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HomeMy WebLinkAbout09/22/1986 Meeting M I NUT E S e Eugene City Council Dinner/Work Session Bon Sai Restaurant September 22, 1986 5:30 p.m. COUNCILORS PRESENT: Debra Ehrman, Emily Schue, Ruth Bascom, Roger Rutan, Jeff Miller. COUNCILORS ABSENT: Cynthia Wooten, Richard Hansen, Freeman Holmer. City Council Vice President Debra Ehrman called the meeting to order in the absence of Mayor Brian B. Obie and County President Richard Hansen. 1. STATE BALLOT MEASURES City Manager Micheal Gleason introduced Tony Mounts of the Finance Division. Mr. Mounts said 22 measures will be on the November ballot. Sixteen of them are State measures, four are Lane County measures, and two are City of Eugene measures. The City of Eugene measures concern the West Eugene Parkway and a nuclear-free zone. He said five of the State measures would have significant financial impacts on the services the City provides. He introduced Kathy Field of the Finance Division who discussed the five measures. A. Ballot Measure 7--Constitutional 5 Percent Sales Tax -- Ms. Field said Measure 7 would impose a five percent sales tax. The measure is sponsored by the Oregon Education Association (OEA). The measure would be effective no later than January 1, 1988. It has a special funding provision for basic school support and community colleges. It would retain the present tax base system for property taxes. Ms. Field said Measure 7 has a 1.5 percent property tax limitation for owner- occupied, principle housing only. It is a constitutional amendment and does not provide for voters to override the 1.5 percent property tax limitation. Consequently, the constitution would have to be amended to change the property tax limitation. She said the sales tax would be on tangible goods only and some specific things, such as food and prescription drugs, would be exempted. The measure would prohibit local sales taxes. It provides a rebate for people with low incomes and would continue the existing Homeowner And Renter Relief Program (HARRP). Ms. Field said approval of the measure would have a long-term effect on Eugene because the city would reach the 1.5 percent property tax limitation in three to five years. The time it would take to reach the limitation would depend on actions of other jurisdictions such as the school district and Lane County. She said revenue from the Urban Renewal District would be decreased about 27 percent if Measure 7 passes because the property tax rate would be decreased. e MINUTES--Eugene City Council Dinner/Work Session September 22, 1986 Page 1 Mr. Gleason said school districts could maintain their present tax base if the measure is approved. Ms. Field added that school districts would receive 70 - percent of the sales tax revenue. After two yearst school districts could request an increase in their property tax base. Answering questions from Ms. Bascom and Ms. Ehrmant Ms. Field said the present six percent tax base limitation would continue if Measure 7 passes. She said the OEA estimates that revenue of about $9.6 million will be recei ved and about $8.97 million of it would be distributed to schools and property owners. B. Ballot Measure 9--Constitutional Property Tax Limitation Ms. Field said Measure 9 is a constitutional amendment and is sponsored by Ray Phillips. She said Measure 9 would limit property taxes to 1.5 percent and restrict increases in the assessed value of properties. It would change the property tax system in Oregon from a tax base system to a rate system. The measure would limit the property tax rate in 1987-88 to either 2 percent of the average assessed property value or the 1985-86 property rate rate (whichever is less). From 1988-89 ont the property tax rate would be limited to 1.5 percent of the average assessed property value or the 1985-86 property tax rate (whichever is less). Ms. Field said Measure 9 does not restrict sales taxes. If voters approve a property tax increase, it limits the growth of the assessed value of property tax bases to two percent a year. Measure 9 permits elections on the increase only twice a year. The measure does not provide any relief for renters or people with low incomes. She said the measure creates a tax base for some school districts that need it; consequently, OEA is not likely to oppose the - Measure 9. Ms. Field said approval of Measure 9 would decrease Eugene property tax revenue $6 to $8 million in 1987-88. From 1988-89 on t it would decrease Eugene property tax revenue $14 to $20 mill ion. She sa i d the State Legislature will have to determine how to distribute property taxes after 1987-88. C. Ballot Measure l1--Constitutional Homeowner'st Renter's Property Tax Relief Program; Sales Tax Limitation Measure Ms. Field said Measure 11 is a constitutional amendment. It would become effective in 1987-88. It prohibits sales taxes unless they are approved by initiative petitions. It would exempt $25,000 or half of the assessed value of owner-occupied housing. Measure 11 would require the State to reimburse cities a minimum of 80 percent of the property tax revenue lost by passage of the measure. It indicates lottery revenues, and probably income taxes would be used to reimburse cities for the decrease in property taxes. It requi res a renter relief program equal to the homeowner's exemption. The HARRP program would continue. Ms. Field said Measure 11 would have little direct effect on the City because the property tax rate could be increased to make up for the homeowner's and renter's