Portland’s land (roughly 8,000 acres of natural areas) and operates community centers, pools, the Portland International Raceway, two arts‑focused community centers and other assets. Long said the bureau saw total attendance across programs and facilities exceed 1.3 million in FY 23–24 and that parks and recreation contributed to broader tourism and economic measures that support local jobs.

Long outlined a range of community services — youth employment, summer camps, environmental education, swim lessons and free‑meal programs. The bureau’s Access Pass program, launched in FY 21–22 and designed to reduce cost barriers, provided about $4.1 million in financial assistance to more than 18,000 people in FY 23–24; Long said 70% of access‑pass registrants self‑identified as living at or below the Oregon poverty level.

Program concerns and public comments

Testimony from nonprofit leaders, advisory‑board members and service providers emphasized both the economic and social value of arts and parks programs and urged continued funding. Jessica Green, executive director of the Portland Parks Foundation, said parks provide infrastructure for partners to deliver programs and asked councilors to consider what level of park system the city wants to fund. Chris O’Grady, a public‑health physician and Parks Advisory Board member, called parks and recreation “essential infrastructure” and cited public‑health benefits including reduced heat exposure and improved mental health.

A few public commenters raised specific program questions. Justin Mendigerin, a recreation lead with Portland Parks and Recreation, questioned the Access Pass because it currently requires no financial or residency verification and said the program’s cost trajectory (reported by staff as several million dollars annually) could be financially unsustainable without targeted verification or redesign. In contrast, other speakers including Graham Cole of White Bird and Mark McCrary of the Portland Gay Men’s Chorus described arts grants and operating support as essential for maintaining performances and the local economic activity they generate.

Next steps and committee requests

Committee members asked for follow‑up details. Council members requested a breakdown from the Revenue Bureau of the factors behind the arts‑tax collections decline; a timeline and copy of the Portland 5 venues work‑group recommendations; and more detailed benchmarking on parks and arts spending in comparable cities. Staff said Metro and city partners are completing facility condition assessments for P5 venues and that recommendations from the P5 work group will proceed through city and Metro leadership and the relevant governing bodies.

The presentations and public comments underscored competing pressures: the economic and community benefits of arts and parks programs, and tightening local resources driven by an unindexed flat art tax, rising personnel costs and certain one‑time or increasing obligations. Committee co‑chairs said they plan further hearings and analysis during the budget season to examine funding options and program priorities.