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BY ALAN PITTMAN
School Funding Facts
Checking claims about the income tax for schools
C
lashing campaign claims around a
proposed temporary city income
tax for schools may leave voters
confused.
This week, proponents of the four-
year, $17 million tax Measure 20-182 on
the May 17 ballot fi led a lawsuit alleging
that supporters falsely quoted Eugene
Mayor Kitty Piercy in the offi cial Voters’
Pamphlet, misleading voters about Piercy’s
and Gov. John Kitzhaber’s position on the
school funding measure.
Piercy has endorsed the measure and
Kitzhaber has not taken an offi cial position.
Mark Callahan, a 4J School Board
candidate and school funding measure
opponent named by the lawsuit called the
charges “libelous” and refused to retract
the Voters’ Pamphlet statement. “I maintain
my innocence,” he said.
Hillary Johnson, a 4J mother and chair
of the pro-schools campaign, said this isn’t
the only misinformation from opponents
to school funding. “Opponents are twisting
words and misrepresenting the facts in
an attempt to mislead citizens into voting
against adequate funding for our public
schools,” she said.
Here’s a rundown and fact checking of
some of the key claims in the hot campaign
around the city income tax measure to
reduce cut school days and crowded
classrooms in 4J and Bethel schools:
AMOUNT
Opponents claim the tax will cost
average families four times more than the
tax will actually levy.
“The average family will pay $500 a
year,” opponents claim on their website.
The “$500 tax increase” fi gure for “middle
income wage earners” is repeated by
opponents in the Voters’ Pamphlet. KEZI-
TV also repeated the “tax the average
family $500 a year” claim in an April 18
broadcast.
But, in fact, the average family will pay
only about $120, according to the measure,
tax law and U.S. Census data.
According to the latest Census, the
average family income in Eugene is
$58,875. Common adjustments for health
insurance, retirement, taxes paid, etc.,
could reduce that fi gure to an Adjusted
Gross Income of roughly $50,000.
According
to
calculations
by
ECONorthwest, an independent economics
fi rm, $50,000 in AGI is about $34,300 in
Oregon Taxable Income and a Measure 20-
182 tax of about $120.
The tax impact exceeds $500 a year
only for families with an AGI of more
than about $100,000, according to
ECONorthwest calculations.
MIDDLE CLASS
Opponents have claimed repeatedly
that the tax “targets low-income families,”
but the tax actually targets high incomes.
Based on state tax data and the city tax
rates, an estimated 84 percent of the tax
revenue will come from the top 20 percent
of incomes. About 30 percent will come
from the highest 1 percent of incomes over
$500,000 a year.
The city income tax for schools exempts
the poorest third of taxpayers (joint AGI
under $31,000) and has graduated rates
rising with income from 0.35 percent to a
top rate of 1.2 percent for joint AGI over
$250,000.
Opponents have reported raising
$64,000 to defeat the school funding
measure,
mostly
from
wealthy
conservatives who would pay the most
with the tax, according to campaign
fi nance disclosures.
Some of the Measure 20-182 opponents
back property tax increases. But income
taxes generally have a lower impact on
the poor than property taxes because they
rise with ability to pay and the poor have
a greater share of their income invested in
their housing, according to tax experts.
JOBS
Opponents claim that the school
funding measure will reduce jobs, but
ECONorthwest economists found that the
measure would have “a net positive impact
on the local economy,” creating hundreds
of jobs and millions of dollars for increased
wages spent locally. “The favorable impact
on location and production decisions
provided by the enhanced services may
more than counterbalance the disincentive
effects of the associated taxes,”
ECONorthwest reported.
Directly, the revenue from the measure
could save up to 100 local teaching jobs.
Many employers, including offi cials
from the UO, PaloAlto Software and
Sporthill and local doctors, support the
tax and testifi ed that they need adequately
funded local schools to attract and retain
employees and/or keep their businesses in
Eugene.
PERS
Opponents have claimed “the money
will be diverted to fund a generous public
employee benefi t package,” but that
contradicts the judge-approved offi cial
ballot title for the measure.
The ballot title specifi es that “school
districts would be required to use revenues
to reduce the number of days students are
not in school and to reduce average class
size.”
