By Rob Pell
October 10, 2015
Many local business owners have been swamped with questions from customers about the city's upcoming vote on the Permanent Sales Tax. Several asked me to write an article explaining what is going on and why this proposed Permanent New Tax is so dangerous to Grants Pass. It's covered in 6 basic parts:
1) Subject To Misuse … Measure 17- 67 Can Be Changed Without A Vote Of The People
2) Only Permanent Sales Tax In Oregon … Devastating To Local Businesses
3) $1.6 Million Tax Increase ... Hard On Working People And Fixed Income Seniors
4) Hard On Property Values
5) What This Grants Pass Sales Tax Means For Josephine County Voters
6) What It Will Take To Defeat It … Voting NO
Part 1 … Subject To Misuse, 17- 67 Can Be Changed Without A Vote Of The People
The way the City Council instructed their attorney to write Measure 17-67, leaves the door wide open for their future manipulation. As the new Permanent Sales Tax is currently written, the Council can change or add to the types of goods and services to be taxed, without a vote of the people. It would take nothing more than the stroke of their pen. By leaving out critical language the Council made sure that this tax could be an ever-increasing income stream. Whenever the Council wants more of our money, they can add 1,000 or more additional businesses to the taxable list, without our vote.
In their push to get this passed, the Council added an artificial sweetener. They claim the jail utility fee they added to the water bill will go away if the Permanent Sales Tax is enacted. This fee pays for space in the county jail to be used for city inmates. However, their language was intentionally chosen to be very deceptive. The fact is that the water bill fee is already scheduled to expire, before this sales tax would even begin. But even if the Permanent Sales Tax passes, this or a future city council can bring back the water bill fee anytime they want, in any amount they choose, without a vote of the people.
As written, this new Tax becomes Permanent and if enacted, the people will have no ability to change, evaluate, or modify it. However, the City Council can significantly change or modify it on a whim, or whenever they create their next financial crisis. This should be of great concern. Measure 17- 67 is deceptively written.
2 … A Grants Pass-Only Permanent
Sales Tax Will Be
Devastating To The Local Economy
At the first public forum on the Sales Tax held at City Hall in late July, City Manager Aaron Cubic stated in his opening comments: “Grants Pass is perfectly set up geographically for a Sales Tax since Medford is so far away no one will go there to avoid paying a Grants Pass tax.” The vacant stares and dropped jaws on faces around the room told me that virtually every taxpayer in attendance was stunned. After the meeting, people's comments on Cubic's assessment included: “what a crock”, “disingenuous”, “stupidest thing I've ever heard”, and “total BS”. But hey, give the guy some credit. When its part of your $185,000 a year job to sell a terrible idea, sometimes you have to go out on a limb.
Cubic's ridiculous comments aside, if Grants Pass becomes the only city in Oregon with a Permanent Sales Tax it will practically guarantee that whenever people are in Medford they will buy more to avoid the GP tax - As it stands now, thousands of people from Josephine County travel every month to Medford for work and shopping. Costco alone draws hundreds a week. So without spending a penny more for gas (because they're already going to Medford) many people will buy a lot more when they are there to avoid paying the GP tax. Why wouldn't they? It's human nature to want to save money.
Also, folks who live halfway between here and Medford or Roseburg will avoid shopping in Grants Pass altogether. Keep in mind the multiplier effect. If someone living in Rogue River or Gold Hill goes to buy tires in Medford, we don't just lose the tire sale but lunch, gas, and peripheral shopping as well. The dollars that are spent in Medford will then be recirculated throughout their community when the employees of their tire store or restaurant go out and shop for their families. Grants Pass will lose out across the board.
If the City Council is too dense to understand that simple basic concept, they should have easily been able to understand that concept if the situation was reversed. The president of the Grants Pass Chamber of Commerce agrees that if Medford suddenly did something really stupid and passed a Medford-only Permanent Sales Tax, the Grants Pass business community would be jumping for joy because it would be a significant disincentive to shop in Medford - creating a boost to the Grants Pass economy.
Further, the average American family spends $700 to $800 for Christmas gifts. We can be sure that a far greater percentage of that spending will occur online or in Medford or Eugene if Grants Pass gets stuck with the only Permanent Sales Tax in Oregon.
Even a 5 or 10% reduction in sales will be more than some businesses can absorb. This will cause them to go under, creating more vacancies and higher unemployment – both of which would be horrible for the local economy and property values.
Part 3 … $1.6 Million Tax Increase Is Unfairly Structured And Hard On Most Working People
Moments before they voted to put this Permanent Sales Tax on the ballot, the City Council conveniently made sure that businesses the councilors and mayor are personally involved with would be Sales Tax exempt. This is probably why a recent city-wide telephone survey identified the City Council as the least trustworthy source of information about the Permanent Sales Tax.
Another component of Measure 17-67 is that the $1.79 property tax levy would be eliminated if the Permanent Sales Tax passes. The tax bills of giant property owners (like Charter Communications and MasterBrand) would be reduced. In fact, all ten of the city's largest property taxpayers would no longer pay the $1.79 public safety levy and all of them have businesses that will be Sales Tax exempt.
