Airport debt plan will give tax relief.

Byline: ED RUSSO The Register-Guard

Eugene city councilors asked the city-owned airport Wednesday night to tighten its financial belt to give property owners a slight tax break.

By a 6-1 vote, councilors directed the airport to pay off construction debt with revenues and reserves instead of a property tax that has been levied for the past eight years.

Some councilors said the action would right an old wrong by ending a tax that wasn't supposed to have been levied in the first place. Others said the airport could afford to pay the bond debt without any lasting harm.

"We have the ability to pay it," Councilor Gary Rayor said, referring to airport revenues. "And it's the right thing to do."

Councilors also said they hoped that eliminating the airport levy would help clear the way for voter approval this month of two new levies - one to replace the downtown fire station; the other to operate the new main library and continue two branches.

"We are trying to help them on their property taxes when we are asking them for more money," said Councilor Betty Taylor.

But property owners probably won't notice the airport tax break, especially if they approve the two new levies.

That's because the airport bond levy has been small: a little more than 6 cents per $1,000 of assessed valuation, or $8.67 a year on a property assessed at $143,300, the city's average.

If voters approve the new levies, the property tax bill on an average assessed home will rise by $57 a year for the next four years, wiping out the savings caused by the end of the airport levy.

The potential impact on the airport is uncertain. The levy has collected $480,000 a year - money that airport officials now must find by delaying construction projects, receiving new money, or a combination of both.

For the past two years, councilors have toyed with the idea of forcing the airport to drop the bond levy, which has been controversial from the start.

Passed by voters after much debate in 1987, the $5.8 million bond was used to help build the airport terminal two years later. Opponents argued that airport users - not property taxpayers - should pay for the terminal.

At the time, officials vowed to use city funds to pay off the bonds and to levy property taxes only as a last resort. But in 1993, as it tried to find money to plug a revenue gap, the council levied the tax to pay off the bonds, an obligation that lasts until 2008. Critics said that broke faith with voters.

Airport officials have been adept at saving and building up a reserve, some of which is used to attract federal dollars for construction projects on a 9-to-1 basis. In other words, for every dollar from the airport, the Federal Aviation Administration kicks in $9.

At the start of the next fiscal year July 1, budget reserves and carryover funds from earlier years are expected to total $4.5 million.

Councilor Pat Farr was the lone dissenter. He said that forcing the airport to find $480,000 to pay the debt could jeopardize long-planned construction projects, such as a new runway for smaller planes.

After the council's vote, Airport Manager Bob Noble declined to say which projects, if any, might face delay. Federal funding and increases in airline traffic will play a role, Noble said. "We will have to take a look at what happens this next year," he said.