The measure resolution also specifi es
that the districts annually “must provide a
report to the City Council describing how
the income tax revenues were spent” as
a “condition of continuing to receive the
funds.” The report will be reviewed by
a panel including two opponents of the
measure, the resolution requires.
None of the offi cial measure text
mentions funding the Public Employee
Retirement System (PERS) for teachers.
The city and local school district do not
control the statewide PERS system. Nor do
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they control a state exemption of federal
and state retirement benefi ts from local and
state income taxes.
Opponents argue that teachers are
overcompensated. But research, including
a recent comprehensive study by the
Economic Policy Institute, has found
that teacher pay signifi cantly lags pay
in professions with similar education
requirements, even after taking vacations
and health care and retirement benefi ts into
account.
School staff have already taken cuts
in contracted pay and benefi ts. Bethel
teachers agreed to up to $3 million in
compensation reductions next year after
taking a $2.5 million cut the year before,
in addition to working one day without pay
and a $2.1 million cut the previous year.
The 4J School District is now negotiating
$7 million in cuts to contracted teacher pay
and benefi ts for next year after similar cuts
last year.
many other city services. About half the
people who work in Eugene benefi t from
city road, police, fi re and other services but
live outside the city and don’t pay taxes in
Eugene, according to Census fi gures on
commuters.
About 25 percent of 4J and Bethel
students live outside city limits and their
parents wouldn’t pay the tax on city
residents. To account for the non-resident
issue, the measure distributes the tax
revenue based on the number of Eugene
residents enrolled in each school district.
SCHOOL CUTS
Opponents charge that supporters are
“exaggerating enlarged class sizes, and
fewer instructional days for students,” but
the school districts have said drastic cuts
will happen if the measure doesn’t pass.
Budget cuts may force Bethel and 4J
schools to lay off up to 100 teachers. That
could boost average 4J class sizes about 25
‘The average family will pay $500 a year,’
opponents claim on their website.
But, in fact, the average family will pay
only about $120, according to the measure,
tax law and U.S. Census data.
CHANGES
Opponents argue that the City Council
could change the tax to extend beyond four
years and/or change the tax rates without
a vote, but the council has that power
whether the tax passes or not.
State law and the Eugene City Charter
allow the city to pass an income tax without
a vote of the people. No city councilor
advocated for imposing the tax without
a public vote. The measure specifi es the
tax “shall” be for “four years” on income
“earned between January 1, 2011 and
December 31, 2014.”
The measure specifi es that the tax
“shall” have graduated rates rising from
.35 percent to 1.2 percent for top earners.
ADMINISTRATIVE COSTS
Opponents have claimed that collecting
the tax will cost $7 million a year, but
actual collection costs are likely to be less
than $1 million.
The city plans to contract with
Multnomah County, which had experience
with a similar income tax for schools, to
collect the Eugene tax. The county’s earlier
income tax cost about 5 percent of the total
raised for “collections costs, audits and
other administration,” according to the
Multnomah County website.
OUTSIDE KIDS
Opponents charge that the taxes paid by
Eugene residents will benefi t people who
live outside the city. But that’s also true of
percent and force some classrooms to pack
in up to 50 students. The budget cuts could
also force the districts to effectively move
to a four day school week.
South Eugene Principal Randy
Bernstein testifi ed to the City Council that
the cuts will be “extremely painful and
very, very diffi cult for our schools to bear.”
MEASURES 66 AND 67
Opponents argue that state Measures
66 and 67 tax increases on the wealthy
and corporations last year didn’t solve the
school funding crisis so the city measure
won’t either.
But 66 and 67 supporters, including the
Oregon Center for Public Policy, point out
that the deep recession reduced the state’s
projected tax revenues and the defi cits
would have been twice as bad without the
passage of the tax measures.
WAIT FOR STATE
Opponents argue that the education
funding should be left to the state. But
the state hasn’t solved the problem in two
decades and there is no state solution in
sight.
“The state of Oregon is not going to
fi x this problem anytime soon,” said local
state Rep. Phil Barnhart, co-chair of the
House revenue committee.
Gov. John Kitzhaber hasn’t proposed
any substantive solutions to school
funding. His top legislative priority for
education involves him appointing a new
oversight board, but no new funding. ew
EUGENE WEEKLY
APRIL 28, 2011
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