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HomeMy WebLinkAboutCC Minutes - 12/10/01 Work Session MINUTES Eugene City Council Work Session McNutt Room--Eugene City Hall December 10, 2001 5:30 p.m. COUNCILORS PRESENT: Betty Taylor, David Kelly, Nancy Nathanson, Pat Fart, Scott Meisner, Gary Rayor, Gary Papd, Bonny Bettman. CITY COUNCIL WORK SESSION A.Items from Council, Mayor, and City Manager Mr. Fart had no items. Mr. Meisner had no items. Referring to the upcoming process session, Mr. Kelly said he felt the councilors were often talking past each other at work sessions and meetings, and suggested it might be useful to use the upcoming process session to have a facilitated discussion about how the council could have better communication as a body. Mr. Pap~ arrived at the meeting. Ms. Taylor reported on the League of Oregon Cities in Atlanta, Georgia, briefly noting the seminars she had attended. Mr. Rayor shared best wishes for a happy holiday for all people and a hope for peace. Mr. Rayor strongly supported ward elections and said he was able to run for council office because he could walk his ward and avoided having to spend a large amount of money on radio and television advertising. He thought the ward system produced great people to serve on the council. He expressed irritation about the continued advertising of the Gang of 9, acknowledging it seemed to be less directed at people than at the system. He reiterated that the council was a great group of people, and suggested the issues of concern to those involved with the Gang of 9 had less to do with the council than the economy. Ms. Bettman said she attended the recent Railvolution conference in San Francisco and would provide a report to the council. She said the conference was well-attended by the staff of many agencies, including metropolitan planning organizations. She advocated for the allocation of training funds to enable City staff to take advantage of such training opportunities and suggested staff find out what other jurisdictions were doing. She noted that Earl Blumenthauer, a speaker at the conference, suggested the next authorization of the federal transportation act would be a "Green TEA" [Transportation Efficiency Act]. MINUTES--Eugene City Council December 10, 2001 Page 1 Work Session Ms. Bettman reported on the Human Rights Day award presented to Chief Jim Hill and congratulated the chief. She said he "walked the talk" when it came to diversity. Mr. Papd noted the damage done to trees by recent windstorms and thanked City crews for getting the damage cleaned up quickly. He hoped the City's Urban Forester was able to review tree damage and gauge the condition of City trees to avoid damage from falling trees and limbs. Mr. Papd indicated he enjoyed the National League of Cities and would report to the council in writing on the seminars he had attended. He noted his participation in a bus tour of private and public housing projects in Atlanta. City Manager Jim Johnson had no items. Mayor Torrey reported that Corvallis Mayor Helen Berg paid up on her five-cent Civil War football wager. B.Work Session: Nonproperty Tax Revenue Sources Assistant City Manager Jim Carlson joined the council for a conversation on nonproperty tax revenue options. Dee Ann Hardt, Becky Koble, and Patty Boyle of the Central Services Department were also present for the item. Mr. Carlson discussed the advantages and disadvantages of four nonproperty tax revenue options. Corporate Income Tax · The tax does not generate much revenue on its own · It is considered equitable in conjunction with individual income tax · The tax is considered double taxation by some Gross Receipts' Tax · There is no mechanism for collecting the tax · There would be higher administrative costs associated with setting up the tax · The tax is levied on total receipts and not on net profits · Companies may travel to other jurisdictions to avoid the tax, depending on the rate Individual Income Tax · The State of Oregon would probably be willing to collect it as it is similar to the existing income tax, particularly if Eugene employed a surcharge · Previous attempts to pass an income tax locally have failed · Eugene's tax would be subject to federal and State tax law changes · The tax would maintain parity between individuals and corporations if done in conjunction with a corporate income tax · Salem is considering a surcharge on the individual State income tax MINUTES--Eugene City Council December 10, 2001 Page 2 Work Session General Sales Tax · Previous attempts to pass a sales tax have failed statewide and locally · Despite exemptions for food and prescription medicine, such a tax is considered regressive · There is no mechanism to collect the tax now, so Eugene would be responsible for the costs of setting up and administering the tax Mr. Carlson indicated that staff would recommend, at a minimum, replacing the current local option levies at the time any revenue measure was put into place so as to reduce the existing property tax burden. Staff would not necessarily recommend that be the only use of the money given the structural problems staff had highlighted for the Budget Committee regarding the existing revenue picture. Mr. Carlson further recommended the council table the discussion for