Lane County at a Crossroads
How we got in this predicament
BY BILL FLEENOR & SCOTT BARTLETT
Teddy Roosevelt has been quoted as saying: “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.” The citizens of Lane County, through their elected representatives, are at a crossroads — do we continue to do the same thing and expect different results? Or do we try something different, thus opening up the possibility of success? Albert Einstein often quipped that you cannot expect to solve a problem using the same set of solutions that created the problem.
Now, a little history — Oregon voters passed a sweeping series of Constitutional Amendments in the 1990s (Measures 5, 47 & 50) during a period of time of tax revolt, where certain fiscal conservatives espoused the concept of “starving the beast” — government spending. These measures established state constitutional limits on Oregon’s property taxes on real estate. For example, under Measure 5, property taxes for purposes other than school funding were capped at $10 per $1,000 assessed value. Collectively, the three tax limitation measures transferred primary responsibility for school funding from local property taxes to state income taxes, established permanent property tax rates for each local government and ensured only “assessed value” of property could increase at a rate of 3 percent per year. By the way, virtually all county and municipal governments obtain their discretionary funding through property taxes.
Lane County, like many federal timber-dependent counties, having received significant timber revenue from decades of timber harvest off of federal lands, had not increased our property tax rates maximally, and as such was caught with an artificially low property tax rate as compared to those counties and municipalities that did not rely upon timber receipts. For example, Lane County’s permanent tax rate is $1.27 per $1,000 assessed value as compared to Multnomah with a $5.27 rate or Eugene with a $7.01 rate or Springfield with $4.47. Many of the federal timber revenue-dependent counties are below $2, e.g., Douglas at $1.08; Coos at $1.04 and Curry at $.58. In stark contrast, Wheeler County, a non-federal timber dependent county, has a permanent tax rate of $8.48.
To further exacerbate Lane County’s financial woes, its federal timber revenue was drastically reduced commencing in 1990 from harvesting about 4 billion board feet per year to about 100 million board feet per year in 1998, remaining at that rate to current times. The rapid reduction in federal timber harvest was a result of a federal court ruling in 1991 that the 1976 National Forest Management Act mandates all federal forests be managed for maximum biodiversity and multipurpose use — this was the beginning of the end of the century-old “green gold rush” for Oregon.
Fortunately for Oregonians, back in the early 1990s, our congressional delegation was Johnny-on-the-spot and was able to enact federal legislation in the form of a Safety Net Payment to Counties Act, wherein the Oregon federal timber-dependent counties would receive a guaranteed payment in lieu of timber receipts equal to 85 percent of the base year’s harvest between 1986 to 1990. The catch: the payments would decline 3 percent each year until 2003, at which time the funds would stop. However, once again, our federal delegation saw the writing on the wall and passed the Secure Rural Schools and Community Self Determination Act of 2000, which guaranteed federal timber payments in lieu of timber harvest revenue for six additional years. This money ran out last year in the fall of 2006, and like many of the other federal timber-dependent counties, Lane County scrambled to either find additional revenue (such as an income tax) or be prepared to perform drastic cuts to personnel and services. Miraculously, at the last minute of the last hour in May 2007, the federal government extended the timber payments for one additional year.
Yet another contributing factor, Oregon’s Public Employee Retirement System, started in the 1940s and modified from time to time, has become an ever-growing financial obligation to the taxpayers of Oregon as progressively more employees reach retirement age, bringing with them a guaranteed minimum return on their investments, along with a diminishing public workforce to help defray those escalating costs. Lane County is required under state law to participate in PERS and is responsible for its proportionate cost to maintain the fund and participate in any additional bonding necessary to guarantee adequate reserves. At this time, Lane County is paying debt service on an approximately $69 million PERS bond.
Lane County is currently challenged to reconcile all of these above external events forced upon it over the last several decades, against current needs and demands of providing essential services to its citizens while at the same time providing fair and just compensation to its work force. These events have created the perfect financial storm threatening to despoil our county’s community landscape. In fact, many knowledgeable economists believe Lane County represents the canary in the proverbial mine shaft — we will be one of the first Oregon counties to be fatally hit by this confluence of events.
Do we try to solve our current problem with old solutions or take no action? Or do we try something different and new in hopes of reaching equilibrium between our ability to pay and providing essential public services. Lane County has been struggling with a financial imbalance since Measures 5, 47 and 50 were enacted, wherein it receives slightly more than a 3 percent increase in property tax revenue each year, offset by operational costs that increase at about 7 percent; the imbalance of 4 percent is called the structural deficit.
The way Lane County has been routinely dealing with this deficit has been to eat away at reserves and reduce the size of its employee work force. In fact, over the last 27 years, Lane County has reduced employee numbers from a high of about 1,885 to a current level of about 1,485 employees. During this same time, the county, the size of the state of Connecticut, has grown in population from about 265,000 to its current 340,000 citizens. It has also cut $18 million from its budget, reduced essential public services and consumed most of its reserves. But like any organization that is mandated by law to provide essential public services, there is a minimum level of staffing required below which vital service delivery may be jeopardized.
Most of Lane County’s employees work under contract and through many years of bargaining (compelled by state law) have achieved increasing compensation packages consistent with similar-sized public organizations. Included in these bargaining contracts are the obligations inherent in the PERS system and mandated by the state. However, public employees should not be made scapegoats for sweeping state tax reforms and federal timber harvest levels outside of our/their control.
The immediate quintessential decision for Lane County citizens is — do we continue to downsize our county by progressively laying off more county employees and reducing or eliminating many essential public safety and health programs in the process? Or do we strive for creative adjustments based upon broad consensus with the goal of preserving maximum possible levels of both vital services and the important family wages jobs which deliver those services? Regardless of any ultimate outcome, many of our neighbors and friends will be affected, some much worse than others.
Working from the same set of fiscal facts, let us all participate in crafting a shared vision for our beautiful but endangered Lane County.
Bill Fleenor, (email@example.com) is a Lane County commissioner. Scott Bartlett (firstname.lastname@example.org) is a Lane County Budget Committee member.