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CROUCHING
CRIME, HIDDEN TAX
Lane County is asking voters to double their county taxes on the Nov. 7 ballot. The county has failed to pass tax increases a dozen times in the last decade. But county officials hope Measure 20-114, a complicated $29 million income tax, will succeed with a quarter-million-dollar PR effort, confusing ballot title and dire rhetoric about crime and county finances. But in order to fly, the tax increase faces many questions, including is it needed? Fair? A priority? And will it pass? Needed? Lane County officials say they desperately need the tax increase, arguing that the county has a high crime rate and needs more jail beds, prosecutors and deputies. But the crime rate in Lane County is falling, not increasing. From 1996 to 2004, the violent crime rate fell 11 percent and the property crime rate fell 15 percent, according to FBI data. Compared to other law enforcement agencies serving more than 100,000 people, Lane County's crime rate is relatively low, according to FBI statistics from 2004. The violent crime rate here ranked 365th out of 398 such agencies, and the property crime rate ranked 358th. Compared to other Oregon counties, Lane County's violent crime rate ranked 16th out of 36 in 2003. The property crime rate ranked 8th highest. The violent crime rate in Salem's Marion county was 35 percent higher, the property crime rate 37 percent higher. In Portland's Multnomah County, the violent rate was 74 percent higher and the property crime rate 43 percent higher than Lane County. Lane County officials argue that they have far fewer deputies, prosecutors and jail beds than they need. The county has lost some of these in a decade of budget cuts. But the case for more staff isn't clear. Lane County has about the same number of law enforcement employees per capita as Marion County; its closest match in Oregon. Even while supposedly understaffed, Lane County has seen its violent crime arrest rate increased by 20 percentage points from 1999 to 2002. In terms of prosecutorial budget, Lane County ranked 19th highest out of 109 similar sized district attorney agencies in 2001, the latest year federal comparative data were available. At the jail, the rate of overcrowding releases has fallen almost in half since 1997. County officials have long claimed that their budget has no fat left. But for next year, the Sheriff's Office budgeted a 22 percent increase in its helicopter expense budget to $645,000 a year. Supposedly overworked prosecutors managed to let District Attorney Doug Harcleroad take a recent six month unpaid sabbatical. But the county's overall budget does face a structural deficit. Three decades ago, Lane County was flush with federal timber revenue. Even with low taxes and a much smaller population, the county had enough to employ a workforce that in 1980 was 17 percent larger than today's. The collapse of that timber revenue saw that workforce fall in half by 1985. From there it crawled back up to a peak of 1,553 employees in 2000, but has since fallen about 3 percent. The passage of Measures 5 and 50 capping property taxes has limited the ability of the county to increase property taxes without forcing Eugene and other jurisdictions into compression and lost revenue. That leaves the county stuck with the lowest property tax rate in the state. So the county has turned to an income tax. Fair? The county's proposed individual income tax is progressive, with the rich paying a higher proportion of their income than the poor, according to county estimates. A family with a federal adjusted gross income of $45,000 living in a house assessed at $123,600 would pay an estimated $113 in tax, about a quarter of 1 percent of their income. A family earning $250,000 a year living in a house assessed at $350,000 would pay a share of their income four times greater, about 1 percent or $2,541. But renters, who are generally poorer, pay more under the county tax than home owners, who are generally better off and benefit from a credit for 75 percent of county property taxes under the formula. If the family making $45,000 was renting, its tax burden would almost double to about half a percent of income or $197, even after a flat $30 renter credit. Higher income earners who itemize deductions could also enjoy the advantage of reducing their tax burden by as much as a third by deducting the county taxes off their federal and state income taxes. In general, people, such as retirees, with low incomes and high property values will pay far less than those with high incomes who rent their housing. Government retirees won't pay anything on their government retirement income because of state law and court rulings. About 84 percent of the county tax will be paid for by individuals and about 16 percent by businesses and corporations. But big property owners like Hynix and Weyerhaeuser could end up paying little or no additional tax. Corporations get the same deduction credit for their county property taxes off their income taxes. Hynix, currently the county's largest taxpayer, would get a credit of about $700,000 a year. Hynix's income is not publicly disclosed, but the corporation apparently operated with little or no income in recent years when chip prices collapsed. Even in years when they are profitable, Oregon corporations are able to avoid paying much of their state income taxes through loopholes and accounting gimmicks. Two-thirds of Oregon corporations pay only the $10 minimum income tax. One big loophole is allowing Oregon corporations to pay income tax only on the income of the products they sell in Oregon. That's likely a big windfall for Hynix, which sends most of its chips to China where they're built into computers and electronics. Lane County hasn't worked out exactly how it will apportion business income, but it's apparently leaning toward the state formula for generous corporate tax breaks. Hynix has already been given big tax breaks by the county, even while the county has claimed it's desperate for new revenue. Conservative county commissioners have pushed to give Hynix more than $50 million in enterprise zone property tax breaks over the last decade. Last year, the county forced the city of Eugene to give Hynix an extra $10 million in tax breaks. Another fairness issue is city residents' subsidy of rural residents. County residents in Eugene and other cities already pay