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 residents any additional tax dollars, but would increase tax bills for the surrounding area, due to property tax compression. The city of Hermiston would lose 4 percent 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, said Hermiston Assistant City Manager Mark Morgan. Hermiston Fire & Emergency Services Chief Scott Stanton, however, 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 Hermiston City Manager Byron Smith. “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. According to Morgan, an across-the-board budget cut of this size could mean that the Hermiston Police Department could get $92,000 less per year, while Parks & Recreation could lose $27,000 annually, and the Hermiston Public 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 surpassed 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 taxpayers in the un-incorporated portion of Umatilla County, while not causing taxpayers in the city to pay any additional tax.
Stanton told the council Monday night that without consolidating the two districts, Hermiston fire services would be in the red by 2018 because of a projected increase in service calls. Stanton said there has been a 62-percent increase in emergency service calls in the last 10 years and that number is only going to increase as the city’s baby boomer population continues to age.
If, however, the consolidation vote passes next month, the combined district would have the revenue needed to meet service demand for the next two decades. Stanton also said he would be able to finally fully staff the Station 2 on Diagonal Road.
A full breakdown of the financial impact by city department, as well as the County Assessor’s estimate of revenue loss, are available on the city’s website.
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