Many struggling Oregon businesses to see tax hike in 2021

PORTLAND, Ore. — It has been a hard year for many Oregon businesses. Despite the struggles, they still have to pay state and local taxes and fees. Thousands of businesses will also face a higher unemployment tax rate.

The economic effects of the pandemic are being felt from Portland restaurants to Baker City hotels, like the Geiser Grand.

"By the end of the year, we will probably have lost $1 million in revenue that we would have had," said owner Barbara Sidway.

Sidway says they adjusted early to the pandemic, buying disinfectant and thinking of new ways to do business. Like many businesses, the hotel owner took a PPP loan to help stay afloat. Still, it's been a struggle.

Despite the hardship, businesses still have to pay taxes and fees for 2020 and 2021. There are, for example, liquor license renewals.

"It’s not fun to pay a significant license for on-premise alcohol consumption when you haven’t had consistent on-premise alcohol consumption," said Jason Brandt, president of the Oregon Restaurant and Lodging Association.

Brandt said state and local government could do more to help businesses during the pandemic when it comes to taxes and fees.

"Taxes and fees in the year 2020 should not be approached in the same way they were approached in past years," Brandt said. "The reality is this hasn’t been a market force issue for us, it’s been a government restriction issue."

Bars and restaurants got some reprieve during the third special session of 2020 when lawmakers approved the sale of to-go cocktails.

The Oregon Liquor Control Commission is still required to collect license fees, but it is allowing business owners to delay payment of the 2020-2021 renewal fee without a late fee.

Counties still charge health inspection fees, too, based on seating capacity. Multnomah County is requiring license holders to renew their licenses on Jan. 1, but froze fees for the 2021 calendar year. The county said it is working with operators to enter into payment plans to spread out annual permit costs over a three-month period.

Top of mind for most business owners, though, is an increasing unemployment tax rate.

"In almost all cases, they showcase thousands of dollars in increased taxes they have to pay. These are employer paid payroll taxes, they aren’t shared by employees," said Brandt. "The business owners themselves have to take the brunt of all these increases, and their costs are going up due to COVID, not because they want to lay off or furlough their employees."

In Baker City, Sidway fears her unemployment tax rate will remain high for the next three years due to the pandemic.

"The rates are going to go up dramatically for everyone in the hospitality business, in my opinion," said Sidway.

According to data shared by the Oregon Employment Department, about 145,000 businesses pay unemployment insurance taxes. About 124,000 businesses will see that tax rate go up for 2021, about 85% of all businesses.

Several states protected businesses from the increasing unemployment tax related to the pandemic. Oregon has not.

Oregon Employment Department Acting Director David Gerstenfeld previously said it would take legislative action to adjust that tax rate. Oregon's tax rate is based on a self-adjusting formula to ensure the state's Unemployment Trust fund stays solvent.

KATU News went to Rep. John Lively, chair of the House Committee on Economic Development, to ask if the state could adjust the tax rate for businesses impacted by the pandemic.

"I’m not aware of anything personally. So, let’s keep in perspective what the government has done in that time," said Lively.

Lively pointed to Gov. Kate Brown's recent allocation of $55 million to businesses as one example. In December, Brown announced the state would eliminate penalties and interests on 2019 income tax due from Oregon businesses who are struggling to pay tax bills amid COVID-19 restrictions.

"There has been a lot of effort on the state’s part," said Lively. "I think there will continue to be more."

This story is part of our Following the Money initiative. If you suspect government waste or a lack of accountability, give our Following the Money reporter, Keaton Thomas, a call or write him an email.