BOARD OF COMMISSIONERS'
November 29, 2005
Commissioners' Conference Room
Commissioner Anna Morrison presided with Commissioners Bill Dwyer, Bobby Green, Sr., Peter Sorenson and Faye Stewart present. County Administrator Bill Van Vactor, County Counsel Teresa Wilson and Recording Secretary Melissa Zimmer were also present.
1. ADJUSTMENTS TO THE AGENDA
2. PUBLIC COMMENTS
Joe Collins, Eugene, discussed the justice system in Eugene and the accountability. He commented that most people are afraid of the police and the District Attorney. He said that democracy doesn’t work. He hoped the city or County would oversee the District Attorney and bring in new people.
Jim Hale, Eugene, distributed Multnomah County’s income tax forms. He said there was a need for public safety money. He thought there should be a separate pool of money in the charter amendments that takes care of each of those items. He commented that there needed to be a new tax system and in the charter amendment, it should state that there wouldn’t be any more property taxes. He thought it was a well thought-out system that should be duplicated in Lane County.
3. COMMISSIONERS' REMONSTRANCE
4. EXECUTIVE SESSION as per ORS 192.660
5. COUNTY ADMINISTRATION
Van Vactor announced the Performance Counts Conference on Thursday.
6 COMMISSIONERS' ANNOUNCEMENTS
7 CORRESPONDENCE TO THE BOARD
8 COMMISSIONERS' BUSINESS
1) Ordinance No. 5-05/In the Matter of Amending Chapter 4 of Lane Code to Add Provisions for a Lane County Sales Tax and Use Tax, to Dedicate the Revenues, to Adopt Administration and Collection Provisions, To Renumber Differential Tax Provisions, and to Set an Effective Date (LC 4.400 through 4.462).
2) Ordinance No. 6-05/In the Matter of Amending Chapter 4 of Lane Code to Add Provisions for a Lane County Gross Receipts Tax, to Dedicate the Revenues, to Adopt Administration and Collection Provisions, To Renumber Differential Tax Provisions, and to Set an Effective Date (LC 4.500 through 4.563).
MOTION: to move that Ordinance No. 5-05 and Ordinance No. 6-05 be postponed indefinitely.
Dwyer MOVED, Green SECONDED.
Wilson explained that if the majority of the Board did not want to pursue either the sales tax or gross receipts tax, taking them off the table now focuses the discussion on other tax alternatives or other public safety funding alternatives. She added if in the future the Board wanted to come back to these, they would have to start over, as they would no longer be available for review.
Stewart thought it was appropriate to take them off the table.
Sorenson was in favor of the motion. He said they put these matters out for a public hearing and they received public comment. He thought the sales tax and gross receipts tax were not popular. He thought it was a good decision not to enact the taxes.
3) Work Session/Public Safety Funding Options.
Dave Garnick, Senior Budget Analyst, passed out two new attachments on income taxes. (Copy in file.)
Stewart indicated that they used the Multnomah County ordinance as a model for the income tax.
Wilson explained that Attachment 9 (copy in file) discussed how the Oregon personal income tax is computed. She said that gross income tax includes business income and loss, farm income, capital gains and loss, rental income, partnership income, estate and trust and S Corporation income. She indicated for gross income, they take out adjustments and arrive at a federal adjusted gross income. She added what Oregon does is that they add things that are not taxed by the feds but are taxed by Oregon, such as interest on government bonds from other states and deductions, to arrive at Oregon taxable income. She noted that sole proprietorships and partnership shares are all reported on the Oregon personal individual income tax form. She added that partnerships under Oregon law are not taxed separately.
With regard to the Multnomah tax form, Wilson indicated that it was different than the Oregon model of corporation and personal income. She added the personal income tax is new and it is a temporary three-year tax. She explained that they do have an income exemption and by state law, local governments are not allowed to tax PERS or federal employee retirement. She said they would have to do an income exemption.
Terry Williams, City of Portland, explained that both the City of Portland and Multnomah County had defined business as broad in order to support the marketplace. She said they decided to tax people on their residence, not those who work in Multnomah County, since it was easier to define. She added they could allow a deduction for business income under the one program so they weren’t getting double taxed. She said they found there was more income overall by having broad business and a deduction for personal income. She indicated that Multnomah’s tax rate is 1.45% and the city tax rate is 2.2% for a combined tax of 3.650%.