a one-year period through 2002 because of the economic conditions that currently exist. Staff did not believe this was the best time to seek a new major revenue source and further believed that it was important to concentrate on the renewal of the library operating levy, transportation funding, and possible bond measures for downtown City facilities. Mr. Carlson said that if the council was interested in continuing to pursue nonproperty tax revenues, he recommended it remove the sales tax option from further consideration and concentrate on the two income taxes, focusing on the surcharge approach for the individual income tax, and the gross receipts tax. Mr. Meisner said that he was comfortable tabling the item for one year, with the acknowledgment that the tabling was not "passive," and staff will continue to work on the subject. Ms. Nathanson arrived at the meeting. Mr. Meisner indicated he would like to see an analysis of the revenue options based on an analysis of actual service needs. He regretted setting aside work on a sales tax because it had the advantage of spreading the burden to those who use City services but do not live in Eugene. However, he believed a sales tax should be regional in nature, and he did not see such a tax happening soon. Ms. Taylor determined from staff that the costs of setting up a taxing system would be one-time costs, and the City would be responsible for the ongoing costs of administering a gross receipts tax. Mr. Carlson said that if the City was to use the individual income tax or corporate income tax, administrative costs could be relatively low, depending on how the tax was structured. Ms. Taylor was opposed to tabling the subject given the many needs that exist, the need for property tax relief, and the need to have a vote every four years to keep the library running. She said it was time to talk about alternatives to the property tax. Ms. Taylor objected to a surcharge on the State income tax, saying the income tax in Oregon was not progressive as it relatively high for low-income residents. Ms. Taylor asked if the City could levy an income tax on incomes above a certain level. Mr. Carlson said yes, the City could exempt all income tax returns under a certain dollar figure from the surcharge. Ms. Taylor indicated she was interested in that approach. MINUTES--Eugene City Council December 10, 2001 Page 3 Work Session Ms. Taylor said she thought the City was going to cover the costs of the downtown fire station using existing funds. Mr. Carlson recollected that the council directed the staff to come back with a financing plan for both the downtown fire station and the special operations building, which they would do in February 2002. He did not know if the cost of a fire station could be handled from existing resources without a bond issue. Mr. Kelly shared Ms. Taylor's concern about tabling the subject while appreciating Mr. Meisner's remarks that work would go on. Given the unmet service needs and the citizens' desire to maintain the current level of services, as well as the unsustainability of the current property tax system over the long-term and its impact on homeowners on fixed incomes, he preferred to work actively during 2002 on bringing a package to the voters in 2003. He suggested the council step back and identify its goal, and he perceived the goal as a restructuring of the current revenue system. First, such a restructuring would relieve some of the property tax burden; second, it would roll the current levies into the system and avoid future stop-gap measures; third, the council could build a revenue forecast that allowed it to restore the service levels that existed previous to the passage of ballot measures 47/50, noting neither measure was supported by Eugene voters. Mr. Rayor questioned the wide variations in the revenue yield projections provided by staff, and asked the reason for the large range. Mr. Carlson said that the yield numbers were dependent on the accompanying rates; the reason the corporate excise tax yield was so low was due to lack of corporations in the community. Mr. Rayor wanted to look at City finances on both the revenue and cost side. He tended to support a surcharge on income tax because he suspected such a tax might be deductible from State and federal taxes and the City would, in effect, be using those agencies' moneys. He was supportive of tabling the subject in an active manner, but, like Mr. Meisner, was interested in determining where the need existed. He pointed to the relatively small amount of revenue that would be needed to support youth services, for example, and suggested a third of that would come from the federal government if the surcharge was deductible. He suggested the City follow Salem's lead in looking at this option. Ms. Bettman thought an alternative to tabling action would be to pursue the topic but not aggressively. She suggested a variation of draft action B- 1, outlined in the meeting packet, wherein the council identified those taxes it was interested in pursuing. She was not interested in a sales tax, which she thought should be assessed on a broader level than city- or region-wide. She wanted to know what percentage of property taxes the council was considering for offset and what service gaps would be addressed