Buzz Blogger:I have some more questions for some of you in the know.
What is the general fund budget of Lane County? Since there is the possibility of losing $47 million from the federal timber money, it would be nice to see what percent that is of the general budget (total budget doesn't really work since many things are funded by grants that can only be used on certain programs).
The other question that people are asking me is how come the County doesn't have more taxes in the last 20 years from the influx of people moving into the area, as well as the rising property values. I know that the County only gets 1.28 per assessed $1000, but if the value of homes has doubled over the past 20 years, then the amount the county gets should have also doubled. I'm guessing that there was a county property tax cut somewhere.
So the county gets $1.28 per assessed value. What would that have to be raised to, to cover the $47 million in lost timber money. I know it isn't doable because of state law, and the city of Eugene taking up a large portion. But would be interesting to see how much less money the city of Eugene would get, and how much more in property taxes those in Lane County not living in Eugene would pay.
Finally, let's pretend that Lane County decided not to cut anything from Public Safety, D.A., Health and Human Services, or Youth Services. What other programs would then get the ax? What else does the county fund?
The answer: EVERY other program, including elections and the revenue-generating Assessment and Taxation. (By the way, the DA, as the leading law enforcement authority in a given jurisdiction, IS public safety. Similarly, since "Juvenile" deals with the juveniles committing all the same crimes committed by adults, it is also public safety.)
Lots of other good questions I'll try to answer. One qualification first. I was present during public hearings when many of these issues were dissected and analyzed four and five years ago, but my numbers are not current. The best source for the current numbers is the budget authority cited above. With that qualification aside, I see that the balance has changed very little, so I'm comfortable answering some of the questions.
First, a correction: Lane county never stopped paying PERS to apply the money elsewhere. From time to time there are PERS cost increase projections. They start as estimates and then become realities, sometimes long after government bodies have to budget for increases. That wasn't a problem until the 1990s, when the PERS board was forced to invest it's funds prudently and conservatively, while tens of thousands of PERS employees invested their portions of their PERS accounts aggressively in the stock market. The stock market exploded during that time, so the employees who had their money in the more risky "variable" account made huge profits which compounded year after year. The bull market ran for 17 years, with many of those employees doubling their money several times. Although the PERS board did extremely well with it's investments, their more conservative posture put them well behind the performance of thousands of employees with 50% 0r 75% of their accounts in variable accounts. Under the old PERS system (prior to 1/1/2004) the state had to match the employee accounts at retirement. THAT is what created both the short-lived period during which a very small minority of PERS employees were able to retire at more than their salary AND the huge PERS deficit. The problem first struck in about 1999. Between 1999 and 2004, the PERS board would try to project (guess) how badly the damage would be compounded by the next years' market performance. If they guessed 10% and the employees made 19%, the government agencies would have to scramble to finance the difference. That pattern repeated several years running. At one point PERS gave ALL PERS employers a projected payment plan to cover expected future earnings AND make up for under-estimating employee market performance in preceding years. Here's the rub: The catch-up money was very expensive, as PERS required employers to pay the money PLUS any additional money it had earned AND would earn over the repayment period. Lane County decided to repay ALL of the money in a lump, as it was cheaper to borrow the money to pay the PERS liability all at once on a fixed bank-loan, than it was to continue risking the growth in the market. In hindsight, the county was right, as the market increased MUCH more than the bank loan. Still, the remaining loan obligation is large. In the county record it's called "The PERS Bond", and it's one of the obligations the commissioners are talking about pre-paying if the federal money is renewed, as it will reduce overhead and allow the county to continue to provide minimal services.
PERS was reformed in 2004 as a result of enormous political pressure. (It wasn't necessary, as subsequent market adjustments have left PERS funded at 102%, one of the most solvent, secure public retirement systems in the country.) The reform took away the government match portion, reduced costs, extended retirement age, adjusted actuarial tables, and made other changes which reduced benefits to employees. Employees who had been under the former PERS system for 15 to 20 years have seen their projected retirement benefit drop by as much as 40%.
The lawsuit which caused PERS reform was filed by Lane County, a move which never earned the county any credit for "taking on employees" and trying to reduce the cost of government. They can't win for losing.
It's odd, but the PERS cost is never a basis for arguing against funding adequate education or fire services, but it's regularly used as an explanation for why public safety isn't funded.
