Eugene Weekly : News : 2.11.10

A Local 66/67?
Local taxes on rich/corporations could pass
By Alan Pittman

With tax increases on the rich and big corporations passing in Lane County by 2-1 margins, state Ballot Measures 66 and 67 could provide a road map for local tax reform.

About 80,000 people in Lane County voted for the taxes versus about 45,000 opposed. 

An income tax measure failed in Lane County in 2006 with 51 percent voting “no.” That local measure (20-114) was not a tax on the rich, but a broad income tax that would have hit the poor particularly hard.   

 State Measure 66 increased income taxes only on households earning more than $250,000 a year. But Lane County’s complicated tax measure in 2006 would have doubled the county’s tax burden on a family that was renting a house with only $45,000 in income.   

A Lane County version of Measure 66 with a similar 2 percentage point tax increase on household incomes above $250,000 would bring in about $21 million a year, based on state tax data. About 99 percent of households would pay nothing in new taxes.

Lane County could use the money. Federal and state revenues to the county fell $14 million last year, and federal timber payments are scheduled to end entirely in two years.

Without the federal funds, “your county’s ability to provide critical life protection services, such as jail beds and safe roads, will be radically degraded,” County Commissioner Bill Fleenor said during the State of the County address last month.

The county has a more progressive majority on the County Commission now. That majority may be more open to an income tax on the rich than the previous conservative majority, which crafted the income tax that hit the middle class. 

Eugene could also use more tax revenue. The city cut $12 million last year and is contemplating possible layoffs to close a $7 million budget deficit next year. 

“Last year the recession worsened, and we were among the hardest hit in the country. Our unemployment, hunger, crime and homelessness rates soared. Our budget shortfall expanded, and tax returns shrank,” said Mayor Kitty Piercy in her State of the City address last month.

A Eugene-only tax similar to Measure 66 would generate about $14 million a year. Based on historic voting patterns, support in Eugene for the state measures was likely even higher than the 2-1 county vote. Precinct results for the election aren’t in yet.  

One option for the city or county would be to pass revenue from a local Measure 66 on to schools. School district 4J still suffers from crowded classrooms, and the Bethel School District may still stay at four days a week, even with the added revenue from the state measures.

School District 4J Superintendent George Russell told the district Budget Committee last month that even with Measures 66 and 67 passing, the district could face cuts of $12 million in the next fiscal year. That’s after cutting $29 million last year.

Eugene previously gave 4J about $30 million from a local property tax levy for schools. That funding measure wasn’t continued after a court ruled it violated Measure 5 restrictions. But Measure 5 restrictions are limited to property taxes only. A local income tax wouldn’t have that problem.

Local governments could also pass or refer a local version of Measure 67’s increase in the $10 corporate minimum tax. A Lane County corporate tax similar to Measure 67 could raise roughly $10 million a year, based on state data. A Eugene-only Measure 67 would raise roughly $6 million a year.

Local Chamber of Commerce and big business interests would doubtless oppose local versions of Measures 66 and 67. But given the 2-1 county vote for the tax increases despite millions of dollars in anti-tax TV ads, their arguments don’t appear to affect many local voters.

The biggest obstacle to Measure 66/67-style local tax reform may not be voters but local government fixated on property taxes. The Eugene City Council recently reviewed a long list of possible funding alternatives for fixing downtown. Staff described the list as “comprehensive,” but it never mentioned progressive income or corporate taxes as an option, and the city councilors didn’t either.