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Editorial: It may not be a tax problem

It’s a common complaint in today’s world: expenses grow faster than revenues.

It’s true right now in government and it’s true in businesses and individual households.

So what do we do about it?

In households, we look for ways to economize: scrambled eggs instead of steaks for dinner, put on a sweater and turn down the thermostat to save on the power bill, downgrade or cut the cable package, go out to dinner two times a month instead of four or five, look for less expensive insurance, refinance the house.

Businesses try the same kinds of economies: larger deductibles on their health insurance, replacing computers a little less frequently, squeezing the office supply budget as tightly as possible, lay off any employees and hope the ones still on the job can fill in the gaps.

Some things are harder to economize on: the water and garbage bills keep going up no matter what we do, so does the cost of food, even when you pinch pennies.

In government, the equation is a little bit different. When taxes aren’t meeting revenues, you can ask voters for a tax increase.

If you’ve shown your fiscal responsibility and argued persuasively enough, voters will support your plea.

Wasco County and the City of The Dalles are contemplating such actions soon in response to declining (or drying up almost all together, in the county’s case) revenues to support road maintenance.

A recent League of Oregon Cities report noted that many other Oregon cities are also struggling to cover road maintenance budgets, as well as water and sewer system repairs, for which The Dalles implemented major rate increases starting last year.

The Dalles most likely would not have been in such straits, as Port of The Dalles Commissioner Mike Courtney pointed out at a recent meeting, had the city heeded the priority recommendations made 20 years ago by a citizen panel during formation of the Columbia Gateway Urban Renewal Agency. That panel proposed infrastructure updates (including sewer and water) as a priority for urban renewal funding, but the city chose to focus almost exclusively on downtown blight.

To be fair, some infrastructure work has been done with a combination of urban renewal, grant and private funding: namely the Second Street renovation and the Union Street underpass. But water and sewer have largely been cut out of the equation.

Now The Dalles and other cities are moaning about the effect of property tax compression on their revenues. Compression is what happens when voters put a limit on how much taxing districts can charge per $1,000 property value ($10 total in the case of non-school districts) and then cap how fast value can increase to 3 percent a year, no matter how fast expenses and values actually grow. That’s the effect of tax limitation measures 5 and 50, passed by voters during the 1990s to put a rein on tax increases.

All things being equal, that’s a recipe for declining revenues. But all things aren’t equal and the picture is much more complex than that.

Which is why we have to call foul on this complaint in The Dalles’ and to some extent Wasco County’s case.

Voters have effectively passed multiple tax increases for both of those entities.

They’re called special taxing districts that have carved the expense of various former city and county department functions into separate districts with their own separate — and additional — tax bases.

It started in the 1980s when the city hewed away the park and recreation function, which gained its own permanent tax base in the 1990s. Then the fire department followed suit. In neither case did the city cut its own tax rate. The library taxing district helped the city budget — along with the county.

The county has had other taxing districts carved away: Soil and Water Conservation and Extension Service. Neither did they cut their tax base.

While compression carved away $108,846 from the city budget for the 2013-14 tax year, the city also saved $709,000 by not funding parks and $2.8 million by not funding fires. The savings are more modest for Wasco County, $385,779 from Soil and Water Conservation and $475, 285 for Extension compared with almost $155,000 in compression. The libraries are another $1.25 million expense that the county and city no longer share. Of course, keep in mind that we actually funded all these districts slightly better than the county and city could have thanks to tax rates anticipating increased future expenses.

Of course, none of the local taxing districts get the $1.36 million (after compression) carved off the top of taxes to fund the Columbia Gateway Urban Renewal Agency. That loss is absorbed proportionally by all the districts that tax within the agency boundaries.

That includes the increased revenues from taxes on land occupied by the Google complex — the second-largest property tax payer in Wasco County even with its generous tax breaks. It also includes taxes on the Griffith Motors building, Goodwill Industries and other new developments that have occurred during the life of the agency.

So it’s not hard to argue that city and county voters have been more than generous in keeping local government services well-funded, despite tax limitation measures.

As a community where incomes — and property values — lag behind the national and state averages, we are diverting taxes that could be spent on infrastructure improvements, maintenance and expansion. Admittedly, blight is a concern in any city core, but public infrastructure also falls under that description.

We’re not saying a road district isn’t necessary, giving the losses in revenues at both the county and city revenue, but as part of the process, it may be time to take an accounting of all tax revenues and where they go.

Government tax and fee increases all come at a cost to private citizens, when their incomes fail to grow apace with with rising costs. When that happens, not only citizens but private businesses suffer as consumers shift purchase dollars to taxes.

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