as well. Ms. Bettman pointed out that the council always had the discretion of when to implement a tax. Ms. Bettman supported a mechanism that would replace a portion of the property tax, because even during an economic downturn it would result in more affordable housing. Mr. Pap~ preferred a sales tax with exemptions for food and other essentials. However, he acknowledged the difficulty of passing such a tax. He asked how Portland was able to get its additional taxes passed. Mr. Carlson said that the business tax was established in 1854, and staff did not believe it was subject to a vote at that time. Mr. Johnson said the Multnomah County business tax was revised in 1970. Staff was unsure of when it was initially levied. Mr. Pap~ said he agreed with Ms. Bettman's suggestion that the council proceed and concentrate on communicating the situation to the community and setting the stage. The City could do some polling on all the approaches to see what the community thought. That would give the council an idea of what, if anything, was MINUTES--Eugene City Council December 10, 2001 Page 4 Work Session acceptable. He said momentum was building for another parks and open space bond measure, and he did not want to jeopardize that. Ms. Nathanson concurred with the remarks of Mr. Meisner. She thought she could support a motion with narrow parameters about what should be studied. She questioned what a survey would tell the council if, at the same time, it planned an extensive campaign about transportation needs and funding. She questioned if the voters would support both or either. Ms. Nathanson asked what was needed for the youth operating levy. Mr. Johnson said approximately $1.7 annually. Ms. Nathanson recalled that the council asked staff to begin working on a more comprehensive, collaborative solution with the other government agencies, and asked the results of that. Mr. Johnson reminded the council of the report it recently heard regarding special districts, which offered a variety of options. He noted that Willamalane and River Road Parks and Recreation districts were deeply involved in the City's planning with the nonprofits for youth services. The City was working on an urban transition contract renewal with River Road Parks and Recreation District. Ms. Nathanson said it did not appear there was a general discussion among the CEOs about a general revenue source. Mr. Johnson concurred. Ms. Nathanson said constituents asked her on occasion why there was no sales tax. She suggested that times had changed, and wondered what the answer would be if the property tax were partially offset and certain items exempted from the tax, such as food and over-the-counter drugs. Ms. Nathanson indicated she did not want to adopt a tax that required the City to set up an administration system. Mr. Farr suggested the citizens were not interested in new, imaginative forms of taxation. He questioned if there was a chance a new tax could move forward, expressing the concern that the council's discussions and efforts could turn out to be an exercise in futility. He said that the only way he would be interested in more work on the topic was if a new tax was used as a total offset against property taxes. Mr. Farr said that people did not want another layer of taxes. Mayor Torrey wanted to know specifically how the money raised by a new tax would be used. He wanted to know what the projected General Fund revenue shortfall equated to in terms of services, with the services prioritized. He anticipated that staff would be providing the council with some information to review over the recess related to that question. Mayor Torrey was opposed to a gross receipts tax. He said that the City could tax a company's revenue even while it was losing money. If it wanted economic development, the council should not be putting up roadblocks. He expressed appreciation for Mr. Rayor's comments about a business tax. He said that the owner of a small professional business had indicated to him he would move to Springfield if the City of Eugene implemented such a tax. Ms. Bettman said that the council was having the discussion because of the council goal of Fair, Stable, and Adequate Financial Resources, and a sincere desire on the part of the council to restructure the taxing system. She thought the downside of a sales tax was that it would be local, and the burden and cost of administering it out of proportion to the benefit. Ms. Bettman favored a gross receipts tax and income tax surcharge because since the 1970s the tax burden had shifted to the individual and away from business on a 60/40 basis, a MINUTES--Eugene City Council December 10, 2001 Page 5 Work Session reverse of what it had been previously. She thought a gross receipts tax would more equitably distribute the tax burden between the two groups. She favored the income tax surcharge because it could potentially also include nonresidents using City services. Ms. Bettman favored offsetting the property tax with the receipts of those taxes. Mr. Kelly reminded the council of the gross receipts tax the City previously collected to pay for parking downtown. He agreed with Ms. Bettman about the need for striking a better balance between business and individual taxation. The City Club recommended an individual