Correction appended

Most Portland residents will see their monthly bills for residential garbage and recycling collection lowered by about 40 cents beginning in February because the city has stopped collecting a business tax from garbage haulers.

The Portland City Council voted Wednesday to approve new rates after excluding the sales of residential garbage services from the Portland clean energy tax in December.

The change means the monthly rate for curbside pickup for a 35-gallon recycling receptacle with wheels, for example, will go from $32.55 to $32.15.

Ratepayers will be reimbursed for the taxes they’ve already paid, said Christine Llobregat, a spokesperson in the city’s planning and sustainability bureau. The average customer with a 35-gallon roll cart paid around $1.20 from July 1, 2019 through Jan. 31, 2020, she said.

“The new rates have been set below the cost of service in order to pay back customers over the course of the period from Feb. 1, 2020 through June 30, 2020,” Llobregat said.

The city increased monthly bills up to 75 cents for most customers in July saying it was to cover higher fees for processing yard debris and food scraps and the surcharge for the voter-approved Portland clean energy tax. The initiative subjected businesses designated as large retailers by the city to a 1% surcharge on revenue from retail sales in Portland.

Businesses with at least $1 billion in annual revenue nationwide and at least $500,000 in yearly Portland sales have to pay. Utilities, credit unions and co-ops are exempt, as are the sales of health care services, most groceries, medicine and prescription drugs.

Recycling companies were among the businesses who pushed back against the tax, saying city officials applied it too broadly. When voting to exempt construction companies as well as sales of residential garbage services and retirement plans last month, Mayor Ted Wheeler and Commissioner Jo Ann Hardesty remarked that the move was done partly to prevent lawsuits against the city.

The Portland Haulers Association, which represents the city’s residential solid waste and recycling collection services, sent a memo to the Portland City Council in July saying only three of 11 residential franchisees actually fell under the definition of a large retailer.

To cover the 1% tax on the three big haulers, the city raised all residential customers’ solid waste and recycling bills an average of 20 cents per month beginning in July and all 11 hauling companies collect the 20 cents monthly, the association said.

The group said the 20 cent increase may not necessarily cover all the fees owed by the three affected haulers and it was unclear what the companies not subject to the tax were supposed to do with the extra funds they collected.

Voters approved the business tax in November 2018 and it went into effect the following January. The tax is supposed to raise money for clean energy projects, energy-saving retrofits for low-income homeowners and renters, green infrastructure and the creation of living-wage green energy jobs. Funds raised are meant to be prioritized to help Portland’s low-income residents and communities of color.

The city initially estimated the surcharge could generate between $54 million and $71 million every year. The new exemptions decrease projections to between $44 million and $61 million.

The proceeds will be distributed as grants to nonprofit groups selected by a nine-person committee. The first round of grant funding, likely $7 million, is planned for this summer.

Note: A previous version of this story misidentified the city bureau Christine Llobregat works for.

-- Everton Bailey Jr; ebailey@oregonian.com | 503-221-8343 | @EvertonBailey

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