The Corvallis City Council plans to ask the voters to renew the city’s local option property tax levy and likely will put a measure on the November 2018 ballot.
That was the consensus reached at a work session Thursday at the Madison Avenue Meeting Room. Although councilors cannot make decisions at a work session, the direction was clear, and city staff will prepare motions for a future regular session to note the group’s intent.
It’s also clear that the city will not take a local sales tax to the voters. Renewing the levy and a sales tax were the two revenue-raising options that rose to the top after 22 meetings of a budget task force and further discussions before the city’s Budget Commission.
Ward 9 Councilor Hal Brauner, who chaired the task force, spoke at length on why he felt a sales tax was not the answer for the city.
“It’s a divisive issue,” Brauner said. “What should and should not be exempted? Will it drive sales to neighboring cities? How do you collect sales tax on internet sales?”
Brauner also noted that with internet sales likely to increase, taxing sales of local businesses could hurt their competitiveness.
The next big question for the council to answer is how much money to try to raise. A staff report from Finance Director Nancy Brewer used a scenario that called for raising $6.7 million per year, with $4 million being what the services that are paid for by the current levy will cost, plus $2.5 million to improve police and fire staffing levels and approximately $250,000 for park maintenance.
Councilors appeared comfortable with that mix of services, although many want to see more specifics before coming up with a dollar figure.
The city got into the levy business in May 2011, passing Measure 02-74, which raised $1.9 million per year for three years by taxing property owners 45 cents per $1,000 in assessed value. It passed by a 65-35 percent margin.
In November 2013, voters passed Measure 02-86, which is producing $3.5 million per year for five years using a rate of 82 cents per $1,000. It passed by a 52-48 percent margin.
Raising $6.7 million per year with just a levy would require a rate of $1.50 per $1,000, or $450 per year for the owner of property assessed at $300,000. That annual cost to property owners was $135 under the first levy and $240 under the second.
Meanwhile, the city’s general obligation bond from the 2001 open space initiative will be retired in June 2019, the same month as the current levy expires. Thus, the 24.5 cents per $1,000 on the bond could be added to the 82 cents with the result that an assessment of $1.06 could be imposed without increasing anybody’s taxes.
But that $1.06 only will produce about $4.5 million per year, so councilors either will have to lower their expectations regarding how much money to try to raise or boost the assessment and take a chance with the voters.
November 2018 was chosen as the target date because the Corvallis School District is planning a facilities bond for the May 2018 election. The city could wait until May 2019, but Brauner noted that if the voters said no in November, that would leave time for a second vote on a smaller package in May, still two months before the current levy expires.
The Corvallis School District operations levy easily won voter approval (more than 75 percent favored it) in November 2016, and a Benton County public safety and health levy renewal received 69 percent of the vote on Tuesday. But it should be noted that both of the levies were renewed at the same rate, $1.50 per $1,000 for the schools and 90 cents per $1,000 for the county.
One resident, Book Bin owner Bob Baird, spoke Thursday during the community comments section of the work session. He strongly supported taking the sales tax off the table and encouraged councilors to take a formal vote to make sure the business community could trust that it was a dead issue.