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Ms. Cutsogeorge called the council's attention to Attachment C, Summary of Scenarios to raise $26.6 Million or $16.8 Million for Schools. She reviewed the four scenarios outlined in the summary. She said if the council wished to implement one of the scenarios, it could adopt Resolution A with a fixed tax rate or rates; if it wished to have more detailed discussion of tax rates and structures, it could adopt Resolution B with a variable rate and structure to be set later. Ms. Cutsogeorge referred the council to an economic analysis of the tax by the consulting firm EcoNorthwest, included in the packet as Attachment D. The analysis concluded that an income tax for schools would have a positive economic effect from reduced household spending by increased taxes to fund schools, resulting in more local economic activity. The analysis also suggested that people would be likely to support such a tax if the districts could demonstrate it would result in better educational outcomes. Ms. Cutsogeorge recommended that if the council chose to place a ballot measure for an income tax to fund schools on the May 2011 ballot, it adopt an ordinance before the ballots were mailed with specific information about who was subject to the tax, what income was taxable, deadlines for filing, and penalties for failure to file. That ordinance would only be effective if voters approved the ballot measure. If the council chose to place a measure on the November 2011 ballot, staff would draft an ordinance prior to that time. Mayor Piercy solicited council questions and comments. Responding to a question from Councilor Clark, 4J Chief Financial Officer Susan Fahy indicated the district's shortfall was projected to be $21.2 million in 2012, based on the Oregon Legislature's budget for schools. Superintendent Gill indicated that the Bethel shortfall was anticipated to be about $5.6 million in year 1 of the biennium, and would increase by $1.7 million in year 2. Councilor Clark pointed out that the City did not yet know what the legislature would do, leading him to incline to a November election date. Councilor Clark determined from Ms. Fahy that the district would lose the $17 million in federal grant dollars if its capital bond did not appear on the May ballot because of competition for the remaining qualified school construction bonds. Responding to a question from Councilor Zelenka, Ms. Cutsogeorge indicated the analysis done by EcoNorthwest was based on the Oregon Taxable Income (OTI). Staff provided information about Adjusted Gross Income (AGI) for informational purposes. Ms. Cutsogeorge clarified that the Eugene taxable income would be lower because State statutes preempt the City from imposing a local tax on PERS retirees. The Eugene taxable income would be lower than the OTI because of the pension effect. Councilor Zelenka noted another question before the council was whether to use a rate or amount. He posited that if the council selected a rate, the risk of under collecting fell on the districts, and that risk was eliminated if the council set an amount. Ms. Cutsogeorge concurred. She said if the council wanted a more thorough discussion of the tax structure, it should pick the amount option over the rate option to ensure those discussions could occur over the next few months. Councilor Zelenka asked about the timeline for those discussions. Ms. Cutsogeorge anticipated a work session before mid - March, followed by a public hearing in mid - April, with final ordinance approval before April 30. Councilor Farr asked Ms. Cutsogeorge to discuss the difficulty of implementing a tax approved in November 2011 by January 2012. Ms. Cutsogeorge said the City would have to create an administrative structure to collect the tax, and she estimated that would take about six months. If the council decided to go to the ballot in November staff would not have to wait to create that structure, but there was a risk if MINUTES— Eugene City Council February 14, 2010 Page 8 Regular Meeting