Item B: School/Youth Services Funding

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Updated 02-07, based Personal Income Tax upon 09-01 economic data Brief Description A tax on income of residents of Eugene and nonresidents earning income in Eugene. of Funding Option Prior City A personal income tax on incomes above $100,000 to fund public safety services was Actions and considered and rejected by City Council in July of 1996. History In the Fall of 1997, City Council formed the Council Committee on Finance to review multiple revenue sources that would stabilize the General Fund after the impact of Measure 50. The committee reviewed multiple revenue sources and ultimately recommended that Council direct staff to develop an implementation plan for a business and personal income tax. Although Council took no action on the recommendation, this effort contributed to the allocation of Urban Renewal funds to the new library and the successful passage of the Parks and Open Spaces Bond Measure. Experience in Although there are no personal income tax precedents in Oregon, local governments do Other levy personal income taxes in other states. Jurisdictions In November 1999, Lane County proposed an 8% income tax surcharge to support public safety needs. In Lane County, the measure failed 74% - no, 26% - yes; in Eugene it failed 68% -no, 32% - yes. In November of 2006, Lane County proposed a 1.4% annual tax on income to support public safety needs. In Lane County and Eugene the measure failed 51% - no, 49% - yes. Lane County has placed an income tax measure on the May 15, 2007 ballot. The proposal would tax personal, nonresident, and business income at a rate of 1.1%, with revenues dedicated to public safety. Calculation Base The tax could be a percentage tax on Adjusted Gross Income or alternatively the tax and Typical could be levied as a percentage of the taxpayer’s state income tax liability. Rates Estimated Based upon the following 2001 data, a Eugene surcharge of 3 % would raise about $8 Revenue Yield million: assuming that approximately 68% of Lane County income is earned within Eugene or by Eugene residents, a 1 % tax on Adjusted Gross Income would generate $43 million. Alternatively, a Eugene income tax could be levied as a percentage of the taxpayer’s state income tax liability. A Eugene surcharge of 10 % would raise about $27 million for fiscal year 2002-03. Will the tax be practical to administer : If the Lane County income tax is enacted, the Administrative City could piggyback on the County piece or potentially contract with the State and Effort and piggyback on the state income tax. Efficiency What are the estimated costs to administer : To be determined based upon collection method.