income tax surcharge and gross receipts tax. He suggested the council research the rationale behind that recommendation. Mr. Kelly noted that the individual income tax addressed many nonincorporated businesses as well as individuals. Mr. Kelly reiterated his goals and said that if restructuring was so important, he was willing to give up the third goal (leaving restructuring property tax and replacing current levies) with the time line for a 2003 implementation. Mr. Kelly, seconded by Ms. Bettman, moved to direct the City Manager to develop and bring back for City Council consideration options for using proceeds from any nonproperty revenue source to offset some portion of the property tax burden and to roll in operating levies with the goal of adoption in 2003. Mr. Fart indicated he could not support the motion because of his concerns about the impact of a new tax on Eugene residents. Mr. Kelly understood Mr. Fart's reluctance to study the subject but suggested not to do so was to say the property tax mechanism was acceptable as is. He did not think any councilor believed that. Mr. Pap~ also shared Mr. Fart's concern and said the council needed to start with the voters and get some education started so it was not "polling the citizens in a void." If some favored approach "bubbled to the surface," the council could proceed from there. If nothing bubbled to the surface, he suggested the council was wasting its time. Ms. Bettman supported the motion and asked if it adequately conveyed to the manager the intent of the council. Mr. Carlson noted that the motion said nothing regarding the mechanism for a nonproperty revenue source, only its intended use. Ms. Bettman asked if staff would continue to work on the topic using the direction it had gained through the discussion. Mr. Johnson said yes. Ms. Bettman suggested that the council owed it to the voters to narrow the options, and through that process would increase citizen awareness. The motion was not committing the council to anything specific; it merely endorsed an alternative to the property tax and the investigation of other options. Mr. Rayor did not support the motion because he was seeking a more defined approach. Ms. Nathanson said she also would vote against the motion and support the staff recommendation to table the issue. She said that she did not think it was a good idea to provide information about revenue options to the voters when the council had not made the case for the need. Ms. Nathanson said the community was largely MINUTES--Eugene City Council December 10, 2001 Page 6 Work Session satisfied with the services being delivered the community. The council had not begun to explain the ramifications of the financial forecast to the public. She did not think it was a good time to talk about taxes when things appeared to be okay. Ms. Nathanson said that perhaps there was a way to get together focus groups or some other strategy to work with citizens and see how they were feeling and their level of support for certain solutions. Ms. Nathanson wanted to know more about which taxes had unintended or indirect consequences, suggesting all would have consequences on land use patterns or job location. Eugene is not a self-contained island. Mr. Meisner supported the motion, saying that all the positions in opposition seemed to indicate the motion was a standalone motion and represented the sole direction given to staff. He anticipated a separate motion related to public involvement in discussing both needs and options. He said that the discussion needed to Occur. Mr. Meisner continued to be interested in addressing the issue of property relief to owner-occupied housing, acknowledging it would take legislative action but if the City did not make it a priority the legislature would never talk about it. He thought the City needed the flexibility to grant such relief as a taxing entity. Mr. Meisner was not willing to wait much longer than 2003. He noted that there were those interested in another 20-year parks and open space bond, and there was discussion about bonds for police and fire facilities. The City Council needed to begin talking seriously about an alternative to the property tax. Mr. Johnson thought fiscal year 2003 was a preferable year for the discussion. He thought the council would be in a better position after June 2002 to suggest alternatives to staff. Ms. Taylor said she would probably support the motion for lack of a better alternative, but she did not think the motion meant the City had to wait until 2003 for implementation. Ms. Taylor agreed with Ms. Bettman about the need to work actively on the goal of Fair, Stable, and Adequate Financial Resources. She did not think people thought the property tax was equitable. Ms. Taylor pointed out transportation funding would require a tax. She reiterated her interest in a gross receipts tax and for an individual income tax with low-income people exempted. Mayor Torrey pointed out that Governor John Kitzhaber was seeking reductions in services with the goal of finding out if the public was willing to support those services through additional taxation. Until the City took a similar approach, he thought it was making a mistake. He said the council should identify the service needs. He said that the outcome