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Home My WebLink AboutItem 4: Adoption of Resolution 5023 Calling a City Election on May 17, 2011, on a Temporary City Income Tax to Raise Funds for Local Schools ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Possible Action: Adoption of Resolution 5023 Calling a City Election on May 17, 2011, on a Temporary City Income Tax to Raise Funds for Local Schools Meeting Date: February 14, 2011 Agenda Item Number: 4 Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 541-682-5589 ISSUE STATEMENT The council will consider whether to place a measure on the May 2011 ballot authorizing a City income tax to fund local schools. BACKGROUND As the magnitude of the budget shortfall facing the Eugene School District has become clearer in recent months, a community discussion has emerged around the possibility of the City of Eugene enacting a tax on behalf of the local public school systems. On December 14,2010, Mayor Piercy held a public forum on the topic to hear from concerned citizens and a citizen group was formed to explore the idea further. On January 11, 2011, the council met to discuss a possible new revenue for schools. Several key questions were posed in order to provide direction on whether to move forward, and if it was decided to move forward, what the revenue package should look like. As a result of their discussion, the council created an education subcommittee that would include representatives of the City of Eugene, the Bethel and 4J school districts, Stand for Children and the business community, and to return to the council with recommendations. On January 18 and January 20, the Subcommittee on Education Funding met to discuss an income tax proposal for education funding. Subcommittee materials are available on the City’s website at www.eugene- or.gov/schooltax. On January 24, 2011, the council discussed the subcommittee’s recommendations and the potential for a City income tax for schools. As a result of their discussions, the council directed the City Manager to bring back for council consideration on February 14, a proposed ballot measure for the May ballot that: 1.Approves a local income tax on Eugene residents that would sunset after six years; 2.Is designed to raise revenue sufficient to (a) allow the two school districts to reduce or eliminate furlough days and keep average class size from increasing to the extent possible; and (b) to cover the costs of implementing the measure; \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc 3.Divides the tax revenues (after deducting the costs of implementation) between the two school districts based on the number of students in each district who reside within the city limits; 4.Would reduce or suspend the local income tax if the State either (a) increases state funding of the districts to the point that additional local revenues are no longer needed to restore furlough days or prevent average class size from increasing, or (b) requires that the local income tax revenues decrease the amount of state funding for the districts; 5.Requires the school districts to provide annually a report to the City Council describing how the income tax revenues were spent; and 6.Requires the school districts to establish a review panel, similar in nature to the Citizen Street Repair Review Panel, comprised of four members appointed by the Bethel school district, four members appointed by the Eugene school district, and four members appointed by the Mayor, two of whom should be business representatives and two who opposed the measure. In addition, the council directed the City Manager to ask each school district how much revenue the district would like to receive from the measure to achieve the outcomes. Resolutions: Attachments A and B set out resolutions referring an income tax measure for schools to the May ballot. There are two resolutions included because there is a fundamental policy choice for the council with regard to the measure: will the income tax be structured to attempt to raise a particular dollar amount of revenue, or will it be structured to set tax rates that will generate an amount that may or may not be the dollar amount desired by school districts. Under resolution Option A, included as Attachment A, the council would set the tax rate or tax rates to be imposed under the income tax measure. If the dollar amount that is raised by those rates is below what was desired to be raised, then district budgets will fall short. In this option, taxpayers will have more certainty about what they will pay, and the school districts will bear the risk that revenues do not reach the target amount. Under resolution Option B, included as Attachment B, the council would set the amount desired to be raised by the income tax measure. The council would subsequently set tax rates that are designed to raise that amount of net income to schools. If the actual amount raised comes in different than the desired amount, the council would adjust the next year’s tax rate or rates to raise the desired amount, subject to a maximum rate or rates specified in the ballot measure. The rate could go up or down each year in order to raise that target amount of money, within the maximum rate specified in the measure. In this option, school districts will have more certainty about what revenue they will eventually receive from the measure, but taxpayers will bear the risk that rates may go up in order to reach that target. Both resolutions leave blanks for the particular set of facts needed, such as the tax rate or rates, or the dollar amount to be raised. In addition, the resolutions set out the following key points:  Type of Tax – personal income tax on Eugene residents  Use of Funds – reduce or eliminate furlough days and reduce class size  Funds Split – based on the number of Eugene residents enrolled in each district  Term of Tax Levy – starting for tax year January 1, 2011 and sunsetting after six years, or December 31, 2016 \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc  Reduced or Suspended Tax – if the State increases school funding so that this tax is no longer needed in order to achieve the goals, or if the State requires that local income tax dollars reduce other State funding for the districts  Review of Tax – districts must report to the council each year how the tax revenues were spent  Review Panel – districts must create a review panel consisting of specific members designated in the resolution  School District Support – each school district must provide a written statement by March 16 that the district supports the council placing the measure on the May ballot in order for the City Manager to submit the measure to the County Elections Chief School District Response: The FY12 projected deficit for 4J is $24 million and for Bethel is between $4.8 and $7.6 million. The districts requested that two City income tax scenarios be developed. One scenario would raise a net of $26.6 million for schools, with approximately $19 million for 4J and $7.6 million for Bethel. A second scenario would raise $16.8 million for schools, with approximately $12 million for 4J and $4.8 million for Bethel. Because of the desired split of tax revenues by percentage of Eugene residents in each district, it was not mathematically possible to size a tax that would solve the entire deficit for both districts perfectly. Staff requested responses from each district about the impacts of these City income tax scenarios on teacher layoffs, furlough days and class size. Their responses are included below. Response from Bethel: 1.How much revenue is needed in FY 12 to allow Bethel to eliminate instructional furlough days and keep average class size from increasing? Depending on finalized state revenue numbers (which will be determined by the end of the legislative session or possibly sooner), they need: $4.8 million to $7.6 million. 