SALEM — Oregon Gov. Kate Brown’s quest to deliver the full $40 million state subsidy she promised for the 2021 World Athletics Championships in Eugene is fueling some awkward exchanges between Democrats in the Capitol.

The tourism tax increase Brown is seeking to fill most of the gap would not actually be dedicated to the championships. Instead, most of the $6.8 million-a-year revenue stream would go to state tourism agency Travel Oregon, which would decide how to spend it.

Supporters imply a chunk of the money would be awarded to the championships but haven’t said so outright.

Rep. Alissa Keny-Guyer, D-Portland, asked one of the event organizers during a hearing on the tax increase earlier this week how she expected to get the remaining $20 million promised by the governor. Sarah Massey, managing director of the Eugene-based group Oregon21 which is organizing the event, responded, “I can’t say where it’s going to come from.”

The message from a spokeswoman for the governor was similar: Brown has made a case for Travel Oregon to award more money to pay for the championships, but decision is up to the Oregon Tourism Commission whose members the governor appoints.

Keny-Guyer and affordable housing advocates say that if the state is going to permanently raise the tax on hotels and other lodging, leaders should at least discuss spending some of the proceeds to help low- or moderate-income renters. They say Oregon’s success at attracting tourists has fueled the conversion of housing into short-term rentals offered on sites such as Airbnb, displacing residents and pushing rents higher.

Rep. Alissa Keny-Guyer, D-Portland, speaking on the House floor on March 3, 2016.

Finally, key lawmakers who oversee the state budget are suspicious of Travel Oregon and wonder if the semi-autonomous agency might already have money on hand that it could dedicate to the track and field championships. The governor is asking them to set aside $5 million from the general fund, which is largely income tax revenue, for the games.

“I don’t think this is something the people of Oregon necessarily signed up to have their tax dollars used for,” Sen. Elizabeth Steiner Hayward, a Multnomah County Democrat and co-chair of the Ways and Means committee, said last week. If state officials want to spend more on the games, she suggested they hit up the tourism agency. “I think Travel Oregon is sitting on a substantial amount of money.”

Steiner Hayward and other leaders on the Ways and Means committee have said nearly all of the $490 million they could award from the general fund this session is already spoken for, to address dire needs at the state’s child welfare agency, psychiatric hospital, forestry department and parole and probation programs. Lawmakers including House Speaker Tina Kotek also want to spend millions to address Oregon’s homelessness crisis.

When asked earlier this week whether the governor’s $5 million general fund request qualified as an emergency, House Speaker Tina Kotek replied, “I guess you could classify it as an emergent issue … That is certainly something we’re all going to have to discuss.”

Lawmakers’ skepticism also ties back to 2016, when they narrowly approved a previous increase in the tourism lodging tax with the implicit understanding it would likely help subsidize the 2021 championships in Eugene. At the time, organizers said they would ask Travel Oregon for $25 million of the money, The Register-Guard reported.

“We’ve already made some investment,” Steiner Hayward noted.

The current 1.8 percent tax is going to drop to 1.5 percent in July 2021, unless lawmakers make it permanent. Since lawmakers last approved an increase, Travel Oregon’s budget has surged more than 50 percent to $39.3 million annually and its payroll has also grown. That’s thanks to the tax rate increase but also due to a roughly 53 percent increase in spending on tourism lodging subject to the tax, according to figures from the Legislative Revenue Office.

It appears the fracas over the proposed tax increase is not done. Keny-Guyer announced at the Tuesday night hearing she plans to submit two amendments to the plan, one to dedicate revenue from the 0.3 percent increase to rental assistance and another to create a new tax on short-term rental properties.

That drew skepticism from Rep. Nancy Nathanson, a Eugene Democrat and key supporter of the previous tax hike. “I would be concerned about making a major policy decision in a short session, on a day’s notice, through an amendment,” Nathanson said.

Rep. Nancy Nathanson, D-Eugene, center, chats with Rep. Barbara Smith Warner, D-Portland, during a House floor session in 2016. Oregonian file photo by Denis Theriault

Keny-Guyer responded that she was trying to be supportive of the world championships and had been given the impression “that if we extended the (tax rate) sunset, it was in part because of the 2021 track world championships … needing more money and I was very sensitive to that.”

But Keny-Guyer said she was not ready to give up on “a bigger conversation between now and 2021” about raising money for rental assistance. “If we’re going to have people come from around the world and see our homeless all over the streets, this is our one shot at the apple and if we aren’t doing something between now and August of 2021 urgently to address the housing situation and we have limited pots of money, that’s of concern,” she said.

— Hillary Borrud | hborrud@oregonian.com | 503-294-4034 | @hborrud

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