Portland arts tax scofflaws beware: City tax collectors on Wednesday won the ability to spend more money to go after money-earning adults who don't pay the $35 annual tax.

On a 4-0 vote, Portland city commissioners removed a cap on how much the city can spend to run the local arts tax. Commissioner Dan Saltzman was absent.

Commissioners and city officials said they needed to remove the voter-approved limit of spending 5 percent of collections to run the tax because it kept city tax collectors from maximizing arts tax revenue.

"While we are undoubtedly going to take some lumps for it, I think fixing it is the right thing to do," Mayor Ted Wheeler said during a hearing on the cap-removal idea. Wheeler added that he believes the arts tax works, but not as well as "originally proffered or anticipated."

In principle, the limit was supposed to ensure that 95 cents of every dollar collected went to arts organizations and art and music teachers. Still, in each year of the tax's existence, the city revenue office has blown past the cap.

Thomas Lannom, the city Revenue Division director, said that's because the tax is relatively low at $35 per-person – not because the program is inefficient. He defended scrapping the overhead limit in testimony to the City Council last week. "Spending 10 cents to collect the next dollar makes perfectly good business sense, but the current city code prohibits us from doing that," Lannom said.

Lannom said that, contrary to public opinion, the arts tax is one of the city's most efficient money-making pathways because each arts tax collector manages about 100,000 accounts at a time. Compare that to other city taxes, he said, where each collector handles far fewer accounts.

The council also agreed to work with the arts tax oversight committee to draft a recommendation that an income-based exemption to the tax, currently set at $1,000 per individual and at the poverty level for a household, be doubled at a minimum. Lannom said one in seven adult Portlanders is eligible for an arts tax exemption. Doubling it would balloon the exemption to make one in three Portlanders eligible, he said.

Portland voters approved the arts tax in 2012 with a 62 percent "yes" vote. As of June 2017, it has brought in $47.8 million, with nearly 10 percent spent on overhead costs. The net amount goes to the Regional Arts & Culture Council, which gives out arts-related grants, and also pays for arts teachers in the six local districts that lie partly or wholly inside city limits – Centennial, David Douglas, Parkrose, Portland Public Schools, Reynolds and Riverdale.

-- Gordon R. Friedman

503-221-8209; @GordonRFriedman