In the fall of 2018, Portland voters approved the Clean Energy Initiative to establish the Portland Clean Energy Fund (“PCEF”). The initiative requires Portland retailers with total annual revenues over $1 billion and Portland annual revenues over $500,000 to pay to the PCEF a 1% surcharge on gross revenue from retail sales. PCEF funds are earmarked 50-70% for clean energy projects (e.g. renewable energy, energy efficiency, and green infrastructure) and 20-25% for job training that prioritizes workforce development for traditionally underemployed and economically disadvantaged workers.
The measure passed easily, with about 65% of registered voters voting in favor. Immediately, however, businesses raised concerns that the surcharges were too extensive and that certain retailers should be exempt. Those who opposed the initiative argued that large retailers, construction contractors, and certain municipal utilities—such as garbage collectors—were obvious candidates for an exemption.
In August 2019, it became clear that some businesses would challenge the PCEF in court, arguing that it violated the Commerce Clause of the U.S. Constitution. However, the Portland Business Alliance argued against legal action, instead asking the city to work with the business community to agree on clear exemptions to accommodate local businesses.
In December 2019, the Portland City Council voted unanimously to expand the list of business industries exempt from the 1% gross revenue surcharge. While exemptions were already in place for certain utilities, grocery, and health care businesses, the December 11 vote added exemptions for construction contractors, garbage and recycling services, and revenues from the sale of qualified retirement plans. The amendment will likely reduce the PCEF revenue by $10 million annually, to an annual estimate of $44-61 million. The first distributions from the PCEF are likely to occur in 2020 totaling around $7 million.
As cities continue to feel the negative impacts of climate change across the planet, it is necessary that municipalities, states, and the federal government grapple with this challenge in a meaningful way. As efforts continue in support of clean energy initiatives and job retraining, it will be important for businesses and municipalities to work together to find creative solutions. The PCEF is Portland’s first attempt to find those solutions and it will hopefully serve the city well.