2.Will Bethel impose instructional furlough days or increase class size if a local income tax is approved by the voters in May? It is possible Bethel will still have to increase class size or impose instructional furlough days. Imposing an income tax to collect $4.8-7.6 million does not guarantee that amount being available for use in FY 12 because:  there is no guarantee of collection rates;  this does not include the cost of implementation of the tax;  the timing of the receipt of tax revenue in the District may be very late into FY12 or even into FY13; and  estimated tax revenue may not match realized tax revenue. If a school income tax were projected to raise the entire amount of the FY12 deficit, until Bethel receives the entire first year of new City income tax revenues, the District cannot guarantee the number of teachers, the number of furlough days or class sizes. A major concern for the District is “bridging the gap” or responsibly covering the expense of providing the service (instructional days and maintaining class size) until the projected revenue is received. The “bridging” \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc strategies include a limited, but still substantial, risk until it is determined that projected City tax revenue is matched by realized revenue from the tax. For subsequent years, the level of state funding, labor negotiations, changes in City income tax revenue and other factors that affect budgets could change, and those changes could require additional reductions in teachers, increases in furlough days and/or increases in class size. 3.Will Bethel impose instructional furlough days or increase class size if a local income tax is referred to the voters in November, either at $4.8 million or $7.6 million as per the assumptions above? Yes, it is likely that one or both of these budget reduction methods would necessarily be imposed. Response from 4J: 1.How much revenue is needed in FY 12 to allow 4J to eliminate instructional furlough days and keep average class size from increasing? Assuming that 4J receives from the State the current projected revenues, then they need: At the $12 million revenue level, reductions directly affecting classroom instruction could likely be reduced significantly in 2011-12 if other budget reduction strategies including compensation- related adjustments are achieved and the district issued Tax Anticipation Notes. Given the uncertainty of these budget variables, the district would not be able to assess this until after the th May 17 election. This level of funding would not preclude further reductions in 2012-13. If the $19 million in revenue were guaranteed, it is likely that reductions directly affecting classroom instruction could potentially be eliminated assuming other budget reduction strategies including compensation-related adjustments are achieved and the district issued Tax Anticipation Notes. Again, given the uncertainty of several budget variables, the district would th not be able to assess this until after the May 17 election. 2.Will 4J lay off any teachers, impose instructional furlough days or increase class sizes if a local income tax is approved by the voters in May, either at $12 or $19 million as per the assumptions above? Probably, but depending on the level of income tax realized, the reductions directly affecting classroom instruction would likely be reduced. We potentially could put furlough days at the end of the year and then restore them once the measure is passed and income is realized. Imposing an income tax to collect $12 or $19 million does not guarantee that amount being available for FY 12 because there is no guarantee of collection rates, cost of implementation, timing of tax payments, or taxpayer incomes. If a school income tax were projected to raise the entire amount of the FY12 deficit, until the legislature acts and 4J receives the first year of new City income tax revenues, the District cannot guarantee the number of teachers, the number of furlough days or class sizes. For subsequent years, the level of state funding, labor negotiations, changes in City income tax revenue and other factors that affect our budgets could change, and those changes could require additional reductions in teachers, increases in furlough days and/or increases in class size. \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc A major concern for the district is "bridging the gap" or responsibly covering the expense of providing the service (instructional days and maintaining class size) until the projected revenue is received. The "bridging" strategies include a limited, but still substantial, risk until it is determined that projected City tax revenue is matched by realized revenue from the tax. 3.Will 4J lay off any teachers, impose instructional furlough days or increase class size in FY12 if a local income tax is referred to the voters in November, either at $12 or $24 million as per the assumptions above? Yes. 4J Board Meeting on February 9: In addition to the responses provided by 4J in writing, the board discussed the income tax proposal at their meeting on February 9. At that meeting, the board discussed the possibility of three "bridging" ideas: using reserves, issuing tax and revenue anticipation notes repaid from income tax receipts, and/or scheduling furlough days towards the end of the year. Regardless of the bridging method chosen, the District will have to prepare their FY12 budget assuming that there are no income tax revenues available. Layoff notices will have to go out in March. This is not unusual in school district budgeting, especially since the legislature doesn't set school funding until May. If the state funding and a potential May ballot measure provide good financial news, the District can make adjustments to their FY12 budget at that point, before it is adopted by the end of June. Much of the remainder of the discussion revolved around the risks inherent in using any kind of bridging strategy designed to minimize the impact of planned FY12 budget reductions. Aside from the obvious financial risk that taxes won't come in as anticipated, there were other areas of risk that were discussed that stem in part from council decisions. Some of the points raised were:  Whatever conditions the council puts on the use of funds could impact the district's ability to use borrowing for bridging.  What happens if the termination clause comes into effect because the state solves the school funding issue or the review panel recommends that the City no longer give the districts the dollars? Will the district still be able to use tax proceeds to pay off any cash flow borrowing that has been implemented?  What happens if someone sues over the use of the tax, as occurred with the school levy a few years ago? Who pays for those legal costs?  There was a concern about how the tax measure would be "grossed up" to take into account evasion, avoidance, pension exclusion and administration, and the risks inherent in that calculation being incorrect. There was discussion around "risk sharing" for legal challenges and revenue shortfalls in the event that actual revenues come in less than anticipated. City staff responded that the City would basically be acting as a conduit for the districts in this measure, and wouldn't be bearing any of the risks from legal actions or revenue shortfalls. The City would be reimbursed for any costs, including legal costs, for the tax. The risk of revenue shortfalls would be borne by the districts. \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc Board members also expressed concern about how the ballot language would read in terms of the desired classroom outcomes and the board’s ability to influence or achieve those outcomes. Some examples given were: (i) what does a furlough day mean; (ii) classroom time means more than teachers; (iii) the board can only control the "ratios", and cannot control furlough days; and (iv) will having furlough day language in the ballot measure affect the district's ability to successfully negotiate with its teachers? There were no definitive answers to these questions, nor were there any specific suggestions from the board about how the ballot language should read in order to work best for the district. City staff suggested that board members attend the February 14 meeting and present their ideas or concerns to the council directly during the public comment period. Tax Brackets and Revenue Yield: The net revenue that would be available to schools from several different scenarios, along with tax bracket options, is included in Attachment C. These estimates were calculated using a model