Questions abound on public safety tax.
The Lane County commissioners say the need for more public safety services is clear. But raising new taxes to pay for them prompts questions that so far have mired the elected officials in disputes.
What kind of tax should be sought? Who would bear the brunt of it? Should the commissioners enact a tax, or let the voters decide? And if so, when? Has the public been convinced of the need? And can the five commissioners agree on what to do?
The board is looking for answers next week. After hearing from the public in two sessions on Tuesday, they'll meet Wednesday for what Chairwoman Anna Morrison hopes will bring a definitive result. She said she wants to find a plan that all five commissioners can support, or else drop the public safety matter entirely.
"We need to show leadership as to whether or not we're going to let the system continue to erode, or show the leadership to solve it," she said.
A fundamental question is which tax, if any, to pursue. Three have been discussed: A retail sales tax, a tax on business sales, and a tax on business profits.
Based on their constituencies and political philosophies, the commissioners have reason to prefer one or another over the rest. But tax experts say that, regardless of the tax, the outcome can be the same - the general public eventually takes the hit.
`People have this idea, `Let's tax corporations, because it's not going to hurt me,' ' said David Guenther, an accounting professor at the University of Oregon. "But somehow, that tax gets passed on to someone."
With a retail sales tax, the impact on the consumer is immediate. He or she sees and pays the tax whenever they buy products.
But even with a gross receipts tax - a tax on a company's overall revenues - the consumer often ends up paying, Guenther said.
A business faced with a gross receipts tax may pass the expense on by simply raising the price of its goods or services.
Likewise, businesses faced with a tax on profits - the corporate income tax - may raise prices or cut costs, which could include salary cuts or layoffs, Guenther said.
Guenther suggested that a key difference between the proposed taxes is how easy it would be to collect them. It would be easier to identify and collect the sales tax on things sold in Lane County than to determine how much of a company's profits were generated locally versus outside the area, he said.
The difference in impact between a gross receipts tax and a corporate income tax depends on the business, said Bill Conerly, an independent economic consultant in Lake Oswego.
A business with low sales and high profits dislikes an income tax, while a business with high sales and low profits dislikes a gross receipts tax, he said.
Economists generally agree that a sales tax hits poor people the hardest, because the tax takes a larger percentage of their income.
But going after the corporate income tax or gross receipts tax could push businesses out of the county, Conerly said.
"That doesn't mean there's going to be a sudden exodus, or taxes are the only things (businesses) look at," he said.
"But if somebody is weighing Lane County, those folks sitting on the fence will feel prodded to move out of Lane County," he said
However, Lane County's status as a regional hub - comparatively isolated from other urban centers - could discourage business flight, said Paul Warner, the state's legislative revenue officer. Warner analyzes tax revenues for the state.
While Portland-area businesses can move easily between Washington and Multnomah counties, Warner said, Lane County's size and the absence of major population bases along its boundaries mean less "border effect" - that is, businesses moving just across the border to escape the tax.
Of the three taxes, the corporate income tax would have the most economic impact on the state or a county such as Lane, Warner said. The tax slows the rate of investment by new or existing businesses because it reduces the rate of after-tax returns.
"You tend to affect your relative competitive position compared to other regions or states," he said.
Revenue from this tax is also the most unstable, because it rises and falls with a company's profits, Conerly said. On the other hand, the reliability of the sales tax is based in part on taxing things that everybody buys. And the more these "staples" are taxed, the more it hurts lower-income people, he added.
These are some of the questions facing a board split between liberal and conservative approaches to governance. Can they reach consensus?
Commissioner Pete Sorenson said it's unwise to constrain an issue as important as public safety to the board's political philosophies.
"We all represent the people of Lane County," Sorenson said. The better question, he added, is "does the public see this as a big enough problem to consider changing the way we finance it?"
PUBLIC SAFETY HEARINGS
The Lane County commissioners may seek more taxes for more public safety services. The upcoming meetings:
Daytime public hearing: 1:30 p.m. Tuesday in Room 104, Building 19, Lane Community College, 4000 E. 30th Ave.
Evening public hearing: 6 p.m. Tuesday in Room 104, Building 19, Lane Community College.
Commissioners' meeting: 9 a.m. Wednesday in the Public Services Building, 125 E. Eighth Ave., Eugene.
East Lane town hall: Commissioners Bill Dwyer and Faye Stewart will hold a public meeting in Springfield on proposed public safety tax measures, 7 p.m. to 9 p.m. Nov. 7 at the Willamalane Adult Activity Center, 215 West C St., Springfield.
West Lane town hall: Commissioner Anna Morrison will hold a public meeting in Junction City on proposed public safety tax measures at 7 p.m. Nov. 8 at Junction City's Scandia Hall, 680 Greenwood St.
For more information: Call 682-4203.