Instead, lower income working people and fixed income seniors will be forced to pay for this $1.6 million tax increase through a Permanent Sales Tax. For the approximately 65% of Grants Pass residents who are renters, there would be no savings whatsoever, just the burden of a Permanent Sales Tax.
Plus, Measure 17-67 will be very costly to implement. It will require at least 3-5 more city employees to administer. The average GP city employee now costs taxpayers $112,000/yr. This could add a half-million $ per year to the already bloated city payroll in salaries, benefits and PERS retirement.
Part 4 … Hard On Property Values
Mark Twain said: “Figures don't lie but liars figure.” City finance director Jay Meredith has come up with an isolated set of figures that attempt to prove that adding a Permanent Sales Tax and removing the $1.79 portion of the property tax bill will save homeowners money. Unfortunately Meredith's thinking is incomplete and very short-sighted. Unlike on Meredith's computer screen, home values in the real world are dependent on many factors.
In the US, the average rate for home appreciation in the last 25 years has been around 3%. So a $200,000 Grants Pass home might appreciate on average about $6,000/yr. However, Meredith refuses to even consider the possibility that if a local Permanent Sales Tax causes more businesses to go under, creating higher unemployment and vacancy rates, home values will undoubtedly be negatively impacted.
Very small reductions in the rate of appreciation will cause Meredith's promises of savings to collapse like a house of cards. What happens if the rate of appreciation falls from 3% to 2.5%? Instead of a $200,00 home going up in value $6,000/yr it will only increase $5,000/yr – a difference of $1,000. So instead of the $392/yr savings Meredith's calculator promises, the owner of a $200,000 home would actually lose $608/yr because of the negative impacts of the Permanent Sales Tax on the local economy. Unfortunately, if the local economy goes in the tank the situation will be far worse.
Further, in their attempt to “make friends and buy votes,” the City Council exempted so many service businesses (hair salons, auto repair, electricians, etc) from having to pay the sales tax, it's highly unlikely that the remaining businesses will collect enough tax to meet projections. A shortfall will invariably mean they'll be scrambling to re-do their list by year two and ad 1,000s more businesses to the taxable category … all without our vote.
Meredith is an isolated, ivory tower bean counter who obviously doesn't
get out in the real world very often. Like many bureaucrats his alleged
calculator savings will more than likely turn into real-world losses
for hard working taxpayers. Meredith and the City Council are
gambling with our jobs, businesses, homes and families.
Part 5 … What This City Tax Means For Josephine County Voters
Only residents of the city of Grants Pass get to vote on this. So if you live out in the county ... basically you're screwed. Even though you do much of your shopping in Grants Pass you will get no direct say in the outcome of this vote. It really amounts to taxation without representation.
Action you can take to help, you can share this article with everyone you know who lives in Grants Pass and encourage them to vote NO. Every vote counts.
Future action you can take: Rumor has it that City Councilors Dan DeYoung and Mark Gatlin as well as Mayor Darin Fowler will be running for County Commissioner in 2016. At election time remember that these are the people who tried to force this Permanent Sales Tax down your throat, without your vote. Vote for Commissioner accordingly.
Part 6 …. How To Defeat The Permanent Sales Tax … Vote NO And Share This Article With Your Friends And Neighbors by clicking on "Foreward This Article To a Friend" below.
City Hall is hoping to steal this election with a small voter turnout. That's the reason they rushed to get it on the ballot this year. They know that in off-year special elections turnouts are smaller and special interests can often pull a fast one. To protect yourself and your family, it is imperative that you vote this time. City Hall is tricky.
At the two public sales tax forums the overwhelming majority of the public spoke loud and clear against putting this on the ballot. At the first forum, five councilors didn't even have the decency to show up. At the second, five of them turned two deaf ears to the public testimony and voted to go ahead and put it on the ballot anyway, totally rejecting the public's wishes.
At this point we can only defeat this Permanent Sales Tax if enough citizens who truly care about their families, fairness, and the health of the local economy, mail in their ballots. We all must VOTE NO.
Measure 17-67 Is A $1.6 Million Tax Increase We Can't Afford
Bad For People, Bad For Business,
And Not What We Need For Our Struggling Economy
Registering to vote:
If you are new to the area or have moved into the Grants Pass city limits since the last election, you must register to vote or file a change of address.
It's easy to do. The forms are available at:
* The Josephine County Courthouse
* The DMV
* The Post Office
* If you have an Oregon driver's license or Oregon ID card you can go online: OregonVotes.Gov
Copies of this article and voter registration forms are available in Grants Pass at:
Blind Georges, Sunshine Natural Foods, The Kitchen Company, and Martin's Printing.
To support the effort to defeat the Permanent Sales Tax or for information about yard signs, window signs, oversize banners, bumper stickers, etc., please email:
© 2015 Robert Pell - All Rights Reserve