developed by EcoNW. An explanation of the methodology and more details about the calculations are incorporated in the EcoNW report included as Attachment D. Taxation of PERS and Federal Retirement Benefits: State law prohibits the City from applying an income tax to PERS benefits and federal retirement benefits that are taxable in Oregon. ORS 238.445 prohibits municipal taxation of PERS benefits, but allows the state to apply personal income taxes to such benefits. When Multnomah County implemented their tax, they determined that if Oregon PERS benefits are not taxed, then federal law would prohibit an income tax on federal pension benefits. City staff were unable to obtain information from Multnomah County staff about the impact that the PERS and federal pension income exemptions had on their tax receipts. The revenue projections included in Attachments C and D estimate the impact of the prohibition against taxing PERS and federal retirement benefits on City income tax revenues. The combined estimate of the impact is approximately 6% of taxable income. Implementation and Administration: The cost of implementing and administering the program includes the cost of tax avoidance activities, tax evasion, and administration of the revenue collections. The council will need to consider both the staff effort needed to implement and administer the tax, as well as the cost of having a local income tax program. With regard to the amount of time and effort needed to implement a local income tax, staff has made inquiries of the City of Portland, who administered the Multnomah County income tax for schools in fiscal years 2003-04 through 2005-06 and of the Department of Revenue. We have not done a thorough analysis, given the short timeline, but we have some initial information that will be useful for the current discussions. The Multnomah County tax was approved on the ballot in May 2003, and the tax was effective for the 2003 tax year, timing similar to what Eugene is considering. In Multnomah County, their system was up and running by the end of the calendar year, about seven months after passage of the ballot measure. City of Portland staff told us that they estimate it would take at least six months to implement the new tax. \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc Start-up and on-going administration of a local income tax would be complex. Implementation activities would include: policy work with the council regarding the tax; staff and contractor costs; election costs; economic modeling of tax projections for budget and planning purposes; negotiation of an intergovernmental agreement with the City of Portland or the Department of Revenue to administer the tax (if at all possible, rather than creating a new City revenue collection infrastructure from scratch); legal costs; cash flow borrowing costs (if needed) for implementation activities; education of taxpayers; set-up and maintenance of a computerized billing and collections system; set-up and staffing of customer service phone lines; creation and maintenance of a web site with tax information, ability to file forms on line and payment acceptance abilities; processing of payments, deposits and refunds including acceptance of credit card payments; audit activities to ensure taxpayer compliance, including matching data with state income tax information and local address verification; and collection of delinquent taxes. With regard to tax evasion and tax avoidance, the EcoNW report included in Attachment D describes some of these activities. Both activities result in reduced revenue to the City. The very preliminary estimates of the cost of implementing and administering an income tax program, including the cost of tax avoidance and evasion and tax implementation and collection activities, are estimated between 10-20% of the gross revenue in the EcoNW calculations. When added to the estimated impact of the state-mandated exemption for PERS and federal pension benefits, the total difference to get from gross potential revenue to net receipts for distribution to schools is approximately 16-26%. Economic Impacts: EcoNW describes some of the economic impacts on businesses and the community as a whole. The analysis included two aspects. First, EcoNW reviewed literature on the effects of tax rates on economic development and provided some conclusions based on that review. Second, EcoNW estimated the impact on the local economy from a City income tax to fund local schools using an economic model. The analysis is included in Attachment D. Governor’s Budget for Education: According to the Governor’s Budget, which was released last week, it establishes a stable funding floor for Oregon’s public school system. It provides $5.56 billion for the biennium. However, 52% ($2.9 billion) will be distributed during the first school year of the biennium, equivalent to a $5.8 billion budget for school funding. The effect is to provide an increase in state funding for the 2011-12 school year. Front-loading the funding also provides a year to find cost savings through consolidation and other efficiencies to maintain this level of classroom support during the 2012-13 school year. In addition, the Governor is recommending shifting funding for State Police patrol officers from the General Fund to the State Highway Fund, freeing up an additional $93 million in General Fund support for 2012-13 school funding. The shift would require voter approval. The budget includes significant governance changes that direct a greater share of available resources to the classroom and give schools more flexibility in how they provide education services to their children. An excerpt from the Governor’s Budget with regard to education funding is included as Attachment E. Election Information: The council will consider whether to place the measure on the May ballot, or wait until November. A chart comparing some of the factors that will influence the decision is included as Attachment F. The school districts provided some of the information and had the opportunity to review and edit the chart. \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc One factor that has been discussed frequently is the cost difference between May and November elections. The cost to the City of an election this year, whether it be in May or November, will depend on what else is on the ballot. We don’t know yet what is on either ballot, because the deadlines for placing measures on the ballots haven’t arrived and the legislature hasn’t concluded its session. We do know that the May ballot includes board positions for several special districts, and that will bring the costs down for any May measure that is put forth. Election costs include Lane County expenses for putting on the election, City costs for advertising the election, and printing and mailing for voters’ pamphlets and neutral information statements. Eugene has not had a May special election since the 1990’s, but we have had some November special elections recently. A May election would be estimated to cost between $50,000 and $100,000, assuming that a voters’ pamphlet and neutral information statement are prepared, and the County assesses some amount for administering the election process. If the City had the only measure on the ballot, which could occur in the November election, the bill for an election could be as high as $290,000 for all of the various costs involved, including a voters’ pamphlet and neutral information statement. If other items are referred to the November ballot, then the cost would be lower. Some recent experience with costs for odd-year November ballot measures: $113,000 for the November 2007 election and $77,000 for the November 2005 election. Voters’ Pamphlet and Information Statement: EC 2.993 (2) requires the City Manager to publish and distribute a local voters’ pamphlet for elections in which a City measure is on the ballot. EC 2.996 (1)(b) establishes that for council-referred measures, the argument in favor and the rebuttal to the opposition argument are to be prepared by one or more of the councilors who voted in favor of the measure. Production of a voters’ pamphlet is not a regular budget item and requires the expenditure of contingency funds. Production costs, including mailing, for