New bill proposes state takeover

By Jane Stebbins, Pilot staff writer March 15, 2013 10:52 pm

A new piece of legislation introduced in the state House of Representatives Wednesday could allow state officials to commandeer city police, take taxing districts’ tax revenue — and take a bite out of everyone’s paycheck to provide public safety in the county.

The proposed bill, crafted by Rep. Chris Garrett (D-Lake Oswego), chair of the Rules Committee, was introduced Wednesday.

House Bill 3453 states that the governor can declare a county, such as Curry County, as being in a state of public safety fiscal emergency and force it to enter into agreements with other entities — namely cities and local taxing districts — to consolidate revenue, personnel, equipment and other resources to provide and fund public safety services.

To declare an emergency, the governor must have unanimous consent from four legislators, president and minority leader of the Senate and the speaker and minority leader of the state House.

All of that would be overseen, most likely, by officials sent from Salem to address the fiscal problem in a county.

Another part of the bill would allow the governor to put in place a local surcharge on top of existing income taxes to keep the county functioning.

How high that income tax would be isn’t clear in the proposed legislation, but it reads that it could be set at “a maximum rate.”

Oregon already has one of the highest state income tax rates in the nation, ranging from 5 to 9.9 percent, depending on how much money one earns. Wage earners making between $7,951 and $125,000 pay a 9 percent income tax. The median income of residents of Curry County is $39,787.

The proposed bill and the May 21 levy are interconnected in that if the ballot measure fails, the bill — if it makes it through the legislative process — could be implemented immediately. If the levy is approved, the bill probably will prove to be moot.

Officials believe it’s unlikely the state would declare a fiscal public safety emergency if the ballot measure is approved by voters. But if the measure does fail, and the state does take over, it will give the county 18 months to craft its own solution to its fiscal problems.

Commissioners considered presenting a sales tax to voters, but decided a property tax would be more palatable.

“It could be a 2 percent sales tax with no exemptions,” Itzen said. “It could be a 3 percent sales tax with exemptions. It could be Susan’s plan.”

County Commissioner Susan Brown’s proposed ballot question, nixed in favor of the current ballot question, would create a permanent law enforcement district, remove the Sheriff’s Office budget from the general fund and implement a tax to generate revenue to fund public safety. Voter approval would still be required under each of those scenarios, and others could be offered up in the interim.

Thoughts all over

The proposed bill, coincidentally introduced to the House of Representatives three days after County Commissioner David Brock Smith spoke to the Legislature, has County Commissioner David Itzen breathing a little easier.

“It’s reassuring in a sense, because I wasn’t sure they understood the severity of our situation,” Itzen said. “It was incumbent for the state to step in. The Legislature finally understands.”

“This adds the final piece necessary for county solvency by going beyond funding public safety, by consolidating other ‘units of government’ such as cities and other taxing districts into the county with their resources,” Smith said. “It also authorizes the only implemental tax the state has control of — an income tax — on our citizens to shore up any fiscal deficiencies that could exist.”

Brookings Mayor Ron Hedenskog thinks the proposed bill is “a tremendous opportunity for injustice on the part of the governor.

“This is an attempt to scare the voters into voting for the levy,” he said. “This is government in your face. I don’t want the governor stepping in; this is an intrusion into our business.”

“This would effectively take away our local control and allow the state to regulate the size and structure of local government,” agreed Smith, adding that voters can show Curry County is able to fix its problems by approving the ballot measure.

Brookings City Manager Gary Milliman is concerned about the broader implications he sees in the bill.

“If the concept behind HB 3453 is to provide a more efficient vehicle for service consolidation and offers incentives — or disincentives — to do so, that may be a good thing,” he wrote in an email. “If HB 3453 can be used to disincorporate cities, take city tax revenues and consolidate city services to prop up a bankrupt county government with a dysfunctional management structure … that is a major incursion into local government affairs and bad public policy.”

State Sen. Jeff Kruse (R-Roseburg) agrees.

“This is very scary,” he said. “It is an incredible overreach. We’ve been allowing the government to take over everything. This has got the governor’s fingers all over it. I cannot imagine he (Garrett) would have submitted it without the governor’s approval. And I just can’t imagine giving the governor this much power and authority over all things local.”

Milliman said the bill, as proposed, creates more questions than answers.

“Would the bill authorize the governor to consolidate all three cities and the county into a single unit of government? It appears so,” he wrote. “Consolidate two counties? Consolidate cities and school districts? Consolidate only public safety services provided by the units of local government?

“Does the bill authorize the governor ‘on behalf of a unit of local government,’ say Unit A and without Unit A’s consent, enter into an intergovernmental agreement with another unit of government — Unit B — to provide services within the jurisdiction of Unit A? I’m not sure.

“And I am not sure this only applies to public safety services, but may authorize the restructuring of other local government services to generate sufficient funds to provide for public safety.”

The bill brings up again the topic of consolidating services, which the city has examined over the years.

Curry County Sheriff John Bishop said he’s not surprised the bill has been presented, and Smith said after years of warning the populace, it might be the last — or only — option if the ballot levy fails.

“This is exactly what I have been saying for years,” Bishop said. “If we don’t fix this ourselves and quit the inner politics, the state is going to come in and force us to operate under their guidelines.