Garnick said in order to not have any of the property tax of $1.28 per thousand, they would have to generate $73.1 million in order to cover the task force five-year program. He indicated that not everyone would pay. He said there are uncollectables and they would have to generate an additional $8.1 million to cover public safety that has moved out of the general fund. He added there would be a property tax rebate of $26.2 million and that would cover the loss of secure rural schools. He said they would need a larger amount to cover it.
Dwyer wanted to eliminate what Lane County charges with the understanding that it wouldn’t have any affect on any other taxing district.
Green asked about the amount generated with the trends.
Williams responded that on the business side it follows the economic cycle. She said in 2001 it dipped down because there were losses. She noted that last year they changed their collection efforts and brought in an additional $5 million due to the economic change. She added that the personal income would be collected in the same way. She said if there were a business downturn and unemployment, there would be less wages subject to the tax. She indicated the Multnomah personal income tax in 2004 was $113 million She added for the city and county on the business side, their net collections were $54 million for the City of Portland and $31 million for Multnomah County. She said the rate was 1.45% for the county and 2.2% for the city.
Morrison asked where the dollars would come from for the items the general fund covers, other than public safety, if they eliminated the property tax. She said if they eliminate the $1.28 and the Secure Rural Schools Act goes away, there wouldn’t be enough left for the other services within the general fund.
Dwyer said they need to cap the rate and put it in the charter so it couldn’t be changed by the Board. He said they have to let people know they have certainty with the cap. He added that federal, PERS or other types of retirement are not taxed. He thought there should also be a flat tax exemption under a certain amount.
Williams noted that Multnomah County does have a flat rate. She said they have a rate of $2,500 for an individual and $5,000 for joint or head of household. She said it could be set to any rate.
Morrison asked what costs would be in administering the collection.
Williams commented that they don’t make a profit on administering it. She added that the City of Portland administers the taxes and Multnomah charges an incremental cost to add on the program to the business license side. She indicated they collect the tax for three cents on the dollar. She added on the income tax side, they estimate the cost is $7 million per year.
Dwyer suggested capping the amount in the charter not to exceed a certain amount. He thought there should be flexibility in refunding $1 instead of $1.28.
Sorenson asked if they had the ability legally to stop the collection of property taxes because of the agreement with the bond issuers.
Wilson indicated that if the Board wanted to do something along those lines, they would have to re-negotiate each of the agreements with the bond holders and that might involve a complete refinance of the bonds. She thought it would cause an increase in the interest rate. She commented that they see property taxes as a secure reliable tax. She added that an income tax (because it is more susceptible to economic ups and downs) is not as secure. She thought the way the bond market would respond would be the County was substituting a less secure revenue stream and they would raise the interest rate.
Sorenson asked if there was a rainy day component to the collection of the business license tax or income tax.
Dwyer thought that a reserve account was a good idea. He wanted to cap a reserve. He wanted to reserve one percent a year for five years for the bond.
The Use of Illegal Drugs and Meth
Sorenson asked if there was anything that could tell them what the voters wanted. He asked what the money would be used for.
Doug Harcleroad, District Attorney, indicated that there was a poll in March, asking 1,000 people about different concerns. He commented that Lane County has a significant meth problem and it rated a 6.37 on a scale of 10. He added that child abuse cases also rated high. He noted the professionals in the business think it is a huge problem. He stated that the legislature had over 70 bills on meth and they passed several of them. He noted that the federal government is picking up the charge and moving away from marijuana to meth.
Dwyer commented that doing nothing was not an option. He said they need a safer community and the need to take care of the addicts.
Green indicated that they identified meth as a problem.
MOTION: to move that the focus of the Lane County public safety effort be to address illegal drugs, especially methamphetamine and alcohol abuse as described in the Executive Summary of the Public Safety Task Force.
Green MOVED, Morrison SECONDED.
Four Goals Recommended by the Public Safety Task Force
Stewart noted one goal was to target the groups for special action, including illegal drug producers, dealers, users and target property crimes. He added another goal was to reduce family violence, enhance treatment programs and to provide prevention programs.
