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MeetingtheChallengeTaskForce <br />ReviewofGeneralFundRevenueAlternatives <br />January22,2010 <br />PayrollTaxʹNotRecommended <br />DescriptionAtaxonwagesandsalariesearnedwithintheCity.Whencollected <br />viaapayrolldeduction,itiscommonlycalledapayrolltax;when <br />collectedfromemployerbasedontotalpayroll,itiscommonlycalled <br />aheadtax. <br />MeetingtheChallengeActionAlthoughthistaxwouldcapturerevenuefromindividualsliving <br />outsidetheCitywhouseCityservices,thetaxwasnotrecommended <br />becauseitisnotpaidbyemployersoftheStateandthemethodof <br />chargingperheadisdifficultonsmallbusinessesandlowincome <br />jobs. <br />LegalAuthority&RestrictionsCitiesinOregonhavethelegalauthoritytoimposeapayrolltaxunder <br />theOregonhomeruleprinciple,asthereisnopreemptionunderthe <br />currentstatelaw.However,itisunlikelythattheOregonDepartment <br />ofRevenuewouldagreetocollectthistaxonbehalfoftheCityof <br />Eugeneunlessitiscompelledtodosobythestatelegislature. <br />PrecedenceTheStateofOregoncollectsataxongrosspayrollwithintheLane <br />TransitDistrictinEugene/SpringfieldareaandtheTriCounty <br />MetropolitanTransitDistrict(TriMet)inthePortlandareatoprovide <br />partialfundingforthosedistricts.Transitdistrictsdonothavethe <br />homeruleauthorityandmaynotimposethesetaxesunlessallowed <br />bythestatestatute. <br />EffectiveJanuary1,2009,LTDpayrolltaxratewasincreasedto0.65%. <br />In2003,OregonlegislatureprovidedLTDwiththeauthorityto <br />increasetherateannuallyuntilitreaches0.7%in2014.Certain <br />wages,suchasthosepaidbythefederalgovernmentunitsandpublic <br />schooldistrictsareexemptfromthetaxunderthestatelaw.A <br />numberofotheremployers,suchascitiesandCountyareexempted <br />fromthistaxbyanLTDordinance. <br />RevenueYield&StabilityAccordingtoananalysiscompletedin2001,a1%payrolltaxin <br />Eugenewouldraiseanestimated$29.6millionperyearifappliedto <br />allpayrolls.Thisamountwouldneedtobereducedinordertoadjust <br />forpayrollsthatarelikelytobeexemptfromthistax,suchasthatof <br />federalandstateagencies.Amoreuptodateestimateofthe <br />amountofpayrolltaxesthatcanbecollectedannuallyiscurrentlynot <br />availableduetolackofbreakdownofpayrolltaxcollectedwithinthe <br />LTDserviceareabyjurisdiction. <br /> <br />