Now on to the general finance questions:
The county funding is divided between several funds. The reason for the division is that most of the money has "strings" (limitations) attached. Most of it is NOT local tax money either. For example, the Health and Human Services budget is about $105 million, of which $100 million comes from the federal and state governments in directed funding for a wide variety of public health and welfare services. The commissioners have NO authority to redirect or reallocate anything but the small 5% than comes from the general fund. Similarly, under the former Secure Rural Schools Act (SRSA), roughly half of the money was allocated to the Road Department. The inflexibility of that funding caused a twist in county finance structure that often makes the budget seem larger than it is, especially to folks like me with a background in numbers.
Let's look at the county Health and Human Services department. It's a HUGE package of programs, with hundreds of employees and all the infrastructure needs that go with them. (many folks don't know that county employees are providing these services.) Somebody has to hire the employees, pay them, administer benefits, track absences, provide training, equip them with computers, and so on. Who pays for THAT? The answer is this: the county set up an overhead billing process for central services like human resources, payroll, computer programming and services, administration and so on. Such services comprise a significant part of doing business for any business. Of course, THEIR costs also have to be tracked so, for example, the HR department also pays a big chunk of overhead which is used to pay for their office space, the use of computers services and so on. Same thing with county counsel. They have a general fund budget, but their costs have to be apportioned (billed) to other county departments, including those inside the general fund. As a result, for people who are not used to accounting processes, it appears that much of the "income" is counted two or three times. It's counted when it comes into the county as tax revenue, than it's counted as revenue when HR overhead is assessed to IS, and when IS overhead is assessed against HR, and so on. There are two ways to get a real picture of income the way most of us think about it. The easiest way is to look at inbound discreet tax revenue. The other is to see what the county service costs total without all the added overhead.
Most businesses don't have to play this complex funding game, because their money is their money. Nobody tells McDonalds that this particular dollar can only be spent on parking lot repair, and that dollar can only be spent of roof repair, but government is different, because Washington politicians want to enforce their priorities on local government, so the money comes without flexibility. The route Lane County chose is common to government, as it's the only way to force the special dedicated federal money to bear the weight of the cost of supporting it's programs. If they didn't do this, Lane County would have to spend many millions of local tax dollars to provide support for the federal welfare programs, for example. And they can't just charge overhead to the federal programs and not others. (The real number of discreet dollars coming into the county is about 55% of the reported total budget, and most of that is dedicated money from the state or feds that cannot be spent on law enforcement.)
Buzz also asked why the county doesn't have more money given the HUGE increase local population and property value over the last few years. Part of the answer is simple: Although the county is forced to collect all the tax payments for every other body, from cities to schools and special districts, without the ability to assess the others for the surveying, assessment or collection costs, the county only keeps about 9 cents of every dollar collected. The remaining 91 cents per dollar goes mostly to the cities, schools and special districts. It takes a HUGE increase in collections to make a big difference if you're only getting to keep 9%.
The second part of the equation, actually much more powerful and devastating, is the built-in delay and suppression of the collection built into the taxation and collection rate by ballot measures 5, 47 and 50. When the voters passed Measure 50 in 1997, their primary focus was to reduce taxes 17% on a statewide basis by limiting value increases. To control taxes on individual property, values were reduced to the 1995 assessed value less 10% and compared to the 1995 real market value. The lesser value became the new Assessed Value for 1997 and Assessed Value increases were and are now capped at 3% per year. My real property value doubled over about 7 years, but my property tax actually went up a small percentage of that -- and the county collected only 9% of that.
The last piece on the property tax front is this: We're all aware of more people and more growth, but as a percentage of the whole it's not that big. Lane County population is about 340,000, roughly 60,000 more than is was about thirty years ago -- so it's grown by about 20% over 30 years. That's less than 1% per year, still lots of people demanding services, but a relatively gradual rate of growth in people, and property value. It's still been a booming time for construction, but when you consider the percentage of total value in commercial structures and well-established old residential neighborhoods, the growth is a relatively small percentage...especially when the growth of the old stuff is limited to 3% and then the county's share is limited to 9% of that. Clear as mud? I copied and pasted part of this explanation from the county assessor's web page, but I know there is a more comprehensive explanation somewhere in the county system.
The last time I watched the whole budget process, the entire county budget was about $480 million dollars, approximately $58 million of which was general fund over which the county commissioners had power to direct spending. The remaining 88% of the budget ($422 million) was dedicated to particular services and beyond commission control by design.
