City lobbies for task force, scrambles to identify impacts of federal orders

Presenter: With the 2025 Oregon legislative session underway, a status report from the city of Eugene’s lobbyist. At the intergovernmental relations meeting in Eugene Feb. 5, IGR Manager Ethan Nelson:

[00:00:12] Ethan Nelson: So in regards to priority one bills, these are a smattering, I’ll be adding more. But House Bill 2333 would establish a task force on impacts about Measures 5 and 50. We supported that. It initiates state research on (Measures) 5 and 50 on local government finance. This was part of a package that Rep. Evans had put forward and Rep. Nathanson as committee chair in (the House Committee on) Revenue put forward for public hearing last week.

[00:00:40] So I spoke on behalf of that in support of it, and provided some information related to the budget challenges which the city of Eugene is facing, which Council has been deliberating on.

[00:00:52] Presenter: Ethan spoke Jan. 30 before the House Committee on Revenue. He followed the League of Oregon Cities’ Jenna Jones:

[00:01:00] Jenna Jones (League of Oregon Cities): My name is Jenna Jones with the League of Oregon Cities…

[00:01:03] We all know that the current property tax system is broken. Measure 5 passed 35 years ago and puts limits on the revenue cities can raise for critical services. It also has led to millions of dollars of compression every year. Don’t ask me to define it. It is a very convoluted term. But in FY 23-24, cities across Oregon lost approximately $50 million.

[00:01:26] Measure 50 has not allowed cities to grow with their needs that they’re seeing with the market or with inflation, since property tax values can only grow 3% every year. Measure 50 locked cities into permanent rates, some that were low for the times and in other cases nonexistent… I will note that city of Tangent put a letter on the record and it’s one of those eye-opening ones for a city that doesn’t have a property tax.

[00:01:51] What cities want in a property tax system is something that is equitable and based on the real market value of today and not this very complicated tax system that we have under Measure 50.

[00:02:02] Presenter: Before the House Committee on Revenue Jan. 30, Ethan Nelson.

[00:02:07] Ethan Nelson: I’m here just to add a little bit more information from my colleague Jenna, but also specifically talk about H.B. 2333, the one that really focuses in on local governments, just to provide some context. And I think that this is indicative of where a lot of local governments are, cities.

[00:02:24] City of Eugene, we’re working through an $11 million budget gap in our general fund right now. And that’s either going to be solved by new revenue or cuts, and so we’re in the process of defining what that looks like.

[00:02:37] In that process, we identified that over 80% of our general fund budget goes to services such as fire, police, EMS, courts, library, recreation, and then also shelter provision. So it’s these core services, which our community has really identified they want to see.

[00:02:56] We also since FY10 to FY26, we’ve had reductions in every year, every fiscal year, of our general fund. So we’ve every year we’ve been cutting to the extent that over the course of that time, we’ve reduced $67 million out of the general fund in staff cuts, budget cuts, reduction of services…

[00:03:16] (Measures) 5 and 50 were brought forward in the early ’90s. In FY88, the city of Eugene had 7.5 FTE (full-time employees) per 1,000 residents and in the general fund and now we are at 4.6 FTE per 1,000 residents. And so while we’ve had an increase in population and increase in services, we’ve had a decrease in the number of FTE that are providing those services.

[00:03:43] Presenter: That was testimony before the House Revenue Committee Jan. 30. With his report back to the IGR committee Feb. 5, Ethan Nelson:

[00:03:53] Ethan Nelson: So hopefully that will move forward, there will be a task force related to the impacts and be able to start that conversation at the state level

[00:04:01] Presenter: Councilor Greg Evans:

[00:04:03] Councilor Greg Evans: Let me not be facetious about this, but how does this differ, Ethan, from all the other conversations we’ve had over the last 35 years about how ballot Measure 5 doesn’t work for local government and the compression issues we have, all over the place.

[00:04:20] I mean, you know, legislature establishes the task force, nothing happens. We know what the fix is: Reverse this stupid thing. That’s the fix.

