EDITORIAL: Ontario city officials stumbled in pushing sales tax

With Oregonians’ historic distaste for sales taxes, it’s remarkable that Ontario officials embraced the idea as their new budget strategy.

City sales taxes are almost as rare as hen’s teeth in Oregon. Just two cities have a sales tax; Ashland and Yachats voters approved 5 percent levies about a decade ago. Unlike Ontario’s plan, those cities tax only restaurant food and non-alcoholic beverages, and were drafted in part to tap the wallets of their abundant tourists.

Other cities have shied away from the idea, and Oregonians in general have been more than cool to the sales tax. Statewide voters rejected sales tax proposals nine times in 90 years, despite arguments that this new revenue source would smooth the state’s budgetary roller coaster. The refusals included three measures defeated in the 1930s alone, as other states began embracing the taxes to fund their growing governments. Just last year, voters rejected another, more limited tax on corporations.

Despite that long history of controversy, Ontario officials this fall forged ahead with a city sales tax to take effect in January. In the ensuing weeks, they seemed almost surprised at how unpopular the idea is with some folks. They didn’t seem to realize that if they wanted to establish a sales tax, the first step should be to make a strong case for it to the people – and to do so before voting it in.

City councilors and the mayor protest that the new tax shouldn’t come as a surprise – after all, they talked about it in council meetings.

Here’s a reality check. Ontario has 5,458 registered voters. If you asked those who have attended even a single city council meeting to step forward, you’d probably be hard pressed to fill one set of bleachers at a Tiger basketball game.

The takeaway here is that rolling out a major, guaranteed-to-be-controversial tax plan probably requires a little more than “come to the council meetings.” It likely requires a proactive political outreach and a clear justification of the need, and we haven’t seen either by city officials with this measure.

That’s not to say that a sales tax proposal couldn’t prevail. Remember Ashland and Yachats. Or that such proposals won’t continue to crop up. On the state level, the sales tax seems to run a cycle, a few quiet years and then somebody rolls out a new plan that is seeks to rebalance our tax structure and solve our budget woes. And more cities may be ready to give it a try.

As Ontario’s situation is showing, they might want to review the troubled past of the sales tax in Oregon before plunging forward. That history shows the rationale needs to be much stronger than “other states do it,” or lists of exemptions, or promises to lighten other taxpayer loads. Political and consulting careers have foundered on the rocky shoals of such arguments.

And if the carrots so far have failed to inspire support, the sticks – threats to cut important services – don’t exactly make for happy voters either.

That’s the conundrum facing Ontario’s council since citizens collected enough signatures to refer the tax to the voters in May. Councilors now find themselves dealing with a popular referendum on an issue that evokes intense debate and a certain amount of distrust. What’s more, it leaves in place for months uncertainty about the fate of key city services. That’s a tough place to be, but those same officials bear the responsibility for the path that got them there.

The council now faces a choice: Stick with the sales tax and slug it out with opponents in a costly, distracting, and acrimonious battle over the coming months – or repeal the sales tax vote and start fresh. We urge the council not to dig in, but to take the latter course and mend the rift. With a strong outreach effort, they should be able to clarify the city’s needs to the public and propose solutions that will gain citizen buy-in from the start. – SC