exemptions. However, lottery funds have been used for economic e MINUTES--Eugene City Council Dinner/Work Session September 22, 1986 Page 2 development and they would be used by the State to reimburse cities if the measure passes. Mr. Gleason said approval of Measure 11 would shift the - burden of taxes to the State because it would have to reimburse the cities. He said the State would probably decrease the amount cities receive from taxes for such things as cigarettes and gasoline. Answering questions from Mr. Miller, Ms. Field said passage of the measure would affect the City indirectly because lottery funds which have been used for improvement of the airport would not be as available for such projects in the future. If Measure 11 and either Measure 7 or 9 passes, the City would reach the tax limit in Measures 7 and 9 sooner than if Measure 11 does not pass because Measure 11 would increase the City's property tax rate. D. Ballot Measure 12--Statutory State Income Tax Changes, Increased Revenue to Property Tax Relief Ms. Field said Measure 12 is a funding mechanism for Measure 11 although there is no direct connection between the two. Either one could fail while the other passes. Measure 12 increases the State income tax to replace revenues lost from the homeowner's and renter's property tax relief in Measure 11. Measure 12 has no property tax or sales tax. It increases the State income tax rate for individuals with incomes over $11,000, increases the corporate excise tax range, and changes depreciation allowances. The intent of its sponsors is to generate the income to fund Measure 11 and the Legislative Revenue Office indicates it will generate enough income to fund Measure 11. Measure 12 is a statutory measure. E. Ballot Measure 14--Prohibits Nuclear Power Plant Operation e Until Permanent Waste Site Licensed Ms. Field said Measure 14 is a statutory measure. It prohibits the operation of nuclear power plants until a permanent radioactive waste disposal site is licensed by the Federal government. Passage of Measure 14 would shut down the Trojan plant which is the only nuclear power plant operating in Oregon now. Ms. Field said Eugene now receives about $6 million annually from Eugene Water and Electric Board (EWEB) in-lieu-of taxes. About $1.5 million comes from revenue received by EWEB for power from the Trojan plant which is sold to the Bonneville Power Administration (SPA). EWES estimates $1 to $1.2 million of the revenue Eugene receives from the sale of power to the BPA would be lost if Measure 14 passes. Answering questions from Mr. Miller, Linda Lynch of the Intergovernmental Relations Division said it is hard to know what would happen if all the measures concerning nuclear power passed. She said Measure 51 phases out and then prohibits the manufacture in Oregon of nuclear weapons or parts of nuclear weapons, but it is hard to know how parts will be used. She said there probably will be legal challenges if the measure passes. She said electrical rates may increase and the increase might discourage companies from locating here. e MINUTES--Eugene City Council Dinner/Work Session-September 22, 1986 Page 3 Replying to another question from Mr. Miller, Mr. Gleason said no one knows how much it would cost to shut down the Trojan plant but those costs would have e to be paid by EWEB customers. He said the bonded indebtedness pledged against the City of Eugene and BPA is now paid out of the electricity sold from the Trojan plant. If the plant is shut down, that indebtedness probably will be apportioned among the plant owners and Eugene owns about 30 percent of it. He said, in addition, a thermal plant will have to be fired up to replace the electricity produced by the Trojan p 1 ant now. Consequently, passage of Measure 14 will be expensive for Eugene residents. Mr. Gleason said passage of Measure 51, which prohibits nuclear weapon production in Eugene, would require an organization to administer its provisions and the organization probably would require a staff. He did not know how much the organization and staff would cost. Answering a question from Ms. Bascom, Ms. Field said there is a nation-wide concern about the disposal of nuclear wastes but she knew of no specific concerns about the Trojan plant. Respondi ng to Ms. Bascom's question, Mr. Rutan sa i d the measure is a convenient way to close the Trojan plant because of a current political concern. He said there are no permanently licensed disposal sites. Ms. Lynch said the Trojan plant has its second temporary permit. E. Potential Impacts of Measure 9 Ms. Field said the worst case senario if Measure 9 passes would be a revenue e reduction of $20 million for Eugene or a loss of 43 percent of the City's operating revenues if the voters do not override the property tax limitation and if the current State allocation is retained. She presented examples of what the reduction might mean to the City. She emphasized that the examples were not a specific plan. Ms. Field said the City probably would have to operate with about 325 fewer employees if Measure 9 passes. She di scussed poss i bl e percentages of reduction, possible reductions in staff, and reductions in services for each department if Measure 9 passes. She said the Police, Fire, and Emergency Services probably would be reduced by 20 percent or 79 employees. Municipal Court probably woul d lose about 50 percent or about 10 employees. The Development Department would be reduced 77 percent or 19 employees. The Parks and Recreation Department would be reduced 67 