[00:04:32] But I’m just talking out loud. I’m, you know, this is a source of frustration for me. I remember when it passed in 1990 and then 50 came behind that and the money was coming from places outside of Oregon to create the situation that we have and it went on right down the line to California and every place else.

[00:04:55] It is not going to be resolved in this session and it probably will not be resolved in the short session and then we’ll be back at this again in 2027.

[00:05:05] Presenter: Ethan Nelson:

[00:05:07] Ethan Nelson: Councilor Evans… I would say that what’s different is that many local governments have been through so many rounds of cost-cutting and so many ways to provide the core services that cities do through other means, that we’re now at the space where there’s not much to cut and we’re seeing a pretty drastic reduction in services…

[00:05:30] Hopefully that will get a task force out of this session and that there will be work on this and the state legislature will identify this as a priority to address. If we can get that, then we can continue to work on the issue.

[00:05:45] Presenter: They also discussed activity at the federal level. Ethan Nelson:

[00:05:49] Ethan Nelson: I’m sure that many of you have been hearing the news and navigating how state and local governments are responding to the executive orders that have been issued out of White House. Specifically, there was one that was putting a freeze on grant payments. And so that order has been rescinded and there’s also legal action to stay those in addition to that. But we also want to be prepared to understand what the impact is.

[00:06:18] And so we’re starting to pull together what’s called our department budget managers, have a discussion to be able to pull information with the DBMs and coordinate that so that we’ve got a really clear understanding of what would be the impacts…

[00:06:32] We just are really mindful that with the budget session and the discussions that council’s been having, that we want to ensure our DBMs and our staff have got pacing in regards to the workload. So that is something that we’re navigating.

[00:06:49] Presenter: Councilor Greg Evans:

[00:06:51] Councilor Greg Evans: I know things are changing rapidly, like every day there’s like a new announcement about what’s going to be defunded or, you know, what departments are going to be cut and in all of that on the federal level. So this stripping of the federal government—do we have an idea of what the full scope of this is yet?

They just can’t shut down the Department of Education by executive order. They have to do it by congressional action. So do we have any idea of what the congressional agenda is going to be coming out of the administration? And then how does that affect us downstream as a municipal government?

[00:07:43] Ethan Nelson: Councilor Evans, there are a number of initiatives and/or actions that are happening under executive authority that potentially an expansion of executive authority and the process seems to be that that question then becomes litigated in the courts.

And so that was one of the reasons why the Attorney General Dan Rayfield in Oregon, as part of the emergency board’s spending authority, requested an increase in funds to allow for hiring additional attorneys, but also having funds to support litigation…

[00:08:24] Their process is looking to ensure that Oregonians are held harmless and continue to receive federal support for… Medicaid, Medicare, veterans funds, ,… and hence the reason why we’re wanting to be able to pull together a little bit of muscle to say what would we lose if these actions came to fruition and be able to then efficiently, accurately, and effectively tell that story.

[00:08:51] Presenter: Councilor Evans:

[00:08:53] Councilor Greg Evans: The way I’m seeing it, there are a variety of ways that the government can be defunded without having congressional or executive action. So for instance, right now, he has no nominee for secretary of education. None.

[00:09:11] And with CIA and FBI being threatened with layoffs or just eliminating jobs, period—if you eliminate the jobs, then you really don’t have an agency, right? That’s basically where we’re at in this, ability to cruise to madness in this situation.

[00:09:36] I’m flabbergasted and dumbfounded by the whole idea that the infrastructure of our government is coming apart in front of our eyes, and it doesn’t bode well for us on a local level at all, because everything will fall back in our lap. Everything.

[00:09:56] And we don’t have the capacity to address all of these issues without state and federal help. It blows my mind that this is even happening.

[00:10:09] Presenter: The IGR committee hears the latest on attempts to fix the state’s tax system, as city department budget managers are pulling double duty. They’re scrambling to produce the next city budget by July 1, while also being asked to identify potential impacts of federal actions to help the state in its coming court battles.