By Toni Webb
August 10, 2015
NewsWithViews.com
Don’t Tax my Honey-roasted Nuts
Not to be denied from spending their time coming up with new ideas to tax the citizens and drive away businesses, the City Councilors have decided to put up a permanent Sales Tax for vote on November 3rd of this year.
A fiasco from the ballot language (illegal) to the exempt items (example: nuts, unless they are honey-roasted or chocolate-coated) to the implementation (City will need way more than the two people budgeted to administer the program), the Sales Tax measure is doomed to fail. The City will need a whole new bureaucratic department (with high salaries, benefits, and PERS) to administer the program, which is guaranteed to be a nightmare for businesses.
To read the list of exemptions, click on Elections Information on the left-hand side of the City homepage.
The Oregon single-subject law states that a ballot Question must cover only one subject for which the voters will decide.
Question as approved by City Council:
Shall the City eliminate the $1.79 Property Tax levy, eliminate the Jail Utility Fee, and implement a 2.00% sales tax?
Clearly, there are three separate questions; some voters may be in favor of eliminating one or two of the levy/fee, but not implementing a sales tax. The Levy and Utility Fee will sunset in 2016 and 2018, respectively, with or without the Sales Tax measure.
Mark Bartholomew, as the city attorney should have advised the Council that, as-written, the measure violated the Oregon single-subject law for ballot measures, but he didn’t and submitted it to the City Elections Officer. Karen Frerk, as Elections Officer, should not have accepted it as written. Bartholomew is with a law firm in Medford and, if you’ve ever been to a Council meeting, you will see him looking bored and disengaged. He doesn’t step in when the Mayor and Council operate outside of Robert’s Rules of Order. Mayor Fowler is not supposed to attempt to influence a vote, but it often appears as though he is running the Council meetings with his sidekick, City Manager Aaron Cubic. (Note: Cubic’s salary is $186,000; Oregon Governor Brown’s salary is $98,600)
** Of the Ten Largest Current City Property Taxpayers within the Grants Pass City limits, eight will be exempt and pay no Sales Tax. Only two of those businesses will collect Sales Tax—but all ten businesses will no longer pay the $1.79 City Property levy tax! Essentially, eight of the ten will get a free ride.
•
Task Force Chair: Tom Brandes-retired doctor
• Pat Fahey-owner of Southern Oregon Sanitation-exempt
• Jeff Voight-Financial Planner
• Krisanna Albrecht-Women’s Crisis Support
Team
• Terall Blalock-Financial Services
• Carl Raskin-small business owner; beer and
wine sales-exempt
• Robert Hamlyn-Hellgate Jetboats, a seasonal
monopoly
• Roy Lindsay-retired
• Dan DeYoung-retired
• Jay Meredith-GP City Finance Director- exempt
employer
• Mayor Darin Fowler-business owner
• City Manager Aaron Cubic-exempt employer
“The Task Force was ‘tasked’ with recommending terms and requirements for a sales tax program…the recommended terms would be considered by the City Council and incorporated into a ballot measure for a vote of the City of Grants Pass electorate in November of 2015.” (July 27, 2015 minutes, City of Grants Pass, Summary of Taskforce Recommendations)
There was no discussion by the Council or the Task Force on “Is This a Good Idea?” Discussions focused on the sales tax percentage and the rebate amount to be given to businesses to help with administration. At the Public Hearing, the public response was overwhelming against a sales tax, but Council ignored citizen input and proceeded to vote ‘Yes’ to place the measure on the ballot. This was a reckless action by the City Council—the Local Option Property Tax levy and Jail Utility Fee will be eliminated, with no guarantee that the Sales Tax will bring in comparable revenue. The ballot summary does not state the revenue that will be generated because the City really has no idea of what the revenue will be. If Sales Tax revenue falls short, the City will then be forced to lay off Public Safety personnel and reduce services or tack on fees to make up the shortfall. The City refuses to promise that they will not put up another levy, add fees to the water bill, or go back to the voters for a Sales Tax increase. Jay Meredith, City Financial Officer, has repeatedly said that if the Sales Tax does not produce the expected revenue, the City will ask the voters to increase the Sales Tax amount. No city in California began with an 8% sales tax, but they got there over time.
Grants Pass will be known as the ONLY city in Oregon with a Sales Tax! This is the surest way to drive local customers out of town and keep out-of-town shoppers away from Grants Pass. Word will get out around the State and the nation that only one town in Oregon has a Sales Tax—the news will not focus on the amount, only that we are unique in having a Sales Tax.
Downtown businesses, already struggling, will immediately see a drop in businesses as local people begin to bundle purchases while outside the City. The Pro-Sales Tax people are going to be working hard to pass the Sales Tax, causing animosity and a divide among the citizens and the businesses. Already a letter to the Courier (8/2/2015) called for a boycott of business leaders who speak out against the Sales Tax. Conversely, the Sneak Preview Reader’s Poll named the Sales Tax as one of the Worst Government Ideas of the Year.