Approximately $20 million of the $58 million general fund was from SRS federal funding. (If you take out all of the self-charging and double and triple counting, the $480 million county budget shrinks to only about $260 million. That's the real money, no matter how many times it's recycled inside the county.)
Of the $58 million general fund about $40 million was spent on public safety, and most of that, about $30 million, was spent on the Sheriff's office. Other programs, like the DA and Juvenile, are increasingly funded by temporary grants they have to find every year, as Lane County citizens have been unwilling to support public safety since 1985, and the tax base has been inadequate to provide public safety services since 1981, even with the federal funding.
In 2004, when external analysts were brought in to advice the Public Safety Task Force, the first questions was, "What would it cost to build a new jail." At that point the sheriff was just starting to close down the existing jail, but everybody understood that additional capacity was needed even if the old jail was fully open. The answer, based on an assumption of building a jail with capacity about 75% of the average for a jurisdiction our size, was about $110 million, a proposal which would cost about $11 million per year under then-current public bonding rates. Why build a jail when we can't afford to run the one we have? Several reasons. The present jail was built about 30 years ago and it was under-sized then. Now it's FAR too small, it's in need of expensive repair, and it's very expensive to maintain and operate. Modern jail construction employs new design, practices and technology to vastly reduce operating costs. It's the only responsible solution, and it's the one that is being used in almost every other jurisdiction our size and larger in the USA.
At that time (2004) bringing Lane County up to average public safety staffing would have required a doubling of the sworn staff in every one of Lane's nine police agencies, an impossibility for all practical purposes. So all of the county public safety agencies adjourned to separate meetings so they could work out a balanced first step at recovery. In other words, every participant understood that Oregon voters would not be willing to fund an average system and, given that, the participants had to join to build a new system that could function effectively with, say, two-thirds of average staffing, a vast improvement over present. But the price was still far too high.
The public safety team partners included police services, search and rescue, health and human services (because they provided the parole and probation officers and treatment for drugs, alcohol and sex offenders), the DA, corrections and a prevention team. It was very encouraging to observe, as the level of analysis, planning, coordination and professionalism was extraordinary. For example, when the balance was struck, the Sheriff explained why the health and human services treatment had to be funded; the DA concurred, advocating for treatment, support of the methadone program and the demand for beds. The drug-treatment folks explained that their program didn't work without a jail, and the present jail didn't work, because drug-addicts were released before they could sober up enough to CHOOSE treatment. The prevention people explained why they could not help support and steer the adolescents if they could not prevent the criminal parents from harming them and disrupting their lives, and so on. They proposed a cohesive, balanced model that had been forged over years of making the best with very little -- a collaborative and analytical process the external systems advisor found extraordinary and powerful.
In the end, the team built a very sensible, balanced proposal for rebuilding public safety. It called for a more modern and efficient remodel, redesign and augmentation of the present jail, and reconstruction of many, but not all, of the public safety programs that had been lost over the preceding three decades. The price tag was about $85 million, assuming the loss of the federal timber subsidy, so about $65 million in new general fund money, plus the money to replace the general fund portion of SRS. The proposal died immediately due to sticker shock. The committee knew that the citizens would never fund it. Consensus was eventually found at $27 million in new funding plus SRS replacement. That's why it was always described as "a first step" in recovering public safety. That program -- the consensus program without funding for a new jail -- was later inaccurately and unfairly described by many as "another Cadillac program with too many bells and whistles". Had that proposal been approved by voters last summer, Lane County would STILL have been in the lowest 15% in the USA for police officer staffing, but the improvement in public safety would have been enormous, especially in rural areas, as it would have returned resident deputies for the communities of McKenzie Bridge, Walton, and Creswell.
My memory is that in 2004 an assessment of $1 per thousand generated about $20 million dollars, so, if Lane County was able to jump up to the average of the other Oregon metro counties from Salem to Portland, the county would generate another $2.25 per thousand of assessed value, or about $45 million per year. At that rate Lane County could reopen the DA's office and staff the small jail. Little would be done with misdemeanor cases, but convicted sex abusers wouldn't be released before trial, and the DA would be able to prosecute the felony property crimes so many citizens care about. It would return the public safety system to the staffing level of the mid 1990s -- a vast improvement and, by Oregon standards, almost average.
