The Hood River County Board of Commissioners could decide as early as Monday whether or not voters will see its two tax proposals — a prepared food and beverage tax and a local option levy — on the May ballot. A public hearing on the measures will be held at 6 p.m. on Monday, March 18, at the Wy’east Middle School Performing Arts Center; following the hearing, the commission will have a chance to definitively decide whether or not to put the measures on the upcoming ballot.
These two measures are the county’s latest proposed solutions to its ongoing budget crisis caused by decreases in revenue over the years. As of this budget cycle, county staff estimates a $1.6 million deficit and a total $5.3 million in unmet need. Budget problems have plagued Hood River County for years but now, the county is at a point where it will have to significantly cut services if it doesn’t find more revenue in the next two budget cycles.
When asked why the county commission waited until the situation was this dire to present these two tax proposals, Commissioner Karen Joplin said, “Part of it is we’ve been trying other things, and part of it is we thought it would get better. We thought the state would do something, we just kept counting on somebody who’d pick up these big problems and it would get better. We kept thinking that the state and the feds would help out, but we’ve been waiting on that for decades.”
The problem stemmed from a “perfect storm” of circumstances that drastically decreased the county’s revenue.
Hood River County gets the majority of its funding from its forests, through both timber sales and federal compensation.
“Hood River has always had its forests,” Joplin said, “and that sustained us for decades, but things changed.”
The local timber industry took a big hit from restrictions put on federal lands in the early ‘90s. Local mills began closing, and many lost the capacity to handle the county’s large trees, further hurting the county’s timber revenue. Since 2006, the county’s timber revenue has dropped 36 percent.
Because the county transfers timber revenue to the general fund based on a 10-year average — specifically to ensure the county doesn’t take a hit when log prices fluctuate — it took some time for the county to be significantly affected by the drop in timber prices.
Before the county adjusted its low property tax rate to compensate for the loss in timber revenue, however, the state enacted legislation that froze property tax rates statewide. Hood River County’s property tax rate was stuck at $1.41/$1,000 of assessed value — the ninth lowest of Oregon’s 36 counties. For reference, Clackamas County’s rate is $2.98, and Wasco County’s is $4.25.
To further add to the problem, state and federal agencies have been steadily withdrawing funding from their match programs. “The theory was that funding would become more localized,” Joplin said, “but the model didn’t work.”
Since 2006, the county has pulled over $7 million out of its Reserve Fund to balance each year’s budget.
Joplin said that she’s had conversations with constituents who said that the county should adjust to live within their means, “and they’re right,” she said, “but we’re at a point where significant closures must take place to live within our means.”
Hood River County has been attempting to find a solution to their revenue problem for a long time, she said, but legal restrictions have severely limited the county’s revenue options.
“There are a lot of things that we’ve tried that the public doesn’t necessarily know about,” Joplin said. “Counties just don’t have a way to make money…there’s very little opportunity for the public sector to participate in the economy.”
On the state level, the county banked on the Oregon grand bargain in 2013, which was supposed to alleviate PERS costs, and House Joint Resolution 21 in 2015, which would have raised all property tax rates to $2 per $1,000 of assessed value. Both failed. The federal Secure Rural Schools resolution helped stabilize tax revenue, Joplin said, “but that was never intended to be a forever concept.”
Over the years, the county has considered local solutions ranging from purchasing Hanel Mill and starting a biomass facility to growing marijuana in county forests, but all were deemed either impractical or inappropriate. The commission decided that its 2018 general sales tax proposal, which sparked general public outcry, would be too complicated to implement and administer, Joplin said, so it was dropped.
Constituents have been proposing other ideas, such as increasing the TRT tax or charging visitors to pay for services. “The ideas from the community are good ideas,” Joplin said, “but regulations prevent them from working.”
The prepared food and beverage tax was appealing because of its successful implementation in Ashland and Yachats, and it gave the county a chance to collect revenue from visitors who use its services.
“There’s a misconception that it was only intended to affect visitors,” she said. “The concept has never been to solely tax our visitors, but to find a way that visitors could contribute with locals.”
County staff estimate that approximately $1.8 million could be collected annually from a 5 percent prepared food and beverage tax, and $2.1 million could be collected from a $0.89 local option levy.
“This was the best model … so we’ll see,” Joplin said. “Of course, nobody likes taxes, nobody wants to collect taxes, nobody wants to pay taxes … it’s a choice and individuals have to make a decision.”
If one or both measures don’t pass, she said, “we will make the decision to stay within our means, but it will be at great service loss for the community.”
The county is able to take $750,000 from its reserve fund for the next two budget cycles to balance the budget, but once that’s depleted, Joplin expects that the county will focus on preserving services the state considers essential. “Anything that is considered non-essential, that is what would get cut,” she said. Those services include parks and recreation, trail management, law enforcement, the OSU extension program, snowplowing and more.
“We would be operating within our means and the county would look significantly different,” she said.
If the measures do pass, Joplin said the county would be able maintain and enhance its current level of service, including investing in park maintenance and school nursing programs.
“Personally, I’m hopeful that the community is ready to make that investment, but it a tax and it will cost the community more,” she said. “This is a decision we all need to make, and everyone needs to make a decision based on their financial situation … it is what it is, and we have to choose.”
The commissioners encourage constituents to reach out with any questions about the tax measures or the county’s budget situation. Their information can be found at www.co.hood-river.or.us.
The Wy’east Middle School PAC is located at 3000 Wy’east Road in Hood River. For more information about the hearing itself, contact Hood River County Administration at 541-386-3970 or email email@example.com.