Item B: Funding Strategies for Transportation System Operations, Maintenance, and Preservation

Home Browse Search

General Obligation Bonds Incidence (who The tax is paid by all property owners within City limits. Property owners include pays?)business and residences. Businesses may choose to pass the tax on to their customers. In Eugene, approximately 69% of the taxable assessed value in FY07 is for residential property and 31% is for non-residential property. The actual taxes paid may differ from these percentages, however, due to Measure 5 tax rate compression. Fairness/Equity The property tax is a proportional tax on the value of real and personal property for both Issuesbusinesses and residences. It does not take into account the ability of the taxpayer to pay the tax. There are numerous exemptions from the property tax designed to promote a variety of policy goals, including some designed to lessen the impact on non-profit organizations and low-income owners and tenants. Bond financing is a way to more closely match the users of a capital project with those that must pay for the project. Property taxes are paid only by property owners within the City limits. Any users of the bond-financed assets that live outside the City do not pay for a share of the use of that asset. Assessment of This funding source would generate a lump-sum, which would be spent over a period of Financial several years on various projects. Stability and Political The property tax is understandable to the voters (as opposed to a new form of user fee Feasibilityor tax), making it politically feasible from that standpoint. GO bond proposals have had mixed success in the Eugene area in recent years. There have been six GO bond proposals on the ballot from Eugene since 1998, and three of those have passed (parks, recreation and open space and fire projects). Council members have expressed dissatisfaction with heavy reliance on property taxes in various forums in past years. Potential This tax would increase the cost of owning a home or business, and potentially increase Economic the cost of leasing or renting a home or business, if the property owner passes on the tax Impactsincrease. Consistency with Council has two financial policies around capital funding and debt issuance, both of Council Goals which are consistent with the use of GO bonds for funding transportation projects. and PoliciesPolicy C.4 states that the City will secure a dedicated revenue source to fund general capital projects to the extent possible. Policy D.3 states that the use of GO bonds will be limited to major capital construction or improvements in support of general muni- cipal services. The City also has debt policies that limit net direct debt, such as GO bonds, to 1% of the real market value of property within the City. Other A number of Oregon cities have used GO bonds to pay for transportation projects in the Jurisdiction recent past. The City of Salem secured voter approval for GO bonds for a variety of Experiencestransportation projects in the past, but the last successful measure was in 1995. Since then, Salem went to the voters in 2000 with a $45.8 million GO bond measure for transportation improvements and that measure was defeated. They are contemplating a $60 million transportation bond measure in 2008. There was one Oregon GO bond measure on the November 2006 ballot for Polk County road repair and improvement projects. The measure was for $20 million, and it was successful. 2