MOTION: to move that the Board use the four goals recommended by the Public Safety Task Force, as the basis for restoring and enhancing public safety services in achieving those goals.
Morrison MOVED, Dwyer SECONDED.
Green supported this as it offers a balanced approach. He said it is a systems approach and one doesn’t work without the other.
If the Board is happy with the proposed $24.5 million package, or if there needs to be additional money for jail beds, purchase additional jail beds elsewhere or programs that needed to be added to.
Sorenson asked if they were going to be changing anything or if they were adding what they believed was necessary.
Harcleroad indicated that they would increase the services that have eroded for the past 20 years in a variety of areas. He said they would add treatment, detention beds, and jail capacity. He said in the District Attorney’s office they will get back to prosecuting the crimes that come into the office. He added that they would do more in some of those areas. He indicated they would also try to do new things as they see problems. He added that they would go after more effective treatment with methamphetamine users.
With regard to prevention, Alicia Hays, Children and Families, said their money comes from the state and federal government. She said there is not a lot of enhancement. She indicated they were looking for programs that were solid in the community and work. She said they are working more diligently to find funding for mentoring youth.
Green asked about the amount of money they would generate that doesn’t put them at a past level.
Harcleroad commented that this was a good first significant step in correcting a failing public safety system. He supported it.
MOTION: to move that the program budget on pages 22 and 23 of the Executive Summary be changed by adding $2 million for the additional jail capacity for the County’s correction system. The money is to be used to find the jail bed space. She indicated it would bring the total to $26.530 million.
Morrison MOVED, Green SECONDED.
Van Vactor recalled they discussed modestly increasing the prevention budget.
Dwyer supported $1 million for jail capacity.
Harcleroad commented that on the motion Morrison made, the basic proposal is that people are in agreement with re-opening the 96 closed beds. He said it would add 79 beds of double bunking. He said it is short of the studies they have had on capacity issues. He added it was a way of purchasing jail beds elsewhere. With regard to prevention, he didn’t think it would matter to the voters if they were spending an additional $2 million. He thought $1 million for prevention would be okay. He suggested taking $2.5 million, $1.5 million on the jail side and $1 million for prevention.
Green supported Harcleroad’s recommendations.
Dwyer would also vote to support this as long as there was prevention.
Morrison amended her motion to allow $2.5 million, $1.5 for incarceration and $1 million for prevention. She didn’t see it as a high priority.
Green supported the amendment.
Morrison’s concern was putting together something that the voters would pass.
Wilson indicated what the task force was working on was envisioned and developed as a five-year concept. She said with the two taxes they voted down, there was dedication that included two components: a broad dedication to public safety that would be in the charter amendment. She thought she would write something similar into the tax ordinance for the first five year time period. She said it would provide a reasonable plan dedicated to public safety, secure rural schools, property tax relief for the first five years.
Issue Number 4
To Accept Final Approval of Programs and Services.
MOTION: to accept the final approval of programs and services.
Green MOVED, Morrison SECONDED.
Issue Number 5
Property Tax Relief
Stewart indicated if they did an even across-the-board business/personal income tax, they would give $1.00 back and do the additional $2.5 million. He said they would need to do a 1.25% rate. He added if they wanted to give back all property tax, it would be 1.5%, and would potentially be dedicated in the charter, .25% of the tax rate would go to the general fund and an additional 1.25% would go to public safety.
Garnick indicated that Chapter 16 looks at a one percent personal income tax rate, based on Oregon taxable income.
Sorenson asked what would be the number of people affected by this. He asked about the people who rent who would not pay property taxes. He said it would disadvantage people who don’t own property.
Stewart thought that property taxes should be capped at three percent per year. He said, as a Board, they are trying to reduce the structural deficit and if they go with an income tax, it averages about five per cent growth per year. He said it would benefit them as an organization to go to a different taxing mechanism so they could keep up with their expenses. He said if they didn’t go out for more money to take care of the Secure Rural Schools Act and the property tax, if they lose the secure rural schools, there would be a shortfall in the general fund.
Dwyer commented that they needed to keep the 28 cents.
This discussion will continue at tomorrow afternoon’s meeting.
9 EMERGENCY BUSINESS
There being no further business, Commissioner Morrison adjourned the meeting at 11:40 a.m.