ONTARIO — A 1 percent sales tax on certain goods sold throughout the city will not start being collected on Monday. This was the hope of the Ontario City Council, per the ordinance the group passed Sept. 26.
However, petitioners effectively put a stop to any collection until the matter goes before the voters in Oregon’s primary election on May 15.
Less than a month after the ordinance passed, petitioners gathered enough signatures from among Ontario’s registered voters to put the matter up as a referendum.
Under Oregon’s referendum process, once enough signatures are verified the issue must go to the voters before it can be enacted. Malheur County Clerk Gayle Trotter confirmed on Oct. 26 that there were more than enough signatures.
“In the meantime, there is nothing for the city to be able to collect,” said Ontario City Attorney Larry Sullivan.
The general public, however, is still unaware that taxes won’t be collected unless voters OK it.
Corinna Hysell, who works in accounts receivable for the city of Ontario, said even since the petition passed, she has been fielding a lot of phone calls, some even as recently as Friday.
“People have called and asked, wanting to know if it will take effect Monday,” Hysell said.
Calls have been coming from both business owners and people, she said, who have been saying they aren’t ready for the sales tax.
Hysell said she and others who answer phone calls regarding the matter have reassured people it will go to a vote first.
Sullivan explained the reason for not collecting taxes before the vote is the massive backpedaling it would entail if voters stopped the tax after it already had been collected for five months.
“As a practical matter, it would be impossible to go back,” Sullivan said. “We’d have to return all that money.”
A couple phone calls to local retailers later, and the picture is clear that it would be nearly impossible for them to track each of their tax-paying customers for a payback.
Ballot deadlines loom
Work to get the 1 percent sales tax in front of voters faces several deadlines between now and May.
On Jan. 18, city officials and petitioners will sit down with a Malheur County Circuit Court judge to pour over ballot language regarding a sales tax in Ontario.
This is because an attorney, on behalf of the petitioners, challenged the language submitted by the city.
Though the ballot title has been agreed upon, it’s the summary language the parties will be discussing with Judge Lung Hung, according to Ontario City Manager Adam Brown.
Initially, the city had submitted a ballot title that was “written in the negative instead of the positive,” he explained.
The parties now agree, Brown said, that a “Yes” vote means the voter supports the 1 percent sales tax, and a “No” vote will mean the voter is against it.
The state allows these challenges to ensure equity in the referendum process.
“It’s good to know there’s a process to make sure everything’s fair and accurate,” Brown said.
Another approaching deadline is in February, which is the final time to “get anything on the ballot,” he said.
City officials had agreed to amend the City Charter to cap any sales tax at 1 percent, preventing an increase above that rate unless voted on by Ontario residents.
Although the County Clerk’s Office has yet to receive any paperwork from Ontario City Clerk Tori Barnett regarding an amendment, the plan is still to submit it, according to Brown.
This ballot item will be tie-barred to the sales tax matter, he said, meaning that if people vote ‘Yes’ to support a sales tax, they will move on to the second question about whether they support a cap at 1 percent without a vote of the people.
‘Adverse psychological effect’
Though petition-signers made their choice known, the reaction about the tax has been a mixed bag among business owners, with many being vocal about their stance.
One of those business owners has already seen the impacts of how a tax can change the shape of a business.
John Grief, who owns Grief’s Music Center with his wife, Sue, worries about history repeating itself, as well as the psychological toll a tax would take on people.
Grief said his father started the music store in 1948 in Payette, and when Idaho enacted a 3 percent sales tax in 1965, it “started a big shift.”
The interstate came to town about the same time, he said, and people started “going over to Ontario to shop.”
Prior to Idaho’s statewide sales tax, Grief said, Payette was a “little more equal” of a shopping center when compared to Ontario and its retail stores.
“My dad could see within five years that it was having a negative impact,” Grief recalled, and said his father urged him back in 1969 to “seriously consider moving over to Ontario.”
By 1985, one year after his father’s death, Grief opened up in Ontario. By then, Idaho’s sales tax had already jumped several times (many people have expressed concern over the same thing happening in Ontario), and was up to 4 percent.
And although Grief thinks 1 percent is a small amount, he said, “it has an adverse psychological effect, because every little bit makes a difference in people’s eyes.”
And down the interstate in Nampa or Boise, Grief points out is a bigger selection and maybe better prices.
While saying he doesn’t think a sales tax is the right option for Ontario, Grief also said, he doesn’t know what the solution would be to the city’s financial woes.
Jason Jungling, manager of the Plaza Inn said he sees pros and cons on both sides, saying that with more of a “retirement generation in Ontario” it could potentially affect everything as a whole.
That goes for his restaurant customers, too, as the “majority of our clientele is the senior-clientele base, with them being on a fixed budget.”
As far as alternative solutions to a tax, Jungling said the city needs to look at other options to bring revenue in, too.
He said he’s not a “big firm believer in the whole marijuana thing and whether the city should have passed it or not.”
“But in hindsight, the problem is already here, whether it’s being sold here. … It would make more sense for the city to capitalize on that sale than say no to it.”
Then again, he said, “maybe that’s just a bandaid on a problem that’s going to manifest.”
‘Lede time for planning’
If voters agree to a 1 percent sales tax, it’s unknown at this time when it would go into effect. The Argus had reported that it would go into effect Jan. 1, but the reality is if voters approve the tax, Sullivan said, the City Council would have to redetermine the timeline.
“They created a lede time for planning,” he said, referring to the three or four month window of time from the date the council OK’d the sales tax ordinance to the date businesses would have to begin collecting the taxes.
The gap would give businesses a chance to get ready to collect the tax. Although it would be up to the council, Brown said a realistic idea would be about one quarter of a year.
Brown confirmed that while the ordinance is not currently in place, it still sits in the background.
“If [voters] vote yes, the ordinance would stand,” he said.
Some cuts won’t wait till July
Even now, the city is feeling the budget crunch. Effective Tuesday, front desk hours will be shortened from 9 a.m. to 4 p.m., shaving off an hour on both ends.
Finance staff who had been rotating coverage of the front desk conducted a customer count by the hour for the month of November, Brown said. The study found the first and last hours of the day saw the least amount of traffic.
“That is the least impactful on the customers,” he said.
Brown said he implemented a hiring freeze since human resource director Anita Zinke left in October.
Front desk staffing has repeatedly been an area that city officials said could be among those facing on the chopping block, and Brown cited the city’s financial condition as a reason for the cut in a news release sent Friday afternoon.
“This change will allow our finance staff to have dedicated and uninterrupted time to fulfill their normal operations and maintain proper financial controls,” he said in the release.
For the police department, the cuts may not be realized so soon.
“I have authorized two police positions to be refilled,” Brown said. He noted however that “both officers were told of the financial conditions and the possibility that we may need a reduction of force come July 1.”
According to estimates from FCS Group, the city could bring in $3.7 million per year from collection of a 1 percent sales tax.
That money could go towards an assortment of options, according to city officials, such as balancing the general fund to maintain services ($900,000); adding five police officers ($500,000); spending money on the Ontario Aquatic Center ($300,000); or providing beautification to the city ($100,000), among others items.
Without revenue from the sales tax, city officials say, a variety of areas across the city are facing the chopping block. The entire Recreation Department could be in jeopardy. Code enforcement could see a reduction in staffing, and there could be the loss of a firefighter position. City park maintenance, funding for Malheur Transit and Snake River Economic Development Alliance also face cuts.
“It’s in the voters’ hands,” Brown said. “We desperately need it.”