of the goal needed to be made clear: Was it a shift from property taxes to income taxes? The council could go out and ask the voters that question right now. Mayor Torrey said that if the council was trying to fund services into the future, that was a longer discussion than the council could have tonight. He said that if the motion was not needs-oriented, he would not support it. Mayor Torrey anticipated that the 4J School District would be facing severe budget problems, and he suggested it was not right to act in a vacuum without considering those needs. Mayor Torrey called for comments in the third round. MINUTES--Eugene City Council December 10, 2001 Page 7 Work Session Mr. Kelly agreed with Mr. Meisner about the need to have a conversation with the legislature about local flexibility. Ms. Nathanson reiterated she did not think the public would react well to the discussion if the council had not documented the existing revenue situation and long-term revenue needs. She was concerned about the timing of the conversation. The vote on the motion was a 4:4 tie; Mr. Kelly, Ms. Bettman, Ms. Taylor, and Mr. Meisner voting yes, and Mr. Fart, Mr. Papd, Mr. Rayor, and Ms. Nathanson voting no. Mayor Torrey cast a vote in opposition to the motion, and it failed on a 5:4 vote. Mr. Rayor, seconded by Ms. Taylor, moved to direct staffto develop and bring back for City Council consideration a detailed plan, time line, and specific policy choices and refined revenue yield estimates for implementation of a Eugene tax from any new nonproperty tax revenues sources to provide resources for current services and strategic funding needs to be adopted in 2003. Mr. Meisner determined from Mr. Rayor that the motion included no offset to the property tax; Mr. Meisner indicated that he would not support the motion for that reason. Ms. Bettman indicated she was somewhat confused by the motion. She believed the motion represented a tax increase, and stated she would oppose the motion. Mr. Kelly clarified the motion with Mr. Rayor and indicated he would not be able to support the motion, but thanked Mr. Rayor for offering it. Ms. Taylor moved to amend the motion to include an offset in property taxes. The motion to amend died for lack of a second. Mr. Rayor suggested that if the council did not think a tax increase would be the long-term outcome of the discussion, it was fooling itself. The motion failed, 7:1; Mr. Rayor voting yes. Mr. Kelly expressed concern that a lack of council action would mean that the needed education would not occur. He said that many people did not have a good idea of where City revenues came from or where they were spent. Mr. Johnson suggested modifying Option A with the phrase, "and return to the City Council in July 2002 after the budget process." Mr. Meisner, seconded by Mr. Fart, moved to postpone further discussion of nonproperty tax revenue options with the exception of options to replace the Youth Local Option Levy, and direct staff to return to the City Council in July 2002 after the budget process. The motion passed unanimously, 8:0. MINUTES--Eugene City Council December 10, 2001 Page 8 Work Session Ms. Nathanson suggested the City Manager give thought to how the City could use the Budget Committee to proactively structure discussion about the state of City finances in the public realm. C. Work Session: Beltline/I-5 Interchange Project Traffic Engineer David Reinhard joined the council for the item. Bob Pirrie, Jim McRae, and Karl Wieseke of the Oregon Department of Transportation (ODOT) were also present for the item, as was Planning Director Jan Childs. Mr. McRae provided an overview of the project. He discussed the various alternatives being considered by ODOT, the most notable environmental impacts, and next steps in the process. Mr. McRae invited questions. Councilors asked questions clarifying the details of the three alternatives. Mr. Rayor raised the issue of land owned by Springfield originally intended to be a parks facility, and the proposed change in use, which could have a very different impact on the transportation system than the use initially envisioned. He said ODOT should consider that fact as it was not land inside the urban growth boundary but was land brought into the community under false pretenses. Mayor Torrey clarified Mr. Rayor was seeking to know the additional traffic impact from the proposed use if the land in question was rezoned. Mr. McRae said that ODOT based its traffic analysis on the current zoning of the property to generate the traffic figures. Ms. Nathanson noted that part of the plan to reconfigure traffic near the federal courthouse was predicated on traffic volumes. If the full interchange at Franklin Boulevard to provide access from the east was built, to what extent would it reduce the traffic impacts on the Ferry Street Bridge and the federal courthouse neighborhood? Mr. Reinhard said the modeling done for the Ferry Street corridor indicated a five- to ten-percent reduction in traffic in the corridor because traffic would use a Franklin ramp instead. He did not look for much relief from that approach. Ms. Nathanson said that her point in asking was her hope the City was not making plans for a major change to a downtown neighborhood if it knew in advance another