the voters’ pamphlets the past few years, after into account increased costs for postage and labor, are estimated at approximately $25,000. The City has prepared neutral information tabloids for some of the previous bond measures, such as the street bonds. Staff proposes in this case, however, that any tabloid for this measure be prepared by school districts and/or advocates. The cost of printing and mailing the tabloid is estimated at $25,000. The council could cover a portion of the election costs through council contingency, which has a balance of $100,000 at the current time. Other funding would need to be determined to cover the additional costs. The council could also ask the school districts to cover the election costs, since this measure benefits the school districts and not the City directly. Development of Ordinance: If the council votes to send a measure to the May ballot, staff will return to the council to discuss an ordinance to implement the tax. The ordinance will include specifics such as definitions of who is subject to the tax and what income is taxable, details about how the tax will be imposed, how the tax revenues will be dedicated, withholding (if desired), payments, refunds, time and place for filing returns, penalties for failure to file or pay taxes, and \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc so on. The ordinance would contain a section making it effective only if the voters approved the ballot measure. The preliminary schedule for development and approval of the ordinance are as follows:  Work session prior to council break on March 16 to discuss the ordinance  Public hearing on the ordinance in mid-April  Final approval of the ordinance by end of April This schedule is designed to have the ordinance approved by the council prior to the mailing of ballots, which will occur 14 to 18 days before the election (end of April/beginning of May). RELATED CITY POLICIES There are no City policies related to City support for school funding. There is a council goal of Fair, Stable and Adequate Financial Resources: A government whose ongoing financial resources are based on a fair and equitable system of revenues and are adequate to maintain and deliver municipal services. COUNCIL OPTIONS 1. Decide to proceed with a May ballot measure and adopt one of the attached resolutions, having filled in the blanks. 2. Decide to proceed with a November election and give direction to the City Manager about further details for the ballot measure. 3. Decide to not proceed with a ballot measure at this time. If the council moves ahead with a May ballot measure, determine how to pay for the election costs and which councilor(s) will serve on the proponent committee. Attachment G includes a series of questions to help the council move through the decisions needed for this item. CITY MANAGER’S RECOMMENDATION The question before the council – whether to refer a tax measure to the ballot to support schools – is a complicated question involving a number of political and fiscal considerations. Schools need additional revenue. As we’ve discussed, the City also will need additional revenue in the future to develop and maintain a long-term sustainable budget, including the maintenance of existing services as well as considering new or expanded services. The council should weigh the school districts’ needs against the potential impact of a City tax measure (to support schools) on a possible future revenue measure for City services. Since this assessment primarily is a political conclusion about how voters will react, my recommendation to the council is limited to encouraging the council to consider these other impacts when deciding whether to refer a measure to support schools. \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc SUGGESTED MOTIONS If the council decides to refer a measure to the May ballot: 1.Move to adopt the Resolution included as Attachment ___. [The council will need to decide how to complete the blanks in the resolution before making this motion.] 2.Move to authorize the expenditure of funds from the General Fund contingency account to pay the costs of the election, including the cost to produce and distribute the voters’ pamphlet. 3.Move to appoint Councilor(s) _______________ to the voters’ pamphlet proponent committee. ATTACHMENTS A.Resolution Calling a City Election on May 17, 2011, on a Temporary City Income Tax to Raise Funds for Local Schools – Option A Specific Rate B.Resolution Calling a City Election on May 17, 2011, on a Temporary City Income Tax to Raise Funds for Local Schools – Option B Adjustable Rate C.Summary of Scenarios to Raise $26.6 Million or $16.8 Million for Schools D.EcoNW Report E.Excerpt from Governor’s Budget – Education Funding F.Comparison of May and November Elections G.Questions to Assist in Development of Council Motion FOR MORE INFORMATION Staff Contact: Sue Cutsogeorge, Finance Director Telephone: 541-682-5589 Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us \\Cesrv500\cc support\CMO\2011 Council Agendas\M110214\S1102144.doc Attachment A OPTION A - SPECIFIC RATE RESOLUTION NO. _____ A RESOLUTION CALLING A CITY ELECTION ON MAY 17, 2011, ON A TEMPORARY CITY INCOME TAX TO RAISE FUNDS FOR LOCAL SCHOOLS. The City Council of the City of Eugene finds as follows: A. Due to the extent of the budget shortfall facing the Eugene and Bethel School Districts, the schools districts are preparing to close schools, increase class size, and implement more teacher furlough days. Concerned citizens have been discussing the need to find new revenue sources in order to alleviate the damaging impacts that the school budget deficit will create. B. Many community members have recommended that a temporary personal income tax be imposed to help fund Eugene schools so that teacher furlough days can be reduced or eliminated, and class size can be reduced. C. The City Council recognizes the importance of a strong education system and finds that the electors of the City of Eugene should be given the opportunity to decide whether to implement a school funding tax measure. NOW, THEREFORE, based upon the above findings, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. A City election is called for the purpose of referring to the legal electors of the City of Eugene a measure authorizing the implementation of a personal income tax on the residents of the City of Eugene, in order to raise school funding for use by Eugene and Bethel School Districts to reduce or eliminate furlough days and to reduce class size, and to pay the debt service and other costs of any borrowing to implement the tax or achieve the desired outcomes. OPTION A: Section 2 . The tax shall consist of a flat tax of __% on income in excess of $______, and shall be collected annually on income earned between January 1, 2011 and December 31, 2016. OPTION B: Section 2 . The tax shall consist of a graduated tax of: (a) __% if income is less than $___; (b) __% if income is between $___ and $___; and (c) __% if income is more than $___, and shall be shall be collected annually on income earned between January 1, 2011 and December 31, 2016. Section 3 . If necessary in order to have the Oregon Department of Revenue or another governmental entity collect the tax for the City, then the specifics contained in Section 2 of this Resolution may be adjusted by Council resolution. In addition, the Council shall, by resolution, reduce or suspend the tax if the State either (a) increases state funding of the districts to the point that additional local revenues are no longer needed to restore furlough days or prevent average class size from increasing, or (b) requires that the local income tax revenues decrease the amount of state funding for the districts. Section 4 . Funds generated by the tax shall be split between the two school districts based on the number of Eugene residents enrolled in each district. Before any funds are split between school districts, funds shall first be distributed to cover the costs of implementation of the tax measure. Section 5 . The school districts must provide a report to the City Council describing how the income tax revenues were spent. In addition, the school districts must establish a review panel, similar in nature to the Citizen Street