City Projects 4% Annual Loss of Tax Revenue if Fire Districts Combine

Release Date: 
10/13/2014

The Hermiston City Council voted Monday night to support a ballot issue to consolidate the Hermiston and Stanfield Fire Districts.  If approved, the consolidated district would not cost Hermiston tax payers additional, but would increase tax bills for the surrounding area, due to property tax compression.  The City of Hermiston would lose 4% of its annual property tax revenue, however, if the consolidation is approved.

Hermiston residents could experience a loss in service level and programming from City General Fund departments due to the revenue loss.  Hermiston Fire & Emergency Services Chief Scott Stanton offered Monday night, for the new district to pay the City for several years to off-set the revenue loss.

The reason city revenue would decrease is because the proposed fire district would raise the property tax rate within the current Hermiston Fire District by 80 cents per $1,000 of assessed value.  State law limits the amount of property taxes which can be paid for “general government” services to $10 per $1,000, and if taxes exceed the limit, then the actual amount paid by tax payers, and disbursed to taxing districts, is compressed to fit within the cap.

“The bottom line is that the baseline property tax revenue for the City will be cut by 4% if consolidation is approved,” said Byron Smith, City Manager.  “In that case, things like police, the library, parks maintenance, recreation programming, and other city services could have to reduce their levels of service provided in to the future.

The Umatilla County Assessor’s Office estimated that the tax rate increase by the new Hermiston/Stanfield Fire District would cause the City of Hermiston to lose $191,000 per year due to compression.  An across the board budget cut of this size could mean that the Police Department could get $92,000 less per year, while Parks & Recreation could lose $27,000 annually, and the Library could have $14,000 less each year to support its operations.  This revenue would instead be diverted to the new fire district covering the Hermiston area and the area currently covered by the Stanfield Fire Department.

The lost revenue by the City of Hermiston occurs because properties inside of the city have passed the $10 per $1,000 limit, so Hermiston tax payers would not see an increase to what they pay in taxes.  This means that voters in the city may vote for a property tax rate increase that would raise tax bills for current Hermiston Fire District tax payers in the un-incorporated portion of Umatilla County, while not causing tax payers in the city to pay any additional tax.

A full breakdown of the financial impact by city department, as well as the County Assessor’s estimate of revenue loss, are available HERE.

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