Unanswered questions keep school excise tax in limbo

One year after Oregon school districts gained the authority to tax new construction to help defray the cost of building and furnishing schools, only one in Jackson County and about 35 across the state have enacted the fee — in part because of ongoing questions about how to collect it.

The Central Point School District enacted the excise tax in January. The city agreed to assess and collect the fee on the district's behalf when building permits are issued.

But other municipalities and counties across the state have been reluctant to collect the fee because the compensation allowed by law for administration, 1 percent of revenue, is not enough to cover the cost of labor.

The law, created by Senate Bill 1036, also leaves unanswered questions about whether carports and other canopied space and storage structures would be subject to the tax, officials said.

"I would hope the state Legislature in the next session clears up what the tax applies to and whether schools can force jurisdictions to collect it," said Howard George, finance director for the Southern Oregon Education Service District, which has led an ad hoc intergovernmental committee seeking ways to collect the fee. "We are having to fight the battle to collect the tax."

Some Jackson County districts, such as Ashland, Medford and Phoenix-Talent, have not yet decided whether they will collect the tax.

The Medford district, Jackson County's largest, could have collected about $1 million in revenue in 2005-06 had the excise tax been in place, said Kent Stephens, the district's chief financial officer. The revenue would be less now because of a recent slump in construction, Stephens said.

Revenue from the school excise tax of $1 per square foot for residential construction and 50 cents for commercial and industrial may be used for school site acquisition, building furnishings, reconstruction or upgrades of schools, payment of construction debts and architectural, engineering and legal costs related to capital improvements.

The fee per building is capped at $25,000.

Construction of private schools, public building improvements, low-income-housing, hospitals, religious facilities and agriculture buildings are exempt from the fee.

County and city governments process building permits and would be the obvious agencies for collecting the fee, as they issue building permits. However, collecting the tax involves time and money in terms of computer programming and explaining the fee to customers, officials said. In some cases, officials said 1 percent of the excise tax revenue is insufficient.

Medford, Central Point and Phoenix-Talent school districts all have multiple municipalities within their borders with which they would have to come to an intergovernmental agreement to collect the fee.

The Medford district, for example, includes the cities of Medford, Jacksonville and Central Point as well as county jurisdiction.

Central Point collects its tax only in the city, even though it has territory in Medford and the county. Since its tax was enacted last January, it has collected about $30,000, said Vicki Robinson, business manager.

Jackson County will reprogram its computer system to collect the tax within its jurisdiction but will charge the ESD up to $12,750 to set up the system on behalf of the county's 10 school districts. It could be capable of collecting the tax in as soon as two months, said Kelly Madding, county development director. The county also would be entitled to 1 percent of the revenue to collect it.

Officials with the Eagle Point School District said they plan to enact the fee once the county establishes a system for collecting it.

Chris Reising, Medford building safety director, said the city has agreed to calculate the tax for school districts but will not collect it. It would be incumbent on the property owner to send the school district a check to pay the tax, Reising said.

"It will take an intergovernmental agreement for us to do it, and so far we haven't gotten any requests from school districts," Reising said.

Reach reporter Paris Achen at 541-776-4459 or pachen@mailtribune.com.

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