Tax figures ‘shock’ chief, destroy cops budget

Sean C. Morgan

Stunned Sweet Home city officials are scrambling to figure out what to do after learning last week that tax revenue for the Sweet Home Police Department and Sweet Home Public Library has sharply decreased this year.

The City Council has called a special meeting for 7:30 p.m. Wednesday, Oct. 19 at the City Hall Annex to figure out where to go next.

Police Chief Bob Burford said he is “in shock” over the tax information released last Thursday by the Linn County Assessor’s Office.

Declines in property values and increasing tax compression have seriously reduced revenues.

The Police Department will receive an estimated $1.377 million this fiscal year, 2011-12, said Finance Director Pat Gray. The city budgeted to receive $1.66 million based on no growth and compression loss of $458,507, which was already substantially higher than the previous year.

The budgeted compression figure was an increase from a budgeted 2010-11 compression loss of $293,000 and an actual 2010-11 compression loss of $302,000.

Based on property value information released last week, police levy compression will be $730,574 in the 2011-12 fiscal year, Gray said. The total shortfall is nearly $283,000.

“We have further revenue losses to our Library Services levy, of approximately $51,000, which will also have to be mitigated, potentially with service and or staffing reductions,” Gray said.

Compression will also reduce the budget for the Linn County Sheriff’s office, which is looking at an $800,000 shortfall, according to the Albany Democrat-Herald.

Compression is an effect of property tax limitations based on state law. Property taxes are calculated based on assessed value (see sidebar, right). When property tax bills are compared to real market values, the rate cannot exceed $10 per $1,000 of valuation. If they do, the tax bill is reduced to $10 per $1,000. Funds for local option levies are reduced to zero before permanent rates, such as the city’s basic tax rate, are reduced.

Compression numbers all around the county are similar, Gray said.

“Right now, we are looking at every additional cost-cutting measure we can come up with,” Burford said. “We’re trying to think outside of our box and the box next door as well. The City Council is being asked to hold a special meeting next week to be brought up to date on this financial crisis and to see if any funds can be transferred to help us maintain an acceptable level of police services.

“We knew there was a probability of falling revenues due to Measure 5 (1990) compression resulting from the rate increase to the Linn County Law Enforcement Levy and the Veteran’s Hospital local option levy being added into the mix,” Gray said.

“What we did not see coming was the compounding effects of the Western States Land Reliance Trust property coming completely off the tax rolls this fiscal year.”

When the county foreclosed on the WSLRT property last year, the $3.5 million-plus value of the land was no longer taxable and since that property is within Sweet Home city limits, the effect has been significant, officials say.

“This resulted in a substantial reduction in the city’s overall real market value, further increasing compression losses,” Gray said. “The significant devaluation of Comcast properties was an additional nail in the coffin.”

Labor negotiations earlier this year were predicated on the anticipation of some potential revenue losses, said City Manager Craig Martin. “But the degree of loss we were hit with yesterday was well beyond our worst imagination.”

The city’s general employees settled their contract with the city earlier this year. The Sweet Home Police Department Emergency Services Union and the city were scheduled for binding arbitration on Wednesday.

“We learned today that the Emergency Services Union has agreed to our request to postpone arbitration so we can all get our heads around this problem,” Martin said. “We will be meeting with them next week to look for possible solutions.”

Union President Randy Gill said that a union analyst will verify what the city is reporting this week, and then the union will figure out its next step.