Corvallis leaders debate tax inequity and funding burdens from nonprofits

The Corvallis City Council held a work session on December 16, 2024, focusing on the city's financial challenges and potential solutions to address inequities in tax contributions. A significant point of discussion was the impact of tax-exempt properties, particularly those owned by Oregon State University (OSU) and other nonprofits, on the city's revenue.

Council member Paul raised concerns about the fairness of the current tax structure, suggesting that a payroll tax or income tax could help capture contributions from those who benefit from city services but do not pay property taxes. He emphasized that many residents feel that certain entities are not contributing their fair share, which exacerbates the financial burden on taxpayers.

In response, Council member Tony defended OSU's economic contributions, highlighting the university's substantial research funding and job creation in the community. He argued that OSU plays a vital role in the local economy and that the perception of unfairness regarding their tax contributions is misleading. Tony suggested that the focus should be on seeking more state funding rather than placing blame on the university.

The discussion also touched on the potential implications of introducing new taxes, such as a payroll tax, and how they might affect residents' willingness to support future school levies and bonds. Council member Bria expressed concern about proposed service reductions, indicating that any cuts would need careful consideration to avoid negative impacts on essential services.

Laurie added to the conversation by pointing out that other significant tax-exempt entities, such as Samaritan Health Services and various nonprofits, also contribute to the financial challenges faced by the city. She noted that these organizations, like OSU, do not pay property taxes, which places additional pressure on those who do.

The meeting underscored the complexities of funding city services in a community with a large number of tax-exempt properties. Council members acknowledged the need for a balanced approach to taxation that considers the contributions of all community members while ensuring the sustainability of city services. The council plans to continue exploring these issues in future sessions, aiming to find equitable solutions that address the city's financial needs.