Repair Review Panel, comprised of four members appointed by the Bethel School District, four members appointed by the Eugene School District, and four members appointed by the Mayor, two of whom should be business representatives and two of whom opposed the measure. The first report from the school districts and the review panel will be due by December 31, 2012 for the 2011 tax year. The reports must be completed annually and are a condition of continuing to receive the funds. Section 6 . Except for the actions described in section 3 of this resolution which will be accomplished by adoption of one or more additional Council resolutions, the details of the income tax shall be adopted by Council ordinance. Section 7. The City Council orders this City election be held in the City of Eugene, th Oregon, concurrently with the primary election on the 17 day of May, 2011, in accordance with the provisions of Chapter 254 of the Oregon Revised Statutes, and the ballots shall be counted and tabulated and the results certified as provided by law. Section 8. The City Manager is directed to request from each school district a written statement that the district supports the Council placing this measure on the May ballot. If the City Manager does not receive such a written statement from each school district by March 16, then the City Manager shall not forward the ballot title to the County elections chief and no election on the measure will be held. Resolution - Page 2 of 3 Section 9. The City Recorder is directed to give not less than ten days’ notice of the City election by publication of one notice in the Register Guard, a newspaper published in the City and of general circulation within the City. Section 10 . This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted the ____ day of __________________, 2011. ___________________________________ Deputy City Recorder Resolution - Page 3 of 3 Attachment B OPTION B - ADJUSTABLE RATE RESOLUTION NO. _____ A RESOLUTION CALLING A CITY ELECTION ON MAY 17, 2011, ON A TEMPORARY CITY INCOME TAX TO RAISE FUNDS FOR LOCAL SCHOOLS. The City Council of the City of Eugene finds as follows: A. Due to the extent of the budget shortfall facing the Eugene and Bethel School Districts, the schools districts are preparing to close schools, increase class size, and implement more teacher furlough days. Concerned citizens have been discussing the need to find new revenue sources in order to alleviate the damaging impacts that the school budget deficit will create. B. Many community members have recommended that a temporary personal income tax be imposed to help fund Eugene schools so that teacher furlough days can be reduced or eliminated, and class size can be reduced. C. The City Council recognizes the importance of a strong education system and finds that the electors of the City of Eugene should be given the opportunity to decide whether to implement a school funding tax measure. NOW, THEREFORE, based upon the above findings, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. A City election is called for the purpose of referring to the legal electors of the City of Eugene a measure authorizing the implementation of a personal income tax on the residents of the City of Eugene, in order to raise school funding for use by Eugene and Bethel School Districts to reduce or eliminate furlough days and to reduce class size, and to pay the debt service and other costs of any borrowing to implement the tax or achieve the desired outcomes. OPTION A: Section 2 . The tax shall be designed to raise $____ in the 2011 tax year for the school districts plus the costs of implementation. The tax shall consist of a flat tax and be collected annually on income earned between January 1, 2011 and December 31, 2016. OPTION B: Section 2 . The tax shall be designed to raise $____ for the school districts in tax year 2011 plus the cost of implementation. The tax shall consist of a graduated tax that shall be shall be collected annually on income earned between January 1, 2011 and December 31, 2016. Section 3 . The Council shall specify the actual tax rate or rates by resolution with the goal of raising $_____ in tax year 2011 for the school districts, plus the estimated costs of implementation. In subsequent years, the amount raised will increase by the rate of inflation. Rates may be increased or decreased to achieve the desired amount of revenue or meet Oregon Department of Revenue requirements. The Council also shall, by resolution, reduce or suspend the tax if the State either (a) increases state funding of the districts to the point that additional local revenues are no longer needed to restore furlough days or prevent average class size from increasing, or (b) requires that the local income tax revenues decrease the amount of state funding for the districts. Section 4 . Funds generated by the tax shall be split between the two school districts based on the number of Eugene residents enrolled in each district. Before any funds are split between school districts, funds shall first be distributed to cover the costs of implementation of the tax measure. Section 5 . The school districts must provide a report to the City Council describing how the income tax revenues were spent. In addition, the school districts must establish a review panel, similar in nature to the Citizen Street Repair Review Panel, comprised of four members appointed by the Bethel School District, four members appointed by the Eugene School District, and four members appointed by the Mayor, two of whom should be business representatives and two of whom opposed the measure. The first report from the school districts and the review panel will be due by December 31, 2012 for the 2011 tax year. The reports must be completed annually and are a condition of continuing to receive the funds. Section 6 . Except for the actions described in section 3 of this resolution which will be accomplished by adoption of one or more additional Council resolutions, the details of the income tax shall be adopted by Council ordinance. Section 7. The City Council orders this City election be held in the City of Eugene, th Oregon, concurrently with the primary election on the 17 day of May, 2011, in accordance with the provisions of Chapter 254 of the Oregon Revised Statutes, and the ballots shall be counted and tabulated and the results certified as provided by law. Section 8. The City Manager is directed to request from each school district a written statement that the district supports the Council placing this measure on the May ballot. If the City Manager does not receive such a written statement from each school district by March 16, then the City Manager shall not forward the ballot title to the County elections chief and no election on the measure will be held. Resolution - Page 2 of 3 Section 9. The City Recorder is directed to give not less than ten days’ notice of the City election by publication of one notice in the Register Guard, a newspaper published in the City and of general circulation within the City. Section 10 . This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted the ____ day of __________________, 2011. ___________________________________ Deputy City Recorder Resolution - Page 3 of 3 Attachment C Summary of Scenarios to Raise $26.6 Million for Schools % of AGI OTI Taxpayers Scenario Rate Joint Income ($) Joint Income ($) Affected A 1.54% > 51,000 35,000 47% B 1.42% > 35,000 25,000 68% 0.73% < 10,0006,100 C100% 1.02% between 10,000-22,000 6,101-15,200 1.33% > 22,000 15,201 Exempt < 51,00035,000 0.94% between 51,000-74,000 35,001-50,000 D47% 1.32% between 74,000-106,00050,001-75,000 1.72% > 106,000 75,001 Estimated Tax Liability for a Joint Filing Household Under Scenarios A-D to Raise $26.6 Million for Schools Estimated Estimated Tax Liability for a Joint Filing Household AGI OTI C D A B $5,000 $1,800 $0 $0 $13 $0 $10,000 $6,000 $0 $0 $44 $0 $15,000 $9,900 $0 $0 $101 $0 $20,000 $13,900 $0 $0 $142 $0 $25,000 $18,100 $0 $0 $241 $0 $30,000 $21,500 $0 $0 $286 $0 $35,000 $24,800 $0 $0 $330 $0 $40,000 $28,000 $0 $398 $372 $0 $45,000 $31,100 $0 $442 $414 $0 $50,000 $34,300 $0 $487 $456 $0 $60,000 $40,700 $627 $578 $541 $383 $70,000 $47,600 $733 $676 $633 $447 $80,000 $54,700 $842 $777 $728 $722 $90,000 $62,100 $956 $882 $826 $820 $100,000 $70,500 $1,086 $1,001 $938 $931 $250,000 $190,300 $2,931 $2,702 $2,531 $3,273 Notes: Separate filing households would have brackets equal to half of the joint filing households. The OTI excludes non-taxable income under a local tax, such as PERS and federal pensions and other Oregon non-taxable income. Summary of Scenarios to Raise $16.8 Million for Schools % of AGI OTI Taxpayers Scenario Rate Joint Income ($) Joint Income ($) Affected A 1.02% > 51,000 35,000 47% B 0.91% > 35,000 25,000 68% 0.49% < 10,0006,100 C100% 0.69% between 10,000-22,000 6,101-15,200 0.90% > 22,000 15,201 Exempt < 51,00035,000 0.63% between 51,000-74,000 35,001-50,000 D47% 0.88% between 74,000-106,00050,001-75,000 1.14% > 106,000 75,001 Estimated Tax Liability for a Joint Filing Household Under Scenarios A-D to Raise $16.8 Million for Schools Estimated Estimated Tax Liability for a Joint Filing Household AGI OTI C D A B $5,000 $1,800 $0 $0 $9 $0 $10,000 $6,000 $0 $0 $29 $0 $15,000 $9,900 $0 $0 $68 $0 $20,000 $13,900 $0 $0 $96 $0 $25,000 $18,100 $0 $0 $163 $0 $30,000 $21,500 $0 $0 $194 $0 $35,000 $24,800 $0 $0 $223 $0 $40,000 $28,000 $0 $255 $252 $0 $45,000 $31,100 $0 $283 $280 $0 $50,000 $34,300 $0 $312 $309 $0 $60,000 $40,700 $415 $370 $366 $256 $70,000 $47,600 $486 $433 $428 $300 $80,000 $54,700 $558 $498 $492 $481 $90,000 $62,100 $633 $565 $559 $546 $100,000 $70,500 $719 $642 $635 $620 $250,000 $190,300 $1,941 $1,732 $1,713 $2,169 Notes: Separate filing households would have brackets equal to half of the joint filing households. The OTI excludes non-taxable income under a local tax, such as PERS and federal pensions and other Oregon non-taxable income. ¬¬¿½¸³»²¬ Ü ß Phone • (541) 687-0051 Suite 400 Other Offices FAX • (541) 344-0562 99 W. 10th Avenue Portland • (503) 222-6060 info@eugene.econw.com Eugene, Oregon 97401-3001 Seattle • (206) 622-2403 Ú»¾®«¿®§ çô îðïï ÌÑæ Í«» Ý«¬±¹»±®¹» ¿²¼ Ì©§´´¿ Ó·´´»®ô Ý·¬§ ±º Û«¹»²» ÚÎÑÓæ ß²²» Ú·º·»´¼ô Í»²·±® Û½±²±³·¬ ÍËÞÖÛÝÌæ ÐÎÛÔ×Ó×ÒßÎÇ ÛÍÌ×ÓßÌÛ ÑÚ ÔÑÝßÔ ×ÒÝÑÓÛ ÌßÈ ÎÛÊÛÒËÛ Ì¸» Ý·¬§ ±º Û«¹»²» ¿µ»¼ ÛÝÑÒ±®¬¸©»¬ ¬± »¬·³¿¬» ¬¸» ®»ª»²«» ¬¸¿¬ ½±«´¼ ¾» ¹»²»®¿¬»¼ ¾§ ¿² ·²½±³» ¬¿¨ ·³°±»¼ ±² ®»·¼»²¬ ±º ¬¸» Ý·¬§ò Ì¸· ³»³±®¿²¼«³ «³³¿®·¦» ¬¸» ®»»¿®½¸ ÛÝÑÒ±®¬¸©»¬ ½±²¼«½¬»¼ ¬± »¬·³¿¬» ¬¸» ®»ª»²«» ¿²¼ »½±²±³·½ ·³°¿½¬ ±º ¿ ´±½¿´ ·²½±³» ¬¿¨ò S UMMARY Ì¸· ¿²¿´§· »¬·³¿¬» ¬¸» ¬¿¨ ´·¿¾·´·¬§ ¬± ¸±«»¸±´¼ ·² ¬¸» Ý·¬§ ±º Û«¹»²» ·º ¿² ·²½±³» ¬¿¨ ¬± «°°±®¬ Õóïî ½¸±±´ ©»®» ·³°±»¼ò ×¬ ¸±© ¼·ºº»®»²¬ ½»²¿®·± ¾¿»¼ ±² ª¿®·»¼ ´»ª»´ ±º °®±¹®»·ª·¬§ò Ì¸» ¿²¿´§· ¿´± ¼·½«» ¬¸» ¾®±¿¼»® »½±²±³·½ ·³°¿½¬ ±º «½¸ ¿ ¬¿¨ò É» ½±²¼«½¬»¼ ¿² ·²°«¬ó±«¬°«¬ ¿²¿´§· ¬¸¿¬ ¸±© ¿ ´±½¿´ ·²½±³» ¬¿¨ ¸¿ ¿ ²»¬ °±·¬·ª» ·³°¿½¬ ±² ¬¸» ´±½¿´ »½±²±³§ò Ì¸· · ¾»½¿«» ¬¸» ®»¼«½¬·±² ·² ¸±«»¸±´¼ °»²¼·²¹ ø¬¸» ·²¼·ª·¼«¿´ ¬¿¨ ´·¿¾·´·¬§÷ · ¼·®»½¬»¼ ¬± ´±½¿´ ¶±¾ò Ó±¬ ¸±«»¸±´¼ °»²¼·²¹ · ¼·®»½¬»¼ ¬± ¬¸» ´±½¿´ »½±²±³§ò Ì¸» ÏÎÉ ¬¿¨ ½¿«» ´±½¿´ ¸±«»¸±´¼ ¬± ®»¼«½» °»²¼·²¹ ±² ²±²ó´±½¿´ ¹±±¼ ø»ò¹òô ·°¸±²»÷ ¬± ¼·®»½¬´§ «°°±®¬ ´±½¿´ ¶±¾ ø»ò¹òô ¬»¿½¸»®÷ò ß² ·²°«¬ó±«¬°«¬ ³±¼»´ · ¬¿¬·½ô ¿²¼ ·¬ º¿·´ ¬± ¬¿µ» ·²¬± ¿½½±«²¬ ¸±© ¸±«»¸±´¼ ©·´´ ®»¿½¬ ±ª»® ¬·³» ¬± ¬¿¨ ´»ª»´ò ß ´±½¿´ ·²½±³» ¬¿¨ ©·´´ ½¿«» ±³» ¸±«»¸±´¼ ¬± ½±²·¼»® ´±½¿¬·²¹ ÎÈÉÊÔÙØúÔÉÄÑÔÐÔÉÊmØÔÉÕØËÆÔÉÕÔÏÎËÎÈÉÊÔÙØÉÕØËØÖÔÎÏéÕØÉÜÅÔÊÈÏÑÔÒØÑÄÉÎÛØÜÍËÔÐØ ³±¬·ª¿¬·±² º±® ¸±«»¸±´¼ ¬± ³±ª»ô ¾«¬ ¬¸» ¬¿¨ ©·´´ º¿½¬±® ·²¬± ¬¸» ¼»½··±²ó³¿µ·²¹ °®±½» º±® ¸±«»¸±´¼ º¿½·²¹ ¿ ®»´±½¿¬·±² ¼»½··±² ¿²§©¿§ò Ì¸»®» · »ª·¼»²½» ¬¸¿¬ ¸±© ©¸»² ¬¿¨ ®»ª»²«» · «»¼ ¬± º«²¼ ·³°®±ª»¼ °«¾´·½ »®ª·½» ¬¸» º¿ª±®¿¾´» ·³°¿½¬ ±² ´±½¿¬·±² ¿²¼ °®±¼«½¬·±² ¼»½··±² °®±ª·¼»¼ ¾§ ¬¸» »²¸¿²½»¼ »®ª·½» ³¿§ ³±®» ¬¸¿² ½±«²¬»®¾¿´¿²½» ¬¸» ¼··²½»²¬·ª» »ºº»½¬ ±º ¬¸» ¿±½·¿¬»¼ ¬¿¨»ò Ø±«»¸±´¼ ©·¬¸ ½¸·´¼®»² ©·´´ ½±²·¼»® ¬¸» ¯«¿´·¬§ ±º ¬¸» ´±½¿´ ½¸±±´ ©¸»² ½±²·¼»®·²¹ ©¸»¬¸»® ±® ²±¬ ¬± ´±½¿¬» ·² ¬¸» Û«¹»²» ¿®»¿ò Ì¸» ¾®±¿¼ ½±²½´«·±² ±º ¬¸» ´·¬»®¿¬«®» · ¬¸¿¬ ¬¿¨°¿§»® ¿®» ³±®» ©·´´·²¹ ¬± °¿§ º±® °«¾´·½ »®ª·½» ·º ·¬ · ½´»¿® ¬¸¿¬ ¬¸» ¸·¹¸»® ¬¿¨» ©·´´ §·»´¼ ¾»¬¬»® °«¾´·½ »®ª·½»ò Ì± ½±²ª·²½» ¬¸» ½±³³«²·¬§ ¬± ª±´«²¬¿®·´§ ·²½®»¿» ·¬ ´±½¿´ ¬¿¨ ¾«®¼»²ô ¬¸» ½¸±±´ ³«¬ ¾» ¿¾´» ¬± ¸±© ¬¸¿¬ »¼«½¿¬·±² ±«¬½±³» ¿®» °±·¬·ª»´§ ½±®®»´¿¬»¼ ¬± ·²½®»¿»¼ °»²¼·²¹ò Preliminary Estimate of Local Income Tax Revenue February 9, 2011 Page 2 A SSUMPTIONS Ì¸» Ý·¬§ ±º Û«¹»²» · ½±²·¼»®·²¹ ·º ·¬ ¸±«´¼ ¿µ ¬¸» ª±¬»® ¬± ·³°±» ¿ ´±½¿´ ·²½±³» ¬¿¨ ±² Ý·¬§ ®»·¼»²¬ò Ì¸» Ý·¬§ ¸¿ ²±¬ ¼»½·¼»¼ ¬¸» ¬®«½¬«®» ±º ¬¸» ¬¿¨ô ± ÛÝÑÒ±®¬¸©»¬ ¸¿¼ ¬± ³¿µ» ¿ ª¿®·»¬§ ±º ¿«³°¬·±²ò É» ´·¬ ¬¸» µ»§ ¿«³°¬·±² ¸»®»ô ©·¬¸ ¿² »¨°´¿²¿¬·±² ±º ¸±© ¬¸»§ ¿ºº»½¬ ®»ª»²«»ò Identifying taxable income Ú·¹«®» ï ¸±© ¿ ¾¿·½ ½¸»³¿¬·½ ±º ¼·ºº»®»²¬ ¬»®³ «»¼ ¿²¼ ¸±© ¬¿¨°¿§»® ¼»¬»®³·²» ¬¸»·® ´·¿¾·´·¬§ ·² Ñ®»¹±²ò Ì± ¼»¬»®³·²» ¬¿¨ ´·¿¾·´·¬§ô ¬¿¨°¿§»® º·®¬ ¼»¬»®³·²» ¬¸»·® ¹®± ·²½±³»ô ¬¸»² º±´´±© ¬¸» ¬»° ±² ¬¸» º»¼»®¿´ ¬¿¨ º±®³ ¬± ½¿´½«´¿¬» ¬¸»·® ¿¼¶«¬»¼ ¹®± ·²½±³» øßÙ×÷ò Ì¸» ßÙ× · «»¼ ¿ ¬¸» ¾¿· º±® ¼»¬»®³·²·²¹ ¬¸»·® Ñ®»¹±² Ì¿¨¿¾´» ×²½±³» øÑÌ×÷ô ©¸·½¸ · «»¼ ¬± ¼»¬»®³·²» ¬¸» ¹®± ¬¿¨ò Ì¸» ¹®± ¬¿¨ · ®»¼«½»¼ ¿º¬»® «¾¬®¿½¬·²¹ ±«¬ »¨»³°¬·±² ½®»¼·¬ º±® ¼»°»²¼»²¬ô ¼·¿¾·´·¬·»ô ¿²¼ ®»¬·®»³»²¬ ·²½±³» ½®»¼·¬ ¬± ¼»¬»®³·²» ¬¸» ¿½¬«¿´ ¬¿¨ ´·¿¾·´·¬§ò Figure 1: Computation of Personal Income Tax in Oregon Federal Gross Income - Federal adjustments to income (e.g., IRA deduction, student loan interest deduction) = Federal Adjusted Gross Income (AGI) + Oregon Additions - Oregon Subtractions - Oregon Deductions (e.g., itemized deductions) = Oregon Taxable Income (OTI) x Tax Rates + Interest on Installment Sales = Gross Tax - Credits (e.g., exemptions for dependents, retirement income credit) = Tax Liability Oregon Personal Income Source: Oregon Department of Revenue. 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³»®»´§ ¹»²»®¿¬» ¿ ®±«¹¸ ¿°°®±¨·³¿¬·±² ±º º»¼»®¿´ ¾»²»º·¬ò Í»»ô º±® »¨¿³°´»æ ß¼¿³ Ú±®»¬ô Ñ½½«°¿¬·±²ô Î»°«¬¿¬·±²ô ¿²¼ Ì¿¨ Ý±³°´·¿²½»ô Ö«²» îððî øÐ¿½·º·½ Ô«¬¸»®¿² í Ë²·ª»®·¬§ É±®µ·²¹ Ð¿°»®÷å ËòÍò Ù»ÏØËÜÑüÚÚÎÈÏÉÔÏÖî××ÔÚØæÕÎiÊïÎÉ÷·´·²¹ ×²½±³» Ì¿¨ Î»¬«®²á ×ÎÍ Ò»»¼ Þ»¬¬»® É¿§ ¬± Ú·²¼ Ì¸»³ ¿²¼ Ý±´´»½¬ Ì¸»·® Ì¿¨»ò É¿¸·²¹¬±²æ ËòÍò Ù»²»®¿´ ß½½±«²¬·²¹ Ñºº·½»ô Ü±½ò Ò±ò ÙÙÜóéçóêçô Ö«´§ ïïô ïçéçå ËòÍò Ù»²»®¿´ ß½½±«²¬·²¹ Ñºº·½»ò Ì¿¨°¿§»® Ý±³°´·¿²½»æ Î»¼«½·²¹ ¬¸» ×²½±³» Ì¿¨ Ù¿°ò É¿¸·²¹¬±²æ ËòÍò Ù»²»®¿´ ß½½±«²¬·²¹ Ñºº·½»ô Ü±½ò Ò±ò ÙÙÜóçëóïéêô ïççëò Preliminary Estimate of Local Income Tax Revenue February 9, 2011 Page 5 ®»¹¿®¼·²¹ ¸·º¬ ·² ¸±«»¸±´¼ ¾»¸¿ª·±® · º®±³ Ó«´¬²±³¿¸ Ý±«²¬§ò Ú®±³ îððí ¬± îððë ©¸»² Ó«´¬²±³¿¸ Ý±«²¬§ ´»ª·»¼ ¿ ïòîëû ·²½±³» ¬¿¨ ±² ®»·¼»²¬ô ¬¿¬»©·¼» ¬¿¨ ®»ª»²«» ¼¿¬¿ ¸±© ¬¸¿¬ ¸·¹¸ó·²½±³» ¸±«»¸±´¼ ©»®» ¿¾´» ¬± ¿ª±·¼ °¿§·²¹ ¬¿¨» º®±³ ¬¸¿¬ ¶«®·¼·½¬·±²ò Ü«®·²¹ ¬¸±» ¬¸®»» §»¿® ¬¸» ¸¿®» ±º ¬¿¬» ·²½±³» ¬¿¨» º®±³ ¸±«»¸±´¼ ©·¬¸ ¿² ßÙ× ¹®»¿¬»® ¬¸¿² üîëðôððð º®±³ Ó«´¬²±³¿¸ Ý±ÈÏÉÄÙØÚÑÔÏØÙmÉÕØËØÆØËØ ×ØÆØË ¿ºº´«»²¬ ¬¿¨°¿§»® ·² Ó«´¬²±³¿¸ Ý±«²¬§ ¬¸¿² ·² §»¿® ©·¬¸±«¬ ¬¸» ¬¿¨ò Ì±¬¿´ ¬¿¨» º®±³ ¿ºº´«»²¬ ¬¿¨°¿§»® ©»®» ïíòëû ´» ¬¸¿² ¸¿¼ ¾»»² °®±¶»½¬»¼ò Ì¿¾´» ï ¸±© ¬¸» »¬·³¿¬»¼ ²«³¾»® ±º ¬¿¨ ®»¬«®² ·² ¬¸» Û«¹»²» Ý·¬§ ´·³·¬ ¾§ ßÙ×ô ¬±¬¿´ ¬¿¨¿¾´» ·²½±³» ¾§ ßÙ× ´»ª»´ô ¿²¼ ¬¸» »¬·³¿¬»¼ ¬±¬¿´ ¬¿¨¿¾´» ·²½±³» ¿º¬»® «¾¬®¿½¬·²¹ ±«¬ ÐÛÎÍ ¿²¼ º»¼»®¿´ °»²·±²ò ×¬ ¸±© ¬¸» ½¿´½«´¿¬»¼ ¿ª»®¿¹» ¬¿¨¿¾´» ·²½±³» ¿²¼ »ª¿·±² ¿²¼ ¿ª±·¼¿²½» ®¿¬» º±® ¼·ºº»®»²¬ ßÙ× ´»ª»´ò Table 1: Estimated Number of Tax Returns and Average Taxable Income in Eugene City Limits, by AGI Level Taxable Income w/ Average SeparateTotal Taxable Number of Joint Number PensionsTaxable Evasion and Number of Income Returnsof ReturnsRemovedIncome Avoidance Rate AGI Level Returns($1,000s) ($1,000s)($) ($000) JoinSinle tg <096545051510050%50% 0-55,6639534,7105,8425,48196850%50% 5-106,3399375,40231,51129,5674,66450%50% 10-155,8711,1764,69553,66450,3538,57650%40% 15-205,5091,3404,16974,41869,82712,67540%30% 20-254,9001,3303,57088,29082,84316,90730%20% 25-304,3391,3163,02394,80688,95720,50420%10% 30-353,7341,2872,44795,21189,33623,92210%5% 35-403,3001,2912,00996,23190,29427,3635%5% 40-452,8811,2661,61593,99188,19230,6145%5% 45-502,5701,2541,31692,87787,14733,9065%5% 50-604,5052,5521,953186,446174,94238,8315%5% 60-703,7352,4851,250182,777171,50045,9185%5% 70-802,9492,189760167,669157,32453,3575%5% 80-902,3171,845472150,456141,17360,9185%5% 90-1001,7901,493297132,831124,63569,6185%5% 100-2505,5294,811718645,159605,353109,4905%8% 250+847730117469,708440,727520,4508%8% Limits:67,74528,70539,0402,661,8862,497,64836,869 In Cit y Oregon Personal Income Tax Statistics, Characteristics of Filers. Source: Oregon Department of Revenue. 