improvement would occur that mitigated the need. Mr. Kelly said that there were safety and capacity needs at the interchange, and he supported the project. Much study had occurred about different alternatives. The Beltline Decision Team, of which he was a member, did not support all three alternatives, but wanted them to have public input. He highlighted some concerns all three elected officials shared regarding the alternatives. Business displacement was a serious concern on the part of the officials. Some of the alternatives displace so many business that the reason for the improvements went away. Mr. Kelly said that issue needed to be looked at carefully. He thought that Mr. Rayor's points about the sports center were well-taken, and noted the proposed Arlie-PeaceHealth complex, which was not included in any of the modeling that had been done. He was dismayed that the Environmental Assessment was to be released given the officials' request for more data about the impact of that development. If there were an additional 2,500 trips that would be generated, there would be serious problems, and the elected officials would challenge the EA. Mr. McRae said that PeaceHealth was a proposal, not an approved use, and the agency had considered future uses within the designations for the properties in question. MINUTES--Eugene City Council December 10, 2001 Page 9 Work Session Mr. Papd asked which of the three alternatives represented the best traffic engineering. Mr. Pirrie said that endorsement of one of the alternatives would be wrong at this point. He said that was what the evaluation process was all about. He did not want to influence anyone's judgement. Mr. McRae said that all three options meet operational standards. Option 3 may be better than Option 2, which may be better than Option 1. Mr. Pirrie emphasized that the operational safety and capacity of the interchange was ODOT's primary concern. Ms. Bettman thought the project timing was fortuitous because enough data had been gathered to project baseline data before the potential change of use represented by PeaceHealth. Ms. Bettman asked about the relationship of transit service to the interchange. Mr. McRae responded that ODOT used the assumptions regarding TDM and trips relative to the benefits of public transportation, and it was not building for more capacity than what was needed. The standards applied within the proposals also accommodate transit. Transit travel times would be improved. Mr. Reinhard added that the stakeholders included LTD staff, who actively participated in the process. In addition, bicycle and pedestrian modes were considered. Mr. Meisner was also interested in knowing more about the impact of the proposed PeaceHealth/Arlie development on the interchange. He said that the land as presently designated was not as intense a use as that proposed, and he agreed about the added complication created by the rezoning of the sports complex. He said that there were finite dollars available and only one opportunity for a fix. Mr. Meisner expressed concern that the plans for the interchange did not do anything to mitigate the impact of traffic on other roads, such as on Harlow Road. He did not perceive the project was comprehensively planned until staff had factored in mitigating routes and the impact of future development insofar as those plans were known. Responding to a question from Mayor Torrey, Mr. Pirrie discussed the possible project phasing and funding were an additional $18 million available. Mayor Torrey said he believed if the City worked with the State over the next month or two it could get some additional funding from the State, reducing the shortfall in TransPlan. He indicated that the project was needed regardless of the relocation of PeaceHealth in Springfield. At the request of Mayor Torrey, Mr. Wieseke used a schematic of the interchange to illustrate the two phases of the project. Mr. Kelly said that while none of what was described was predicated on PeaceHealth, ODOT would look foolish if the facility was undersized. No one has indicated to the decision team if that issue has been studied. Mr. Kelly noted that the elected officials had asked the State to indicate what the decision team's authority was after completion of the Environmental Assessment. There was concern on the part of Springfield on its authority to weigh in on future discussions. MINUTES--Eugene City Council December 10, 2001 Page 10 Work Session Mr. Kelly noted several issues of concern to him, including the sound walls and the fact residents disagreed with ODOT's conclusion that the existing berm and fence address noise, even at current traffic volumes. He believed the fact the project added a lane in both directions to I-5 between Beltline and I-105 and on Beltline between Coburg and Gateway needed to be highlighted for the public. Mr. Rayor asked if the berm and wooden fences were within the ODOT right-of-way. Mr. McRae believed they were in the EWEB right-of-way. Mr. Rayor encouraged staff to check into that. Mr. McRae acknowledged that in some places, the ownership was not clear. The meeting adjourned at 7:51 p.m. Respectfully submitted, James R. Johnson City Manager (Recorded by Kimberly Young) MINUTES--Eugene City Council December 10, 2001 Page 11 Work Session