County prepares to take out ax

Multnomah County’s income tax proceeds won’t be enough to protect some county programs from a new round of state budget cuts.

Oregon voters this week resoundingly rejected Measure 30, the Legislature’s budget plan. The vote statewide was 59 percent to 41 percent, and even Multnomah County, the most tax-friendly county in Oregon, turned it back 55 percent to 45 percent.

The county income tax, passed last May, will, to a great extent, insulate schools in Multnomah County. The city of Portland won’t feel any direct impact because it relies very little on state money.

But the county government will take a big hit. Exactly how big is unclear: The numbers may change depending on state budget figures and how the state maneuvers to meet the new fiscal picture. County officials now estimate the county will lose $5.3 million by the fiscal year ending July 1 and perhaps $27.3 million in the year that follows.

The county is losing more than other governments because it administers many state-financed programs. When state funding drops, county programs bear the burden. Officials now expect to see health care programs shrink, jail beds close and parole and probation officers let go.

Why doesn’t the income tax offer more protection?

County officials say it’s because the income tax measure was based on what the county expected from the state a year ago when it was written. But with the defeat of Measure 30, state funding for education, human services and public safety has again dropped, said county spokeswoman Becca Uherbelau. In turn, she said, that creates another gap in the county budget.

Grateful for the income tax

“Thank goodness for the I-tax,” said Diane Linn, chairwoman of the Multnomah County Board of Commissioners. Without the income tax, she said, schools in the county would have been hit hard and county services harder.

The county estimates its income tax will raise about $128 million a year during its three-year life. Of that, about $89 million is designated for schools, $32 million for public safety and human services and $7 million for administration. County commissioners don’t expect to see any changes in the way the money is allocated, but administrative costs probably will drop significantly because of the county’s deal with the city to handle collecting.

County officials said about 25,000 Multnomah County residents will lose mental health and drug and alcohol addiction services, while 5,400 chronic mentally ill adults served each month will lose treatment.

In addition, 114 jail beds will close, and prescription drug coverage under the Oregon Health Plan Plus will be eliminated, as will 58 addiction treatment beds for high- and medium-risk offenders.

“The chair and the board are committed to putting their heads together and looking at this and being able to manage this as best they can, knowing full well services in Multnomah County will look significantly different,” Uherbelau said.

They worry, though, about what happens when the income tax expires after the 2005 tax year, with the last revenue arriving in 2006. The tax was designed only as a temporary bridge until state finances improved. But without a state solution, Uherbelau said, the county could see a $40 million budget hole after the income tax expires.

Critic sees fat in budget

Russ Walker, director of the Oregon chapter of Citizens for a Sound Economy, which led the fight against Measure 30, said the county could see savings through greater efficiencies and by privatizing services, such as the county jail.

“We spend a lot of money on things we don’t need to spend money on, and I’m sure the Multnomah County budget is full of things like that,” Walker said. “It’s in the way you do business. You can provide a lot of the same services but at a lower cost. You can outsource. And Diane Linn doesn’t have to pay for snow days. She helped our campaign with that stunt.”

Revenue will remain roughly the same in Portland Public Schools and other county school districts, however. With Measure 30 out of the fiscal picture, the county income tax will provide the Portland district with nearly $60 million of its $380 million general fund budget for next year, more than 15 percent.

The bottom line? The defeat of Measure 30 means Portland schools expect a budget of $376.8 million, about $700,000 less than had it passed.
“We are not as affected by it as other school districts,” said Portland school spokesman Lew Frederick.

However, Portland Superintendent Jim Scherzinger told the school board recently that the 2004-05 budget could see a shortfall somewhere between $4 million and $18 million. The severity will depend on the district’s ability to control a range of rising costs, including employee health care costs that are increasing by 20 percent or more a year.

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