2010 Edition, Tax Year 2008. Note: Only totals are available at the city level. To estimate AGI, OTI, and number of returns by income levels, we assumed Eugene resembled Lane County. Projecting tax liability beyond 2011 Ì¸· ¿²¿´§· ¼±» ²±¬ °®±¶»½¬ ¬¿¨ ´·¿¾·´·¬§ ·²¬± ¬¸» º«¬«®»ò Ì¸· °®±¶»½¬·±² · ¾¿»¼ ±² îððè ¬¿¨ ®»ª»²«» ¼¿¬¿ò Ù·ª»² ¬¸» ¸·º¬ ·² ¬¸» ²¿¬·±²¿´ ¿²¼ ¬¿¬» »½±²±³§ô ·¬ · ¼·ºº·½«´¬ ¬± º±®»½¿¬ º«¬«®» ·²½±³» ©·¬¸ ³«½¸ ½»®¬¿·²¬§ò Ì¸» Ñ®»¹±² Ñºº·½» ±º Û½±²±³·½ ß²¿´§· ÖØÏØËÜÉØÊÉÕØÊÉÜÉØiÊËØÇØÏÈØ×ÎËØÚÜÊÉÜÏÙÔÉ »¬·³¿¬» ¬¸¿¬ ¬¿¬»©·¼» ·²½±³» ¬¿¨ ©·´´ ´±©´§ ·²½®»¿» ¬¿®¬·²¹ ·² º·½¿´ §»¿® îðïðóîðïïô Ü×ÉØËÉÆÎÄØÜËÊÎ×ÏÎÖËÎÆÉÕô×ÉÕØÊÉÜÉØiÊ º±®»½¿¬ · ½±®®»½¬ô ¿½¬«¿´ ¬¿¨ ´·¿¾·´·¬·» º®±³ ¿ Û«¹»²» °»®±²¿´ ·²½±³» ¬¿¨ ½±«´¼ ¾» ¸·¹¸»® ¬¸¿² »¬·³¿¬»¼ ¸»®»ò ß½¬«¿´ ¬¿¨ ´·¿¾·´·¬§ ½±«´¼ ª¿®§ «¾¬¿²¬·¿´´§ º®±³ ¬¸· °®±¶»½¬·±² º±® ³¿²§ ®»¿±²ò Ñ®»¹±² ¸¿ »»² ·²½®»¿»¼ ª±´¿¬·´·¬§ ·² °»®±²¿´ ·²½±³» ¬¿¨ ®»ª»²«» ½¿«»¼ ¾§ ¬«®³±·´ ·² º·²¿²½·¿´ ³¿®µ»¬ ¿²¼ °¿¿¹» ±º Ó»¿«®» êêò ß²±¬¸»® º¿½¬±® · ¬¸¿¬ ·²½±³» º®±³ ½¿°·¬¿´ ¹¿·² · Preliminary Estimate of Local Income Tax Revenue February 9, 2011 Page 6 ª±´¿¬·´»ô ¿²¼ ¬¿¨ ®»ª»²«» º®±³ ½¿°·¬¿´ ¹¿·² · ½±²½»²¬®¿¬»¼ ·² ¬¸» ¸·¹¸ »²¼ ±º ¬¸» ·²½±³» ¼·¬®·¾«¬·±²ò ×º ¿ ¬¿¨ · ¬®«½¬«®»¼ ¬± ¼»°»²¼ ±² ¬¸» ¸·¹¸ »²¼ ±º ¬¸» ·²½±³» ¼·¬®·¾«¬·±²ô ®»´¿¬·ª»´§ ³¿´´ ½¸¿²¹» ·² »½±²±³·½ ½±²¼·¬·±² ½¿² §·»´¼ ´¿®¹» ½¸¿²¹» ·² ·²½±³» ¬¿¨ ½±´´»½¬·±²ò E CONOMIC IMPACTS OF THE TAX Ì¸» Ý·¬§ ¿µ»¼ ÛÝÑ ¬± ¼·½« ¬¸» »½±²±³·½ ·³°¿½¬ ¿ ´±½¿´ °»®±²¿´ ·²½±³» ¬¿¨ ³·¹¸¬ ¸¿ª» ±² ¬¸» ½±³³«²·¬§ ¿²¼ ¾«·²»»ò Economic development impacts Ì¸»®» · ¿² »¨¬»²·ª» ´·¬»®¿¬«®» ±² ¬¸» »ºº»½¬ ±º ¬¿¨ ®¿¬» ±² ¬¸» »½±²±³§ò Ó±¬ ±º ·¬ º±½«» ±² ¬¸» ´±½¿¬·±² ¼»½··±² ±º º·®³ ·² ®»°±²» ¬± ½±®°±®¿¬» ¬¿¨ ®¿¬»ò Ì¸» ´·¬»®¿¬«®» ¼·½«» ¬¸» ¾»¸¿ª·±® ±º º·®³ô ¾«¬ ·¬ ¿°°´·» ¬± ¸±«»¸±´¼ò Î»»¿®½¸»® ¸¿ª» º±«²¼ ¬¸¿¬ º·®³ ¬»²¼ ¬± »»µ ´±½¿¬·±² ©¸»®» ¬¸»§ ½¿² ±°¬·³·¦» ¬¸»·® ¿º¬»®ó¬¿¨ °®±º·¬ò Ô±½¿¬·±² ¼»½··±² ¿®» ¾¿»¼ ±² ³¿²§ º¿½¬±®ô ±²´§ ±³» ±º ©¸·½¸ ½±«´¼ ¾» ·²º´«»²½»¼ ¾§ ´±½¿´ ¹±ª»®²³»²¬ò Ô±½¿¬·±² ¼»½··±² ±º¬»² ¸¿ª» ³±®» ¬± ¼± ©·¬¸ ¬¸» º«²¼¿³»²¬¿´ ½¸¿®¿½¬»®·¬·½ ±º ¿ ®»¹·±²æ ·¬ ¿½½» ¬± ³¿®µ»¬ ¿²¼ º¿½¬±® ±º °®±¼«½¬·±²å ¬¸» ¯«¿´·¬§ ±º ·¬ ´¿¾±® º±®½»å ¬¸» ¯«¿´·¬§ô ½±¬ô ¿²¼ ¬¿¾·´·¬§ ±º ·¬ °«¾´·½ ·²º®¿¬®«½¬«®»å ¿²¼ ¬¸» ¯«¿´·¬§ ±º ´·º» ·¬ 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¬®¿²º»® °¿§³»²¬ô »½±²±³·½ ¹®±©¬¸ · ¼»¬»®®»¼ò Þ«¬ ©¸»² ¬¸» ®»ª»²«» · «»¼ ·²¬»¿¼ ¬± º«²¼ ·³°®±ª»¼ °«¾´·½ »®ª·½» ¬¸» º¿ª±®¿¾´» ·³°¿½¬ ±² ´±½¿¬·±² ¿²¼ °®±¼«½¬·±² ¼»½··±² °®±ª·¼»¼ ¾§ ¬¸» »²¸¿²½»¼ »®ª·½» ³¿§ ³±®» ¬¸¿² ½±«²¬»®¾¿´¿²½» ¬¸» ¼··²½»²¬·ª» »ºº»½¬ ±º ¬¸» ¿±½·¿¬»¼ ¬¿¨»ò Ñ²» ±º ¬¸» µ»§ °«¾´·½ »®ª·½» º«²¼»¼ ¾§ ¬¿¨» · »¼«½¿¬·±²ò Ø±«»¸±´¼ ©·¬¸ ½¸·´¼®»² ©·´´ ½±²·¼»® ¬¸» ¯«¿´·¬§ ±º ¬¸» ´±½¿´ ½¸±±´ ©¸»² ½±²·¼»®·²¹ ©¸»¬¸»® ±® ²±¬ ¬± ´±½¿¬» ·² ¬¸» Û«¹»²» ¿®»¿ò Ï«¿´·¬§ ±º »¼«½¿¬·±² ¸¿ ½´»¿® ·³°¿½¬ ±² ¬¸» ´±²¹ó¬»®³ ¸»¿´¬¸ ±º ¬¸» ´±½¿´ô ®»¹·±²¿´ô ¿²¼ ²¿¬·±²¿´ »½±²±³·»ò ß ®»½»²¬ ¬«¼§ º±«²¼ ¬¸¿¬ »ºº»½¬·ª» ¬»¿½¸»® ¸¿ª» ¿ ¼·®»½¬ ·³°¿½¬ ±² ¬¸» º«¬«®» »¿®²·²¹ ½¿°¿½·¬·» ±º ¬¸»·® ¬«¼»²¬ò ì Þ§ ³»¿«®·²¹ ¬»¿½¸»® »ºº»½¬·ª»²» «·²¹ ´±²¹ó¬»®³ô ¯«¿²¬·¬¿¬·ª» ¼¿¬¿ô ®»»¿®½¸»® º±«²¼ ¬¸¿¬ ¿ ¬»¿½¸»® ±²» ì ¬¿²¼¿®¼ ¼»ª·¿¬·±² ¿¾±ª» ¬¸» ³»¿² »ºº»½¬·ª»²» ¿²²«¿´´§ ¹»²»®¿¬» ³¿®¹·²¿´ ¹¿·² ±º ±ª»® üìððôððð ·² °®»»²¬ Preliminary Estimate of Local Income Tax Revenue February 9, 2011 Page 7 Ì¸» ¾®±¿¼ ½±²½´«·±² ±º ¬¸» ´·¬»®¿¬«®» · ¬¸¿¬ ¬¿¨°¿§»® ¿®» ³±®» ©·´´·²¹ ¬± °¿§ º±® °«¾´·½ »®ª·½» ·º ·¬ · ½´»¿® ¬¸¿¬ ¬¸» ¸·¹¸»® ¬¿¨» ©·´´ §·»´¼ ¾»¬¬»® °«¾´·½ »®ª·½»ò Ì± ½±²ª·²½» ¬¸» ë ½±³³«²·¬§ ¬± ª±´«²¬¿®·´§ ·²½®»¿» ·¬ ´±½¿´ ¬¿¨ ¾«®¼»²ô ¬¸» ½¸±±´ ³«¬ ¾» ¿¾´» ¬± ¸±© ¬¸¿¬ »¼«½¿¬·±² ±«¬½±³» ¿®» °±·¬·ª»´§ ½±®®»´¿¬»¼ ¬± ·²½®»¿»¼ °»²¼·²¹ò Income and employment impacts Ì± ¯«¿²¬·º§ ¬¸» ·³°¿½¬ ±º ¬¸» ·²½±³» ¬¿¨ô ÛÝÑ »¬·³¿¬»¼ ´±½¿´ »½±²±³·½ ·³°¿½¬ ©·¬¸ ×ÓÐÔßÒô ¿² ·²°«¬ó±«¬°«¬ ³±¼»´ò ×²°«¬ó±«¬°«¬ ³±¼»´ °®±ª·¼» ¿ ½±³°®»¸»²·ª» °·½¬«®» ±º ê ¬¸» »½±²±³·½ ¿½¬·ª·¬·» ·² ¿ ¹·ª»² ¬«¼§ ¿®»¿ «·²¹ ¼¿¬¿ ¿»³¾´»¼ º±® ²¿¬·±²¿´ ·²½±³» ¿½½±«²¬·²¹ °«®°±» ¿²¼ ³¿¬¸»³¿¬·½¿´ ®»´¿¬·±²¸·° ¬¸¿¬ ¼»½®·¾» ¬¸» ·²¬»®¿½¬·±² ±º ´±½¿´ ·²¼«¬®·» ©·¬¸ »¿½¸ ±¬¸»®ô ©·¬¸ ·²¼«¬®·» ±«¬·¼» ±º ¬¸» ®»¹·±²ô ©·¬¸ ¸±«»¸±´¼ ¿ «°°´·»® ±º ¬¸» º¿½¬±® ±º °®±¼«½¬·±²ô ¿²¼ ©·¬¸ º·²¿´ «»® ±º ¹±±¼ ¿²¼ »®ª·½»ò ÛÝÑÒ±®¬¸©»¬ ½±²¬®«½¬»¼ ¿² »½±²±³·½ ·³°¿½¬ ³±¼»´ ±º ¬¸» Ô¿²» Ý±«²¬§ ¿®»¿ «·²¹ îððè ×ÓÐÔßÒ ¼¿¬¿ ø¬¸» ³±¬ ®»½»²¬ ¼¿¬¿ ¿ª¿·´¿¾´»÷ò Ì¸» °®·³¿®§ ·²°«¬ ¿²¼ ¿«³°¬·±² ·² ¬¸· ¿²¿´§· ¿®»æ Ì±¬¿´ ·²½±³» ¬¿¨ ®»ª»²«» ¹»²»®¿¬»¼ º±® °»²¼·²¹ ±² ½¸±±´ · ¿«³»¼ ¬± ¾» üîé ³·´´·±²ò Ý±¬ »¬·³¿¬» ©»®» º±® ½¸±±´ °»²¼·²¹ ¿´´±½¿¬»¼ ¬± ¬¸» ¬¿¬» ¿²¼ ´±½¿´ ¹±ª»®²³»²¬ »¼«½¿¬·±² »½¬±®ò Ì¸· »½¬±® ·²½´«¼» ½±´´»¹»ô ¿ ¬¸»®» ¿®» ²± ³»¿² ¬± ·±´¿¬» Õóïî »¼«½¿¬·±²ò Ì¿¾´» î ¸±© ¬¸» «³³¿®§ ®»«´¬ ±º ¬¸» ·²°«¬ó±«¬°«¬ ³±¼»´ò Ì¸» ·³°¿½¬ ®»°±®¬»¼ ®»°®»»²¬ ¬¸» ¹®± »½±²±³·½ ·³°¿½¬ ¹»²»®¿¬»¼ º®±³ °»²¼·²¹ üîé ³·´´·±² ±² ´±½¿´ ¹±ª»®²³»²¬ ¿²¼ ¬¸» ·³°¿½¬ ±º üîé ³·´´·±² ±º º±®»¹±²» °»²¼·²¹ ¾§ ´±½¿´ ¸±«»¸±´¼ò Ì¸» ²»¬ ·³°¿½¬ ¿®» ¼·ºº»®»²½» ¾»¬©»»² ¬¸» ¬©±ò Table 2: Gross and Net Economic Impacts (millions of 2010 dollars) TotalPersonalJobs (full Type of ImpactExpenditureOutputIncomeandpart- Gross Impacts( Spending on Schools)$27.0$42.4$28.7648 Foregone Household Spending$27.0$25.3$7.9227 Net Impacts$0.0$17.1$20.8421 Ì¸» ·²°«¬ó±«¬°«¬ ³±¼»´ ¸±© ¿ ´¿®¹» ²»¬ ¾»²»º·¬ ¬± ¬¸» Ô¿²» Ý±«²¬§ »½±²±³§ ¾§ ·³°±·²¹ ¬¸» ·²½±³» ¬¿¨ò Ì¸· · ¾»½¿«» ¬¸» ®»¼«½¬·±² ·² ¸±«»¸±´¼ °»²¼·²¹ ø¬¸» ·²¼·ª·¼«¿´ ¬¿¨ ª¿´«» ±º ¬«¼»²¬ º«¬«®» »¿®²·²¹ò Ø¿²«¸»µô Û®·½ ßò ò ÒÞÛÎ É±®µ·²¹ Ð¿°»® ïêêðêò Ò¿¬·±²¿´ éÕØøÚÎÏÎÐÔÚçÜÑÈØÎ×õÔÖÕØËéØÜÚÕØËìÈÜÑÔÉÄ Þ«®»¿« ±º Û½±²±³·½ Î»»¿®½¸ô Ý¿³¾®·¼¹»ô Óßò Ü»½»³¾»® îðïðò õØÑÐÊóÜÄñ léÕØø××ØÚÉÊÎ×êÉÜÉØÜÏÙñÎÚÜÑéÜÅØÊÎÏøÚÎÏÎÐÔÚöËÎÆÉÕüéÔÐØêØËÔØÊúËÎÊÊ ë êØÚÉÔÎÏüÍÍËÎÜÚÕkæ ëéìóèîò ëØÇÔØÆÎ×øÚÎÏÎÐÔÚÊÜÏÙêÉÜÉÔÊÉÔÚÊ ×ÓÐÔßÒ ©¿ ¼»ª»´±°»¼ ¾§ ¬¸» Ú±®»¬ Í»®ª·½» ±º ¬¸» ËÍ Ü»°¿®¬³»²¬ ±º ß¹®·½«´¬«®» ·² ½±±°»®¿¬·±² ©·¬¸ ¬¸» ê Ú»¼»®¿´ Û³»®¹»²½§ Ó¿²¿¹»³»²¬ ß¹»²½§ ¿²¼ ¬¸» Þ«®»¿« ±º Ô¿²¼ Ó¿²¿¹»³»²¬ ±º ¬¸» ËÍ Ü»°¿®¬³»²¬ ±º ¬¸» ×²¬»®·±® ¬± ¿·¬ º»¼»®¿´ ¿¹»²½·» ·² ¬¸»·® ´¿²¼ ¿²¼ ®»±«®½» ³¿²¿¹»³»²¬ °´¿²²·²¹ò ß°°´·½¿¬·±² ±º ×ÓÐÔßÒ ¾§ ¬¸» ËÍ Ù±ª»®²³»²¬ô °«¾´·½ ¿¹»²½·» ¿²¼ °®·ª¿¬» º·®³ °¿² ¿ ©·¼» ®¿²¹» ±º °®±¶»½¬ô º®±³ ¾®±¿¼ô ®»±«®½» ³¿²¿¹»³»²¬ ¬®¿¬»¹·» ¬± ·²¼·ª·¼«¿´ °®±¶»½¬ô «½¸ ¿ °®±°±¿´ º±® ¼»ª»´±°·²¹ µ· ¿®»¿ô ½±¿´ ³·²»ô ¿²¼ ¬®¿²°±®¬¿¬·±² º¿½·´·¬·»ô ¿²¼ ¸¿®ª»¬·²¹ ¬·³¾»® ±® ±¬¸»® ®»±«®½»ò Preliminary Estimate of Local Income Tax Revenue February 9, 2011 Page 8 ´·¿¾·´·¬§÷ · ¼·®»½¬»¼ ¬± ´±½¿´ ¶±¾ò Ó±¬ ¸±«»¸±´¼ °»²¼·²¹ · ¼·®»½¬»¼ ¬±©¿®¼ ¬¸» ´±½¿´ ÏÎÉ »½±²±³§ò Ì¸» ¬¿¨ ½¿«» ´±½¿´ ¸±«»¸±´¼ ¬± ®»¼«½» °»²¼·²¹ ±² ²±²ó´±½¿´ ¹±±¼ ø»ò¹òô ·°¸±²»÷ ¬± ¼·®»½¬´§ «°°±®¬ ´±½¿´ ¶±¾ ø»ò¹òô ¬»¿½¸»®÷ò ER STIMATE OF TAX ATES AND LIABILITY Ì¸» Ý·¬§ ¿µ»¼ ÛÝÑ ¬± ³±¼»´ ¬¸» ¬¿¨ ®¿¬» ®»¯«·®»¼ ¬± ¹»²»®¿¬» üîêòê ³·´´·±² ¿ §»¿®ô ¿º¬»® ¬¿µ·²¹ ·²¬± ¿½½±«²¬ »ª¿·±²ô ¿ª±·¼¿²½»ô ¿²¼ ¿¼³·²·¬®¿¬·±² ½±¬ô «²¼»® º±«® ¼·ºº»®»²¬ ½»²¿®·±æ Í½»²¿®·± ßò Ú´¿¬ ¬¿¨ »¨»³°¬·²¹ ¸±«»¸±´¼ ©·¬¸ ¿² ÑÌ× «²¼»® üíëôðððô ©·¬¸ ¬¸» üíëôððð ´·³·¬ ¿°°´·»¼ ¬± ¿ ¶±·²¬ ®»¬«®² ·²½±³» ´»ª»´ò Í½»²¿®·± Þò Ú´¿¬ ¬¿¨ »¨»³°¬·²¹ ¸±«»¸±´¼ ©·¬¸ ¿² ÑÌ× «²¼»® üîëôðððô ©·¬¸ ¬¸» üîëôððð ´·³·¬ ¿°°´·»¼ ¬± ¿ ¶±·²¬ ®»¬«®² ·²½±³» ´»ª»´ò Ì¸· ÑÌ× ´»ª»´ ¿°°®±¨·³¿¬» ¬¸» ßÙ× ´»ª»´ ±º üíëôðððô ¿ºº»½¬·²¹ ¿ ¹®»¿¬»® °»®½»²¬¿¹» ±º ¬¿¨°¿§»® ¬¸¿² Í½»²¿®·± ßò Í½»²¿®·± Ýò Ù®¿¼«¿¬»¼ ¬¿¨ ³·®®±®·²¹ ¬¿¬» ³¿®¹·²¿´ ¬¿¨ ¾®¿½µ»¬ô ¾¿»¼ ±² ÑÌ× ¶±·²¬ ®»¬«®² ·²½±³» ´»ª»´ò Í½»²¿®·± Üò Ù®¿¼«¿¬»¼ ¬¿¨ »¨»³°¬·²¹ ¸±«»¸±´¼ ©·¬¸ ¿² ÑÌ× «²¼»® üíëôððð ©·¬¸ ¬¸» üíëôððð ·²½±³» ´·³·¬ ¿°°´·»¼ ¬± ¿ ¶±·²¬ ®»¬«®² ·²½±³» ´»ª»´ ©·¬¸ ¬¸®»» ¹®¿¼«¿¬»¼ ¬¿¨ ¾®¿½µ»¬ò Ì¿¾´» í «³³¿®·¦» ¬¸» ®¿¬» ¬¸¿¬ ©±«´¼ ¾» ¿°°´·»¼ ¬± »¿½¸ ¶±·²¬ ®»¬«®² ·²½±³» ´»ª»´ ò Ì¸» ¬¿¨ ®¿¬» ª¿®§ô ¸±©·²¹ ¸±© »¿½¸ °¿®¬·½«´¿® ¬¿¨ ¬®«½¬«®» ½±«´¼ ¹»²»®¿¬» ®±«¹¸´§ üîêòê ³·´´·±² º±® ½¸±±´ò Ì¸» ¬¿¾´» ¸±© ¾±¬¸ ¬¸» ßÙ× ¿²¼ ¬¸» »¬·³¿¬»¼ ÑÌ× º±® »¿½¸ ßÙ× ´»ª»´ò Ì¸» ¬¿¾´» ¸±© ¬¸» ßÙ× ¬± °®±ª·¼» ±³» ½±²¬»¨¬ ¿¾±«¬ ¹»²»®¿´ ·²½±³» ´»ª»´ô ¾«¬ ¬¸» ÐÎÙØÑiÊÉÜÅÛËÜÚÒØÉÊÜËØÜÍÍÑÔØÙÉÎîéôéÕØÉ¿¾´» ¿´± ¸±© ¬¸» °±®¬·±² ±º ¬¿¨°¿§»® ¬¸¿¬ ©±«´¼ ¾» «¾¶»½¬ ¬± ¬¸» ¬¿¨ò Ö±·²¬ º·´·²¹ ¸±«»¸±´¼ ¿®» ·´´«¬®¿¬»¼ ·² ¬¸» ¬¿¾´»ô ¿²¼ ·¬ · ¿«³»¼ ¬¸¿¬ »°¿®¿¬» º·´·²¹ ¸±«»¸±´¼ ©±«´¼ ¸¿ª» ¾®¿½µ»¬ »¯«¿´ ¬± ¸¿´º ±º ¬¸» ¶±·²¬ º·´·²¹ ¸±«»¸±´¼ò Table 3: Summary of scenarios raising $26.6 million for schools % of AGI OTI Taxpayers Scenario Rate Joint Income ($) Joint Income ($) Affected A 1.54% > 51,000 35,000 47% B 1.42% > 35,000 25,000 68% 0.73% < 10,000 6,100 C100% 1.02% between 10,000-22,000 6,101-15,200 1.33% > 22,000 15,201 Exempt < 51,000 35,000 0.94% between 51,000-74,000 35,001-50,000 D47% 1.32% between 74,000-106,00050,001-75,000 1.72% > 106,000 75,001 Preliminary Estimate of Local Income Tax Revenue February 9, 2011 Page 9 Ì¿¾´» ì ¸±© ¬¸» »¨°»½¬»¼ ´·¿¾·´·¬§ º±® ¸±«»¸±´¼ º·´·²¹ ¿ ¶±·²¬ ®»¬«®² º±® ·²½±³» ®¿²¹·²¹ º®±³ üëôððð ßÙ× ¬± üîëðôððð ßÙ×ò Ì¸» ¬¿¾´» ¸±© ßÙ× ´»ª»´ô »¬·³¿¬»¼ ÑÌ×ô ¿²¼ ¬¸»² »¬·³¿¬» ¬¸» ¬¿¨ ´·¿¾·´·¬§ º±® »¿½¸ ·²½±³» ´»ª»´ò Table 4: Estimated tax liability for a joint filing household Estimated Estimated Tax Liability for a Joint Filing Household AGI OTI C D A B $5,000 $1,800 $0 $0 $13 $0 $10,000 $6,000 $0 $0 $44 $0 $15,000 $9,900 $0 $0 $101 $0 $20,000 $13,900 $0 $0 $142 $0 $25,000 $18,100 $0 $0 $241 $0 $30,000 $21,500 $0 $0 $286 $0 $35,000 $24,800 $0 $0 $330 $0 $40,000 $28,000 $0 $398 $372 $0 $45,000 $31,100 $0 $442 $414 $0 $50,000 $34,300 $0 $487 $456 $0 $60,000 $40,700 $627 $578 $541 $383 $70,000 $47,600 $733 $676 $633 $447 $80,000 $54,700 $842 $777 $728 $722 $90,000 $62,100 $956 $882 $826 $820 $100,000 $70,500 $1,086 $1,001 $938 $931 $250,000 $190,300 $2,931 $2,702 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ö×Ø×ÊÛÐöÇÎØÊ×Æ×ÎÇ×ÉÓÎÙÐÇØ×ÖÇÎØÓÎÕÖÍÊÙÍÏÌ×ÎÉÛÈÍÊÃ×ØÇÙÛÈÓÍÎÌÊÍÕÊÛÏÉÉÙÔÍÍÐÓÏÌÊÍÆ×Ï×ÎÈÙÔÓÐØ ÎÇÈÊÓÈÓÍÎÛÎØÉÌ×ÙÓÛÐÎ××ØÉ×ØÇÙÛÈÓÍÎ úÇØÕ×Èú÷ØÇÙÛÈÓÍÎ Attachment F Comparison of Election Date Impacts May 2011 November 2011 Impact on Unknown based on information Unknown, based on information Furlough Days available to date. Funds would be available to date. Funds would be used to reduce furlough days to the used to reduce furlough days to the extent possible. extent possible. Impact on Unknown based on information Unknown based on information Teacher Layoffs available. Funding would be used, in available. Funding would be used, in and Class Size part, to support teaching positions part, to support teaching positions and and thereby reduce teacher layoffs thereby reduce teacher layoffs and and minimize increases in class size. minimize increases in class size in the 2012-2013 school year and beyond for the life of the tax. Districts would need more information about when revenue would be available in order to determine whether bridging strategies could be used to fund teaching positions in 2011-12. Effective Date Tax may be effective as of January 1, Tax may be effective as of January 1, of Tax 20112011, although it would be unlikely that a tax approved at the November election date could be implemented in time for tax year 2011 collections (as of January 1, 2012). An alternative would be to have the tax effective as of January 1, 2012, which would leave sufficient time for implementa- tion activities prior to collection date for the tax. RevenueIf tax is effective as of January 1, If tax is effective as of January 1, Availability 2011, payments from taxpayers 2011, payments from taxpayers would be due April 15, 2012; would be due April 15, 2012; preliminary anecdotal information preliminary anecdotal information from City of Portland indicates 50-from City of Portland indicates 50- 60% of revenue would be received in 60% of revenue would be received in April and the rest in October when April and the rest in October when taxpayers who filed for extensions taxpayers who filed for extensions pay their taxes pay their taxes. If tax is effective as of January 1, 2012, revenue would be received in April 2013. May 2011 November 2011 Implementation Should provide sufficient time to Will not provide sufficient time to of Tax implement tax so that 2011 tax year implement tax so that 2011 tax year returns can be filed and payments returns can be filed and payments made by January 1, 2012 made by January 1, 2012 (or maybe not even by April 15, 2012). In order to implement the tax for the 2011 tax year, it might be necessary for the school districts to pay for some implementation activities prior to knowing the results of the election. An alternative would be to make the tax effective as of January 1, 2012, which would leave sufficient time for implementation activities. Cash Flow/ School districts would need to This would depend on when the tax Bridging Issues explore bridging strategies, such as becomes effective, and whether it can for Schools spending reserves or using tax be implemented in time for 2011 tax anticipation notes, in order to year collections. minimize reductions in teaching positions and furlough days in 2011- 12, in anticipation of receiving the revenue. Boards may need to use conservative estimates regarding revenue projections until actual revenue levels are determined. Other Measures Many special district board positions; Nothing currently scheduled; on the Ballot potential bond measures for both 4J deadline to file is late August/early and Bethel school districts September May 2011 November 2011 Impact on The 4J and Bethel Boards will The 4J and Bethel Boards will School District determine how to proceed with a determine how to proceed with a Bond Measures bond measure after City Council bond measure after City Council decides whether to refer an income decides whether to refer an income tax measure to voters and selects an tax measure to voters and selects an election date. election date. School districts have until March 17 School districts have until March to to file a measure with Lane County file a measure with Lane County Elections for the May ballot. Elections for the May ballot and until early September to file a measure for A May bond measure would allow 4J the November ballot. to take advantage of a federal program that would save $17-23 A November bond measure would million for taxpayers, allow the mean that 4J would not receive the district to not increase tax rates for $17 million of federal subsidy for general obligation bonds, and allow their borrowing, general obligation for construction over the 2011 bond tax rates would increase, and summer months. several construction projects would be deferred until 2012. Election Cost Will depend on what else is on the Will depend on what else is on the ballot. Likely to be in the range of ballot. Could be as high as $290,000, $50,000 to $100,000, including including voters’ pamphlet and voters’ pamphlet and neutral neutral information statement if this information statement were the only thing on the ballot Engagement of Current engagement level is high and If schools made reductions in their Advocates a May election would keep that FY12 budgets, that might discourage momentum going parents and advocates from engaging in the tax discussions, or it might demonstrate more clearly the impacts of school funding reductions and provoke more parents and advocates to get involved. Form of Council Resolution placing measure on ballot Resolution placing measure on ballot Action in February. Ordinance implement-and ordinance implementing tax can ing tax approved by council before be approved simultaneously, with ballots are mailed. deadline of mid-August. Attachment G Questions to Assist in Development of Council Motion Q1: Does the Council want to refer a local income tax to the May ballot? If yes, continue to next question. If no, decide when to have the November ballot discussion or decide to not move forward with a City income tax for schools. Q2: Does the Council want to (a) establish the specific tax rate(s) and raise whatever amount of funds produced by the rate(s); or (b) raise a specific amount of money, regardless of the tax rate? specific tax rate If, choose Resolution option A and go to question 3A. specific amount of money If, choose Resolution option B and go to question 3B. Specific Tax Rate Q3A:Resolution Option A – :Does the Council want (a) a flat tax; or (b) a graduated tax? If a flat tax, what is the amount of exempt income and what is the tax rate? If a graduated tax, what are the income brackets and what are the tax rates for each bracket? Specific Amount Raised Q3B:Resolution Option B – , with Adjustable Rate: What is the amount to raise? Does the Council want (a) a flat tax; or (b) a graduated tax? If a flat tax, what is the amount of exempt income? Staff will estimate at the time that the ordinance comes back to council the tax rate needed to achieve “total” If a graduated tax, what are the brackets and how much difference should there be between tax rates for different brackets? Staff will estimate at the time that the ordinance comes back to council the tax rates needed to achieve “total” Q4: Does the Council want to know whether both school districts would like the Council to place the measure on the May ballot? If no, then remove section 8 of the resolution.