Budget crisis in Polk County

by Dan Lucas

I have been somewhat horrified at the headlines about the budget problems in Polk County. Things have gotten so bad that Polk County now goes for 14 hours a day without sheriff’s patrol and the sheriff’s office won’t even be able to respond to traffic accidents unless a crime is involved.

How did it come to this?

There are four major contributing factors to Polk County’s budget crisis:

1. The loss of O&C timber revenue, including the loss of the interim federal money to make up for lost timber harvesting revenue
2. PERS unfunded liability driving up how much Polk County has to pay PERS
3. Increasing health care costs for county workers
4. Property tax restrictions

Loss of O&C timber revenue

Polk County is one of 18 Oregon counties with O&C lands. The Association of O&C Counties explains “The lands were originally granted to the Oregon and California (O&C) Railroad Company by the federal government in the 1860’s to encourage development in western Oregon. When the railroad failed to meet its obligations to sell the land to settlers, the government took back the land.” The O&C Act of 1937 “was passed by Congress to compensate counties for being deprived of property tax revenues and a privately-owned land base for economic development.”

Revenues from timber harvesting on O&C lands used to provide significant revenue (around 35% of their budget) for Polk County up until “federal protections for the spotted owl and salmon curtailed 90 percent of logging on federal forest lands.” To compensate for the loss of O&C timber revenue, the federal government provided “spotted owl payments” for a time, but those have dwindled to almost nothing.

PERS unfunded liability

The small increase (1.1%) in the current Polk County general fund budget was not enough to cover the increases in employee costs — PERS contributions and health insurance increases. As the budget notes “costs associated with employees are increasing at a greater rate than are sustainable.” As I noted back in December, the remaining PERS unfunded liability “will continue to quietly sap the budgets of all levels of state and local governments in Oregon.” PERS is continuing to sap the Polk County budget.

The current Polk County budget includes a 3.5% PERS increase. The budget notes that for each 1% PERS increase, it costs the county $140,000. That means that the 3.5% PERS increase took $490,000, nearly half a million dollars, from the total general fund budget of $16.3 million. So just to cover the costs of PERS increases in one budget, Polk County had to cut the equivalent of almost five full-time deputy sheriffs.

Increasing health care costs

Additionally, more than four years after the passage of Obamacare, health insurance costs are still going up. The Polk County budget notes “As health insurance premiums continue to increase at near double-digit rates, the cost burden on the County becomes more serious. For the upcoming budget, our rates are anticipated to increase between 3% – 10% for both providers.”

Property tax restrictions

Polk County has a relatively low county property tax rate because it was set back when they were receiving O&C timber revenue and increases are constrained by statewide ballot measures passed in the 1990s. Polk County voters have resisted attempts to increase their property taxes. The Statesman Journal’s Anna Staver points out “these counties also have lower home values and annual incomes, so asking those with less to pay more is hard. These counties also tend to have more retirees who are living on fixed incomes.” Additionally, there is the view expressed by Polk County Commissioner Craig Pope “The federal government is going to get a free pass and not meet their obligation.”

Conclusion

So what can be done to help Polk County? Oregon’s delegation to Washington D.C. needs to make restoring O&C timber harvesting revenue a top priority, the Oregon Legislature needs to pass meaningful PERS reform, and reforms needs to be put in place that actually reduce health care costs. Once Congress and the Oregon Legislature demonstrate true progress, then either the need for increasing property taxes will go away or they will have demonstrated credibility with Polk County voters. In the meantime, Polk County residents will continue to suffer.

To read more from Dan, visit www.dan-lucas.com