much higher property taxes for their urban police forces. But the county's rural residents have rejected modest tax increases to fund increased rural patrols. This measure would provide about $1.7 million a year to fund that rural law enforcement, largely by taxing city residents and businesses. About half the money in the measure will come from Eugene. The counter argument is that city dwellers also enjoy rural law enforcement protection when they go to rural areas. But the reverse is also true when rural residents come to Eugene and other cities to shop and work. A more persuasive argument is that Eugene and Springfield with their higher crime rates even out the disparity by demanding more of the expensive prosecution and jail services funded by the tax. But then again, city dwellers with their higher incomes will pay most of the tax anyway. Priority? Critics of past county crime tax measures have argued that they rely too much on expensive and less effective and humane enforcement with cops, prosecutors and jail beds rather than cheaper and more effective drug, alcohol, mental health, and juvenile treatment and education programs that strike at the root causes of most crime. County commissioners have said they plan to spend about two thirds of the $23.1 million in new program revenue from the proposed tax measure on crime enforcement rather than prevention. The county would spend about $10 million to add about 250 new jail beds. Law enforcement would get $3.5 million more to add about 13 new deputies and spend $1.2 million a year on an inter-agency drug team disbanded after voters restricted funding from property seizures. The DA would get about $2 million for more prosecutors. The biggest chunk of the crime prevention money (about $2.2 million) would go towards post-conviction probation and supervision programs. About another $2 million would go to drug, alcohol and mental health treatment programs. Another $1.6 million would go to youth education and wellness programs, such as the Healthy Start program for new parents and the school-based Reconnecting Youth program. Still, the measure is heavily focused on enforcement. Even though about 40 percent of the county jail's adult inmates have mental health problems, the measure includes more than 20 times more funding for adult jail beds than mental health treatment. Voters will also have to weigh the priority for the county measure against other needs for tax funding. Measures for schools, parks, library, firefighters, municipal jail and police officer funding in various cities are also on the ballot. Another question is whether the jail services the county is offering would be better done at the municipal level. Springfield has a measure for a new municipal jail on the ballot. Eugene could build and operate a similar jail. But south Eugene County Commissioner Peter Sorenson said such small jails are expensive, don't offer treatment programs and are less safe for jailers, inmates and the community. Will it Pass? Lane County's proposed income tax appears more likely to fall on its face than fly at the ballot box. Early polls that the county paid for indicated insufficient support for passing a county tax increase. Perhaps recognizing this, county staff plan to hold off on creating many of the forms and administrative rules for the new tax until after the election. Waiting could mean a scramble during holiday season, but if the measure fails, they won't have wasted their time. But the biggest hidden advantage the county's Measure 20-114 may have is confusion. The ballot title doesn't say anything about a tax increase. It reads, "Lane County Charter Amendment to Limit Income Tax." That's because county commissioners chose to refer a charter amendment limiting the income tax to 2 percent rather than actually referring the tax to voters. The commissioners said they will not impose the tax unless the charter amendment passes. Sorenson said commissioners made that choice to allow any future problems in the complicated measure to be fixed easily without another ballot measure. But that still may leave voters scratching their heads over their ballots. To vote against a tax increase, they will have to vote no on the charter amendment "to Limit Income Tax." While claiming it has little money for basic services, the county is spending $250,000 of taxpayer money to convince voters to pass higher taxes. Much of the advertising and information campaign selectively provides information supporting the county's contention that it is underfunded to deal with crime problems. State law prohibits using taxpayer money in political campaigns, but the law is rarely enforced. Sorenson says he understands the concerns about the expenditure but argues that voters need the education. He said the county has been careful to not break the law and keep the publicity "informational and not advocacy." "This measure is not perfect," Sorenson admits. The county is not in a "crime crisis" and the measure should include more corporate taxes and crime prevention, he said. If he wrote the measure by himself, "it would be different," he said. Sorenson said he could have waited for Bill Fleenor to take his commissioner seat in January, ushering in a commission that would support a more progressive tax measure. The delay would also provide greater certainty about whether the large federal timber subsidy for the county will continue. But Sorenson said the measure is better than previous county crime tax proposals, and any improvements wouldn't be worth the delay in addressing the county's "dire" finances. "There are some very serious problems that need to be addressed and at the very least, this is a very good start." Eugene Mayor Kitty Piercy takes a similar view of Measure 20-114. She said she pushed hard to include more money for treatment and education in the measure, warning that it wouldn't pass without the support of Eugene's prevention-minded voters. She said she still worries that the promised prevention funding will be diverted to jails if the measure passes. "I'm taking a chance." Piercy said she hopes county conservatives who in the past have made "disparaging comments" about Eugene will recognize that "they need our votes." "I don't think it's a perfect solution," Piercy said. "But I do encourage the people of our community to support it because it won't happen without us."
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