University students with part-time and full-time jobs may find their paychecks much smaller after July, when Lane County’s new income tax takes effect.
The county income tax, which was enacted by the Lane County Board of Commissioners in a controversial 3-2 vote on Feb. 21, places a 1.1 percent tax on personal and business income earned in Lane County. The tax will take effect July 1 at one-half the rate, while the full 1.1 percent tax will take effect in 2008.
Under the tax, taxpayers who earn $10,000 or less are exempt from the law, while taxpayers who file jointly or as the head of a household are exempted if they earn $20,000 a year or less. People who are not residents of Lane County but earn $2,500 or more in the county are subject to the tax.
County Counsel Teresa Wilson, who helped write the tax ordinance, said it will apply to students who pay income tax through the state of Oregon and earn income in Lane County.
Supporters say the new tax, which will generate $32.5 million per year, is needed to cover the loss in funding for public safety and criminal justice programs, which are faced with major budget cuts after the federal government let the payments used for the programs expire.
Lane County Budget Manager Dave Garnick said the tax revenue will be transferred into a dedicated fund for public safety and combined with $17.7 million of property tax revenue to support the programs.
The programs were previously financed by the federal government under the Secure Rural Schools and Community Self-Determination Act of 2000 (SRS), which provided $220 million to Oregon’s dependent counties, including $47 million to Lane County. The payments expired in September 2006, leaving the county looking to cover the funding.
Career Center Director Deb Chereck said the income tax would affect students who work full-time jobs the most, but even part-time student employees are subject to the tax.
University student Matt Villanueva, who works as a part-time cashier at Flicks & Pics, said he opposes the tax as a working student who has to balance a full load of classes. However, he said the police and safety services are important, and he would support it if the county has to use it to pay for them.
“I guess in the grand scheme of things it balances out,” he said.
Garnick said the county is still trying to lobby for the federal funds, but the U.S. Congress has not indicated that they will renew the program. He said even if the federal government decides to renew SRS, the county will probably see less money.
“We have to put a budget together and have a balanced budget by June 30 or we don’t have money to spend, Garnick said. “We’re basically moving forward with the assumption that we won’t get that money.”
Wilson said the tax rate could be lowered if the federal government decides to continue with all or some of its funding to the county.
The county will put up a tax calculator on its Web site so people can see what the impact of the tax will be on them, Wilson said. She said it will hopefully be available by either this week or next week.
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