“They don’t want to do this, but we are leaving them no choice,” Bishop added. “They have stated it will cost us more and it will not be as efficient. If this happens, the cities won’t be happy, the county won’t be happy — and the citizens will get the service, but it will cost more. Let’s see what happens.”

Brown said she hasn’t decided how she feels about the bill, but realizes the state must look out for its interests: tax collection, property assessment and public safety.

“They’re covering the mandated portions: the Sheriff’s Office, jail beds, subpoenas,” she said. “And they could not impose (an income tax whose revenue would exceed) what the levy would bring in. They have to look at what’s the difference between what we can’t do and what we need (as a minimum). It might end up being pennies on the dollar.”

Kruse stated his frustration at the nonexistence of legislation that would allow a municipality to claim bankruptcy proceedings under Chapter 9 and reorganize. Curry County may have no current debt, he said, but it is still required to pony up for retirement benefits far into the future.

“But at the end of the day, if it (HB 3453) allows the county to keep doors open, it might be all we have,” he said. “We’re looking at a lot of options, but to turn it over to the governor? I don’t think so.”

Other legislators could not be reached for comment, but spokesmen in each office said they were busy examining the proposal.

Levy hardly dead

Itzen likes to remind voters there is a way to avoid all this: Vote “Yes” May 21.

His most recent persuasion tactic is to extrapolate the tax to a cost-per-day basis. The owner of a house assessed at $250,000 would pay $1.20 a day to provide law enforcement services, he said.

“Everyone I talk to, it’s almost unanimous,” he said. “I can do $1 a day, to ensure local control, adequate police protection, a reasonable response time for a 911 call. You think $1.20 a day; I think most people can do that. It won’t be a luxurious county budget, but it will be adequate.”

Hedenskog and Brown still don’t like it.

Hedenskog said he wished Smith, who crafted the proposed property tax levy, had limited it to two years, rather than five. 

“Two years would’ve been a compromise with Susan (Brown),” he said. “I could live with that (levy) for two years, but five? No. There’s one thing left to do, and that’s check the ‘No’ box.”

Although Brown had pushed for a permanent solution, a two year levy, he said, would have given the county commissioners time to create a law enforcement district — said by most law enforcement officials to take 18 months to a year — and develop a more palatable levy. All county commissioners favor that idea, but Itzen and Smith opted with the one on the ballot for an immediate “bridge” to a long-term solution.

“This whole levy is in your face; it is not what the voters asked for,” Hedenskog said. “They asked for the minimum. Let’s see what we can live with, and maybe we can levy more down the line.”

On one hand, Hedenskog blames the county commissioners for not offering voters a levy they feel is palatable. On the other, he feels voters have failed to educate commissioners on what they want.

“We’re trying to work out a safety levy that’s acceptable to voters,” he said. “Just because we vote ‘No’ doesn’t mean we’re stonewalling. It just means we haven’t been given a levy that’s acceptable to voters.”

Nothing — except perhaps Brown’s proposed law enforcement district and levy — would be permanent.

Income tax

No one has any idea how much income tax surcharge the state might implement. That primarily depends on the cost of what the state deems to be acceptable public safety levels.

Hedenskog feels an income tax would be an equitable way to spread the costs of all government.

“I would have no problem with that,” he said, noting that it depends on the level of public services the state feels Curry County needs. 

“The people in Curry County need to realize we’ve got to fund the court, juvenile department, the DA and a jail.”

“They’re going to use an income tax structure to make sure revenue comes in that’s needed in a county that refuses to, or is incapable of, ensuring the safety of its citizens. I didn’t understand if the Legislature understood the magnitude of the problem. Other bills (being presented) tell me they’re finally getting it.”

Brown said the bill isn’t as shocking as many thought it would be.

“The state is trying to keep its counties at minimal covered services,” she said. “It’ll be interesting. There are still a lot of steps that have to be looked at.”

Lawless in Curry?

If the bill makes it into law — which County Commissioner David Itzen believes has good odds —  it would be effective immediately and sunset in 18 months — unless the state opts to continue the income tax surcharge if the county is still fiscally unstable. The bill could also affect neighboring counties that are in the same fiscal boat.

Itzen said he doesn’t want to be in the same boat as Josephine County.

He was startled to read in a Grants Pass newspaper comments from local law enforcement, notably a letter penned by a police officer and lifelong resident who said “evil is winning here” since Josephine County voters turn down yet another property tax increase proposal last May.

“Grants Pass could become a lawless community,” Itzen said. “I think we’ll be the same way; People will (end up) leaving the community, people won’t come here. It’s a window into our future. That article’s gone all over the world about Grants Pass and Josephine County.

“There must be a state mandate to provide for basic law enforcement whether or not the citizens want to shoulder the responsibility,” he added. “You shouldn’t have to travel through a county and worry for your life. I value the independence of counties, but you have to weigh that against safety at minimum levels whether you travel in Multnomah or Curry counties.”

“There has to be some way of ensuring civility in counties that are unwilling to do something for themselves,” Itzen said. “This is finally a recognition by the Legislature that there’s a serious problem out there.”

“It’s too draconian,” Kruse said. “And the (county’s fiscal) world doesn’t end until July 1. I don’t have an answer. If I had an answer, we’d have done it. But that bill just scares the hell out of me.”