How did we get here?
Property Tax Revenue
Permanent Rate Property Taxes
Property taxes are levied against all taxable land and structures in the City. The tax requirement is based on the assessed value of the property. The Oregon Constitution places limits on property tax collection. Measure 5, passed in 1990, limits combined tax collection by general governments to $10.00 per $1,000 of assessed value. If combined rates of all general jurisdictions exceed $10.00, local option taxes are the first to be “compressed,” followed by permanent rate taxes. Compression is the reduction of the full taxing rate on the assessed value of a property. Measure 50, passed in 1997, limits growth in assessed value to no more than three percent (3%) per year for existing property. The current permanent rate for the City is $4.1335 per $1,000 of assessed property. The City will earn approximately $14,380,500 in property tax revenues from its permanent rate in FY’24.
Local Option Levy Property Taxes
A local option levy is a short-term levy of property taxes (up to five years for operating purposes and up to 10 years for capital improvements) outside of the permanent tax rate limit, which must be approved by the voters in a manner consistent with Measure 50 requirements. The current levy rate for the City is $1.79 per $1,000 of assessed property.
Twice, the City of Grants Pass proposed an increase in the property tax levy of $1.89 per $1,000 of assessed property. In 2008 and 2020, levy proposals appeared on the November ballot; each time, the levy failed to pass.
Other Public Safety Revenues
To provide Public Safety services for our community, your City relies on supplemental funding directly from state and federal funding, grants, program registration fees, service and annexation agreements, transient lodging tax, sponsorships, private donations, and other non-property tax resources.
Lodging Tax
Lodging Tax can be imposed for temporary overnight human occupancy. The City has increased its rate over time; however, ORS 320.350 Tax Moratorium required the revenue restriction to be expended towards tourism promotion and tourism-related facilities as of July 2, 2003. This is important in realizing that the first 9% of the City’s lodging tax rate is grandfathered in as allowable allocations based on their implementation date; any changes to this allocation would be subject to new allocation requirements. New rates implemented after July 2, 2003, are subject to 70% allocation to tourism promotion and tourism-related facilities and the remaining 30% to City services. The newest additional 3% in 2021, for a total of 12%, gave the maximum allowable allocation to Public Safety.
Below is the history of the rates charged by the City and allocation based on ORS requirements.
Below is the allocation of Lodging Tax funds as determined by ORS requirements and Municipal Code 4.05 Lodging Tax.
General Fund Support
Public Safety and other General Fund programs such as planning, economic development, downtown development, and parks and recreation rely on unrestricted supplemental funding such as state-shared revenues, state liquor tax, state cigarette tax, franchise fees, and other revenues, also known as General Fund Support. The General Fund Support Required, or usage, is higher than these Current Unrestricted Revenues.
*General Program expenditures are items that are not directly charged to a General Fund specific program or department, but still require General Support resources.
Below is the Public Safety requirement of General Fund Support over time, and showing the requirement is getting larger in proportion to the service level need.
Franchise Fees
The City has jurisdiction and exercises regulatory management over all public rights-of-way within the City under state law, the authority of the City Charter and its Municipal Code. Below is a table with comparisons between the City and a few of its neighboring cities and Bend. There is also a column with information from a survey completed by the League of Oregon Cities in 2019 which surveyed 66 cities. One challenge in this comparison is that each city has its own unique system of charging fees or taxes for the use of the public right-of-way. For example, the City of Klamath Falls has a Right-of-Way Maintenance fee of $2.50 per month on its utility bills rather than a percentage of the bill. Some have individual franchise agreements with individual service providers. The City of Grants Pass was once structured like Klamath Falls but has transitioned to charging a ROW privilege tax.
Previous attempts to provide funding
In addition to the proposed property tax levies of $1.89 mentioned above, the Grants Pass City Council has previously tried or explored other avenues of funding, such as a Service District, Sales Tax, and Payroll Tax.
Multiple methodologies were considered prior to proposing the transportation methodology for the Public Safety Utility fee.
In Oregon, more than 50 cities use a similar fee, sometimes called an "operations fee," to help pay for some part of City services. The fee is collected through City utility bills. Below is information considered by City Council.
Nexus to Service
The City analyzed the previous five years of data to determine the call volume and the calls for service in defined areas. This is important for establishing a rate structure that aligns customers with the appropriate charges.
Considered Methodologies
Transportation Utility Methodology
The City’s transportation model applies fees to customer types based on the Institute of Transportation Engineers Trip Generation Manual (ITE Manual). This is based on a study of trips generated to locations throughout the community. The propensity for traffic, or flow of people to a location is correlated to the need for street maintenance and repair. There are 13 classifications. The classifications take into consideration residential and commercial differences. Residential charges are correlated to the number of dwelling units on a property. Commercial rates vary by size and type of business.
Correlation to Public Safety Services: Expected traffic to a location typically deems people served and structure requirements.
Considerations: Business size and type do not necessarily equate to demand for Public Safety services. Conversely, home type does not necessarily equate to Public Safety services. There are large businesses that generate fewer calls than smaller businesses and there are some homes that call for more services than others.
Water Meter Size Utility Methodology
All customers with water services pay a base meter charge for the water system. Those fees are based on water meter size. The larger the meter the larger the fee as the size of the meter directly relates to water usage and demand on the system. There are nine tiers, and the sizes range from 3/4 inch to 10 inches, with 10 inches being the most expensive. The most common size meter is a 3/4 inch which is standard for single-family homes and a great number of commercial entities.
Correlation to Public Safety Services: Water meter size is normally conducive to the capacity of people served or the structure. It correlates directly to the amount of water necessary to serve a particular structure based on the type of use.
Considerations: Grants Pass has a unique infrastructure in that ~2,700 accounts do not have water meters and draw from well water. Some of these accounts are outside of the city limits, but this is an approximate count of the connections to the wastewater system within the community. There are other instances of similar meter sizes serving different capacities. For example, there can be a 1” meter serving 14 homes, an apartment complex with 50 units, a single-family residential, or a commercial business.
Water Usage Utility Methodology
(Residential versus Commercial revenues were not projected)
For accounts with water meters, the amount of water is also charged. One unit equals 100 cubic feet of water or 748 gallons. Charges for units of water vary by type of service. Residential services pay a tiered rate while all other services pay per unit by type of service.
Correlation to Public Safety Services: Water usage could identify the number of people served or structure needs at a location but in the case of commercial entities water usage is typically indicative of services provided in a building.
Considerations: Again, there are ~2,700 accounts that do not have a water meter and usage isn’t measurable. Although it would seem logical that a single person occupying a residency would use less water than a family or business, residents and businesses use water for landscaping services which may not be indicative of Public Safety services required in peak water usage during summer months. Another example, a nursery would use more water than a drive-through coffee shop, but the coffee shop would most likely have more interactions. Metered water also includes leaks on properties and might not be a proper measurement of Public Safety services.
Additional Unit Charge (Per Account) Utility Methodology
Additional Unit Charge (AUC) is an additional charge for the water system to apply a factor to water meter sizes that are not indicative of the draw on the system based on the number of dwelling units. These are only charged to multifamily housing or private unit developments where one meter serves multiple single-family homes.
Correlation to Public Safety Services: This would equally weight each residential dwelling unit.
Considerations: This is only charged on the residential side of water meters. This is not applied to the commercial side of the water rates. As an example, there is no current data point for potential strip mall setups that could have multiple businesses connected to one water meter.
Combinations of funding options were considered
The matrix below was considered by Council to understand the range of options between the levy and utility fee.