24 Apr

Tax Clouds on the Horizon?

There is a tax storm coming. Can we get out of its way?
Our City costs are going to see a significant increase and we are not prepared. Several events outside City control are going to cause this increase. First, is PERS (the City pension plan) costs are going up and are going to continue to go up every year for the foreseeable future at a rate of about 7%. Second, healthcare costs are continuing to rise. Third, the State minimum wage increase is going to drive up wages for City employees. Employees are currently over 80% of our City costs so these changes are important.
The benefits we pay our City employees are going to exceed 70% of their salaries in the coming year. That means for every dollar in salary we pay we have to pay another 70 cents for PERS, healthcare, etc. That is far more than private industry. The average annual total cost of a City employee will be over $122,000!
But, we are doing very little to prepare ourselves for this coming storm. We are finding a dollar here and there to get by. We are deferring needed expenses for maintenance of infrastructure like roads and bridges. But these steps are not real fixes to the long term issue. They are akin to a “finger in the dike”.
We need a strong action program now to prepare the City for the future. It should include steps like these: (1) upgrade existing software systems to become more efficient (takes 1 person instead of 3); (2) outsource non critical services ( a person cutting grass costs us $80,000 a year ); and (3) cutback in non-core services (police, fire and water are core).
Our City Council says people expect a high level of service. But do citizens know: (1) what software systems are used and even if they do, does it matter; and (2) who is riding that lawn mower? If we gave citizens the choice of significantly higher taxes versus making the suggested changes, wouldn’t they say lower taxes?
Other cities in area have already made some of these changes – West Linn’s parks are maintained by an outside service, for example. Lake Oswego is one of only two cities in Clackamas County that has its’ own 911 service (we serve West Linn too); all other cities use Clackamas County’s service.
There are some cities in the U.S. that have very few city employees with almost all services outsourced. Why? Because they know that the costs are lower and that means lower taxes! No more PERS and other benefit increases.
We need leadership that has a horizon longer than one year. Leadership needs to think 3 – 5 years out and take action now to put us in a strong position for the future. We need leadership that is willing to address issues and layout the situation and choices clearly for our citizens.
Think about this for a few minutes. Doesn’t it make sense to be preparing ourselves now for the coming storm rather than hiding the problem?
There is an election coming in November. Who you vote for will have an impact on your tax bill. Ask every candidate how they will deal with the coming cost storm. It is your money that is at stake.

Written by Gerry Good and published in the Lake Oswego Review April 21, 2016. Gerry is a LOCAL director and a member of the Lake Oswego Budget Committee