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City Service Fee Examined

What are we actually debating here?

Opponents of the city service fee on Eugene’s May ballot say it is a poor budgetary path for a laundry list of reasons: Its proceeds can fund a wide swath of expenditures or even be held in reserves; it’s unfair to poor people just above the low-income cut-off; it’s unfair to small businesses; it will charge a struggling nonprofit just as much as a Walmart; and EWEB’s board could vote not to collect it, leaving the city in a bind. Five out of eight Eugene city councilors oppose the fee.

The pro- and anti-fee campaigns agree: The services that City Manager Jon Ruiz proposes cutting if the proposed city service fee fails are essential, and they shouldn’t be axed. Programs like CAHOOTS and the Buckley House sobering station save the city money in addition to their vital humanitarian purposes. But what’s truly at issue in the city fee vote is whether the services will disappear if citizens vote against the fee. Proponents such as the Eugene Cares campaign say the fee is necessary to preserve them. Opponents say there are other options.

The city manager is projecting a $5.9 million shortfall in the city’s General Fund for fiscal year 2014. The General Fund is used to pay for general services like police and fire, libraries, human services, city facilities, public works, economic development and reserves. The fee would enable the city to collect up to $10 per household and $30 per business location per month, but the precise amount is not set. It mandates a review by City Council after five years, but it does not have a mandated termination date.

Critics, including anti-fee campaign CiTJAW, say the language in the city fee ordinance leaves a lot to the imagination. While it requires an exemption program for low-income residents, it doesn’t define low-income or how the program will work. The ordinance also says that the fee fund can be used for “(a) paying for fire and police services, homeless and human services, and quality of life services such as libraries and pools, (b) establishing reserves for these purposes, and (c) the billing, collection and administration of the city service fee.” What doesn’t fall under this definition? According to opponents, not included are the costs the city should be cutting before it axes essential services.

A method of collecting the fee is also not included. Proponents suggest using EWEB, but EWEB spokesman Joe Harwood says that proposals to use EWEB to collect taxes come up about every five to 10 years, and EWEB’s commissioners have always declined. He also says that turning off water and electricity as a consequence of not paying doesn’t seem appropriate to EWEB, which raises another question: What are the consequences of refusing to pay? Proponents of the fee don’t have an answer.

Fee opponent and former city councilor Bonny Bettman McCornack says funding general services with a special fee while using the General Fund to pay for big, lower-priority capital projects like a new City Hall puts the city on an irresponsible financial path. The city has between $9 million and $11 million in facility reserves for a new City Hall, and a council majority could move those funds back into the General Fund.

Councilor Claire Syrett says that’s not a good strategy because then the city would have used up the money that has been set aside for City Hall, still have the General Fund deficit and not have money to build a City Hall, and that is not a healthy way to manage a city. Bettman McCornack says that a responsibly written bond measure for a new City Hall could take care of that problem by giving Eugeneans the City Hall they want with a funding mechanism that expires automatically and is not subject to property tax limits.

Other councilors have suggested selling Laurelwood Golf Course, tapping end-of-year balances, cutting funding for the Riverfront Urban Renewal District, lowering the budget for economic development, spending part of the Reserve for Revenue Shortfall fund and combining administrative services of local governments.

While the city manager says he will present the Budget Committee with a fiscal year 2014 budget that doesn’t fund the services on the chopping block, the Budget Committee’s job is to alter budgets it receives in ways that are in the best interest of the city. It can add funding for important services, and it can spend a small portion of the city’s large reserves while it takes a better look at the city’s budget.