This is an undue hardship on small and medium-size businesses, the lifeblood of the American economy. Clerks will now have to make a determination on every item sold. The mom and pop convenience store will have to charge a sales tax on a hamburger (prepared food), but not on an apple (unprepared food). Imagine the lines while the cashiers figure this out. What a nightmare for the small business owner, who is already competing with larger stores, internet sales, and customers driving to Medford!
Early on, Jay Meredith, City Financial Officer, determined that 80% of the County shops in the Grants Pass city limits. These shoppers do not get to vote on the Sales Tax; many of them will decide to take their business elsewhere.
Businesses will have two choices:
•
Eat the Sales Tax and decrease profits
• Charge the Customer the Sales Tax and risk
losing their business
Businesses must report and remit Sales Taxes to the City on a quarterly basis and bookkeeping records will be subject to an Audit at any time by the City. Businesses will be able to keep a small amount of the Sales Tax to help cover the cost of collection and reporting. The formula is: 10% of the first $1000 in Sales Tax collected; 2% on the amount thereafter. The City will routinely examine purchases made with the Exemption Permit to verify permits are being used appropriately. Anyone found using a permit inappropriately:
•
Will owe tax due and a 50% penalty—even if there was no fraud
intended, per Jay Meredith
• Subject to permit being revoked
** The City will no longer be collecting Public Safety levy dollars from all Urban Growth areas when they are annexed into the city—how will the city pay for the required services of police and fire department? No additional Sales Tax will be coming in from the annexed areas.
** At the State level, next year the Legislature may vote to impose a $2.00 minimum property tax threshold on all counties in Oregon. Minimum wage may also go way up, making it impossible for small businesses in rural areas to stay open. As of January 1, 2016, many local businesses will be required to provide paid sick leave, effectively increasing their payroll expenses nearly 2%. Businesses also must allow employees to carry over unused sick time from one year to the next.
Who will be affected the most in our County by a Sales Tax?
Lower-income working people, small and medium-sized businesses, and the many charitable organizations will be the hardest hit. Well over 50% of the residents in Grants Pass are renters. Renters will not see a decrease in their rents, but their landlords will reap the benefits of no longer paying the $1.79 City Property Tax levy and Jail Utility Fee. Many of the middle and upper income County residents already go to Medford, Eugene, Portland, and San Francisco to shop. A sales tax will give these residents another excuse to shop outside the City or order online.
As small and medium-size businesses see their sales decline, along with the State-mandated increase in wages and sick leave, they will have to layoff employees, work more hours, or simply close their doors. The majority of the City’s largest employers are exempt from the Sales Tax, so the burden falls on the small to medium-size businesses.
Increased unemployment and poverty has been shown over and over to increase social problems, such as spousal abuse, drug use, crime, and the dropout rate. Last, but certainly not least, the small and medium-size businesses are significant contributors to the local charities, giving generously of their time and money. Charitable donations are one of the first cutbacks by businesses and individuals.
In a sales-tax-free state like Oregon, turning Grants Pass into a Sales Tax Island is a really bad idea. If Medford had a sales tax, it would be great for Grants Pass businesses and we’d all be celebrating!
|
|
There are alternatives to a Sales Tax. Grants Pass residents have shown a willingness to support public safety levies. Perhaps now is the time for Grants Pass to consider a permanent Public Safety District for voter approval and earnestly work on improving the economy and reducing crime in the city. Grants Pass has not effectively been working on economic development for several years. Meanwhile, nationally, the U.S. Job Creation Index maintained its record high of +32 in July for the third month in a row. (Gallup, 8/5/2015). Sales tax for Grants Pass will not translate into tapping a new source of income; primarily the Sales Tax will be directed at tapping into the existing City and County consumer income by a circuitous route. The loss of City property tax revenue, combined with a loss of business in the City, will end up hurting the economy and the community.
© 2015 Toni Webb - All Rights Reserve
Share This ArticleToni Webb is a native of Grants Pass, OR, specializing in internet marketing. After studying international relations at the International Peoples College in Denmark, she returned to Oregon to get her BA at Marylhurst University. She then went on to get her MBA and a Masters equivalent in Healthcare Management; she also earned a certificate in Change Leadership from Cornell. She has founded three nonprofits and served on the Boards of five nonprofits.
Toni was formerly on the City of Grants Pass Historic Buildings and Sites Commission and the Josephine County Spay and Neuter Fund Board. She is currently on the Josephine County Historical Society Board. She ran for County Commissioner in 2012, coming in second in the General Election with 46% of the vote. Running as a write-in for Commissioner candidate in 2014, Toni received nearly 5,500 votes. She continues to promote business development and job creation.
E-Mail: toniwebb3@yahoo.com
