Item A: Renewal of Library Local Option Levy

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The economy and housing prices are expected to remain healthy over the next few years and renewal of the Library Local Option Levy is not projected to result in any significant Measure 5 compression of property tax revenue. For the vast majority of property in the city, total general government taxes will remain below the $10 per $1000 of real market value tax cap prescribed by Measure 5. However, a 3% contingency has been factored into the levy estimates to accommodate the possibility of loss of levy revenue due to a drop in real market property values or the possibility that projected future assessed value growth is less than expected. Attachment B shows the impact on the General Fund if the levy is not renewed and levy-funded services valued at $5.3 million per year were completely shifted to the General Fund in FY08. This case also assumes $2 million in other service additions for FY07 and future years, based on one of the scenarios presented to the Budget Committee in January. In this case, assuming that the library levy were no longer renewed and library services were funded within the General Fund, the council would need to identify on-going service reductions of approximately $4.7 million in FY08. Other Background Information Passage of a property tax measure on a general election ballot in an even numbered year requires a simple majority of the votes cast. A double majority is required in any other election. There are several other items that may be placed on the November 2006 ballot. These include: ?PROS (Parks, Recreation and Open Space) bond measure ?Youth local option levy renewal ?Lane County income tax proposal ?Lane Community College local option levy Timing In order to place a measure on the November 7 general election ballot, the council must act by July 26 to begin the voters’ pamphlet process. The council is currently scheduled to place the measure on the ballot at the May 8 meeting. RELATED CITY POLICIES City of Eugene Financial Management Goals and Policies Policy C.3 – Serial tax levies “To the maximum extent possible, serial tax levies will be used only for time-limited operating services or for capital improvements subject to the rate limitation for non-school governments.” Policy C.6 – Non-recurring revenue “Except for local option levies approved by the voters, the City will use non-recurring revenue on limited-duration services, capital projects, equipment requirements, or services that can be terminated without significant disruption in the community or City organization.” COUNCIL OPTIONS Two alternatives are presented to the council: 1.Direct staff to prepare a measure for the November ballot to fund all library services now funded by the current Local Option Levy, net of $700,000 in services to be shifted to the General Fund in FY08, with a tax rate of $0.41 per $1000 of assessed value; or L:\CMO\2006 Council Agendas\M060412\S060412A.doc