Oregon ranks 30th out of 50 states in rate of prison incarceration per-capita. If we had functional local systems the citizens wouldn't keep authorizing insane "tough on crime" ballot measures that cost hundreds of millions of dollars annually. (There's another such ballot measure coming up in November -- because the citizens are VERY ANGRY with the terrible crime problem and the complete destruction of the public safety system. Unfortunately, many of us moderates have been shooting ourselves in the collective foot by denying the crime problem and the impact of de-funding public safety.)
The answer is NOT more tough on crime legislation. Oregon used to do comparatively well with a penal system in which sentences average less than one-seventh of the US average. It worked because of proactive policing and good law enforcement at the local levels. Since the early eighties we've been slashing law enforcement around the state. The State Police has HALF the number of troopers it had in the early 80s and the state's population has exploded since then. As another person recently said, if police staffing was expressed in the context of teacher staffing in schools, our police staffing would look like having about 90 kids per classroom. The difference is, we'd never tolerate that.
During the income tax hearings in 2004, an accountant came in opposing the income tax and arguing in favor of a limited sales tax on fast-food only. She had the fast-food industry numbers for our area and had done the calculations to show how much revenue such a tax would generate. If memory serves, a 5% tax on only fast food would have generated almost $22 million last year, driving the cost of a value meal from about $3.50 to $3.68. She contended that such a tax would be "painless" and "not regressive".
Consider the revenue potential from a state-wide sales tax of 5%. We'd still be FAR below our neighboring states, and it would take a small amount of that total to fund a roll-back of property tax and an earned income tax for the poor for whom such a tax can be regressive. It would recover all the money not paid by tax cheaters and dodgers. And take-home food and medication could be exempted to further eliminate impact on the poor or elderly. There's a reason 48 other states have sales tax. It's a user/spender-based revenue source that is much more stable than income tax. As usual, Oregon, like New Hampshire, has to be different. We'll suffer a disastrous public safety environment and crappy schools with high tuition costs and, soon, lousy highways, but we're going to stick to our guns on the old sales tax thing. The irony is we could actually generate more NET money if the sales tax was in place and we rebated the property tax proceeds to homeowners, because there are SO many people who dodge income tax and/or pass through our state without paying ANY tax. Also, as long as our tax rate was only 5%, we'd still be so far below our neighbors that it would still make sense to come to Oregon to buy big ticket items. Oh well.
The bottom line is we need more money -- more money for education, so your kids and grandkids don't have to go into debt $100,000 to get a college education, and money for critical government services. Failing that, we need to completely overhaul how money is collected and apportioned, as the city of Eugene was collecting almost $8 per thousand in 2004, while the county got less than $1.28. The only significant services the city provides are police, fire, roads and parks. All the other stuff, from diversity analysts to arborists and "human rights specialists" provides us with no direct, meaningful service and could be eliminated (as the county did long ago). The county is down to providing almost nothing that isn't essential. The few non-essential programs, like parks, the extension service and animal care, are going by the boards this year, unless the commissioners cave in to public pressure AGAIN. (usually, all it takes is fifteen special interest witnesses to show up and complain for the dogs or 4H... (Isn't it odd that no citizens -- NONE -- call to complain about failure to fund the DA or the Sheriff, but dozens call in about 4H and the dog kennel?) Taking $15 or $20 million from the city and giving it to the county might help get the critical services done. It will NEVER happen. People in Eugene don't want it, and the city has gazzillions of dollars it spends on PR. The city was spending in excess of $1.5 million per year on advertising, in addition to eight "public information officers". The county has one such person, to field public information requests and other matters, and the one year the county spent $250 to inform the public, the county got roasted in the media. I'm not sure why that is -- why the county is spanked for doing what every other government body is expected to do, but it's been that way as long as I can remember. Somehow the public never finds out how the city spends it's money. Perhaps that's because the city doesn't have a Register Guard reporter invested with bringing it down... Cooper, the reporter who "reports" on the county, NEVER shares the full story, and the small neutral or favorable sections he shares are usually qualified by words like "alleged", "possible", "according to the county" -- no matter how thoroughly the facts can be verified. Regardless, there's nothing any of us can do to change any of this. None of the politicians will suggest a tax after the beating they took last time. The DA said something like, "The public is demanding we fly the public safety plane into the ground. We're subject to their will and the funding they authorize, so that's what we're going to do."