percent or 70 employees. The Eugene Library would be reduced 93 percent or 42 employees and probably would have to close. The Hult Center probably would have to be closed. The Pl anni ng Department would be reduced 44 percent or 7 employees. The Pub 1 i c Works Department would be reduced 45 percent or 42 employees. The City Manager's office would be reduced 55 percent or six employees. The Administrative Services Department would be reduced 48 percent or 44 employees. Answering a question from Mr. Miller, Mr. Mounts said the City would lose about $21 to $22 million in revenue if all the tax limitation measures pass. Mr. Gleason said passage of the measures would result in confusion because the City cannot plan and because the measures will be challenged in the courts. e MINUTES--Eugene City Council Dinner/Work Session September 22, 1986 Page 4 Linda Lynch distributed several pages titled "Potential Service Effects of Ballot Measure 9" to the councilors. Referring to information about a poll e conducted for The Oregonian during the week of September 4 to 9, 1986, she said Measure 7 probably will not pass. Measures 9, 11, 12, and 14 may pass. She said many people do not understand that passage of Measure 14 will result in the closure of the Trojan plant. Ms. Lynch said the OEA has traditionally fought property limitation measures but the OEA is not part of the coalition against Measures 9, 11, and 12 this year. She sa i d the League of Oregon Cities, the Association of Oregon Industries, the American Federation of State, County, and Municipal Employees (AFSCME), the Firefighters Association, and the State and Public Employees Union have indicated interest in the coalition opposing Measures 9, 11, and 12. She said Fair Share supports Measure 11 and opposes Measure 7. Answering a question from Mr. Rutan, Ms. Lynch sa i d the other property tax measures on the ballot have masked Measure 9 and made it diffi cul t to publicize opposition to it. She said the OEA is te 11 i ng people to vote "Yes" on Measure 7 and "No" on Measure 9. Mr. Mounts said a City Task Team has analyzed the ballot measures and is now disseminating information about them to employee groups and public bodies. Answering a question from Ms. Ehrman, Mr. Gleason said the City Manager's office must give balanced information to the public. However, he and other City employees may indicate their own opinions when they are on their own time. He said he often makes speeches on his own time and gives his own opinions then. e The councilors discussed possible council actions concerning the ba 11 ot measures for some time. Mr. Rutan said the City Council shoul d take a leadership role in opposing the measures which will have a negative effect on the City. He said the council should tell people the result of passage of the measures. Mr. Miller said people think government officials use "scare" tactics and councilors should be very accurate about the information they give. Answering a question from Ms. Ehrman, Mr. Rutan said Measure 9 will have a dramatic impact on Eugene. He hoped the councilors would authorize a public information program about such measures. Ms. Ehrman and Mr. Rutan suggested the councilors meet with the Springfield City Council to discuss ballot measures which will affect both cities. Ms. Schue responded that the council could work with the City Task Team to present information to the public. She noted City funds cannot be used to oppose ballot measures but Ci ty Council ors may speak for themselves and oppose or support ba 11 ot measures. She said the League of Oregon Cities Legislative Subcommittee on Finance and Taxation recommended opposition to Measures 7,9,11, and 12. Mr. Miller suggested the council direct the staff to analyze the impact of the ballot measures and make the analyses public. He said councilors have a responsibility to make people aware of the effect of passage of measures. Answering a question from Ms. Bascom, Ms. Schue said there is some doubt about the effect of Measure 11 on the City. e MINUTES--Eugene City Council Dinner/Work Session ,September 22, 1986 Page 5 Mr. Gleason said the council may disseminate information about ballot measures and the council may advocate for specific measures but the council cannot e spend pub 1 i c funds to support ba 11 ot measures. If the council wants to disseminate information about specific measures, the staff will prepare the information. He said the staff is cautious. Mr. Rutan said he would like the council to take a position on Measures 7, 9, 11, 12, and 14 and make the position public. Then, the council can decide if it wants to do more. Ms. Schue said she would like the council to take a position on the property tax limitation measures as soon as possible. Mr. Gleason suggested the council consider the measures on Wednesday, September 24. Ms. Ehrman said the council will have to decide whether or not to consider measures other than those concerning property tax limitations. She said the council is scheduled to consider Measure 51. Ms. Bascom noted that none of the ballot measures concern tax reform and support for local government. Mr. Miller said some legislators oppose the ballot measures. Answering a question from Ms. Ehrman, Ms. Lynch said legislative candidates usually do not volunteer an opinion about the ballot measures. Mr. Gleason reviewed the council's agenda for September 24, 1986. e Ms. Ehrman adjourned the work session at 6:55 p.m. mncc0922 e MINUTES--Eugene City Council Dinner/Work Session ,September 22, 1986 Page 6