MEDFORD, Ore. — Marijuana legalization ignited years of debate in Medford, and a windfall of up to $600,000 annually in pot tax revenues has fanned the flames of controversy once again.
“It’s really personal for me,” said Medford City Councilor Clay Bearnson, who pushed hard for retail sales of marijuana in city limits. “It was a hard-fought battle to get cannabis even in town.”
The city has welcomed the pot tax money, saving $839,000 so far and expecting to have about $1.2 million on hand when the city adopts its 2019-2021 budget next July.
But it’s also facing some big bills.
The council is confronted with a $3.5 million increase on top of $11.5 million the city is already paying in the current biennial budget for Public Employees Retirement System debt.
Some councilors and others on the 16-member Budget Committee think the marijuana money should help pay for the PERS debt. Bearnson is not one of them.
“PERS would be a great abysmal pit to put it in,” he said.
Instead he’d like to invest the money on a project the community could be proud of, such as a municipal pool, helping with the affordable housing problem or dealing with homeless issues.
Bearnson said Medford voters approved retail sales in the city in 2016, so they should be able to point to a specific problem that was solved by the pot tax revenues rather than essentially flushing the dollars down the PERS hole.
Ryan Martin, Medford’s chief financial officer and assistant city manager, said he expects to see PERS increases over the next six years, which will add to the city’s budget woes.
“It’s going to be one of the biggest topics of conversation,” he said.
Martin estimates cannabis tax revenues will be about $500,000 to $600,000 a year.
Oregon legislators have discussed providing a 25-percent match to cities that have set up side accounts for PERS, so the city could add some $300,000 to the $1.2 million saved from the pot money. The state has put off enacting legislation to provide the match so far, raising doubts that it will ever be available.
‘A drop in the bucket’
Rick Whitlock, a member of the Budget Committee, said he sees two camps forming on the committee, one preferring to spend the money on the PERS debt, the other pushing to use the money for a specific project.
“It certainly has been an issue that has risen to near the top,” he said.
Whitlock said he’d love to see a new municipal pool, particularly with Jackson Pool getting to the end of its life.
He’s also of two minds about the new money, seeing Bearnson’s point that the public wouldn’t notice spending the money on PERS.
“You just wouldn’t see any obvious benefit from that money if you put it into an account like that,” he said. “Financial advisers say it would truly be just a drop in the bucket.”
Councilor Kevin Stine said the city’s primary obligation when it crafts its budget will be to pay off the PERS obligation.
“What I pushed for, and the rest of the committee agreed, is how we keep our current service levels,” Stine said. “We need to have a certain amount of money to keep what we have.”
But Stine said he sees the appeal in supporting a particular project, though he’s not sure if that project is a municipal pool.
“For me it is difficult to make a decision one way or another,” he said. “The question is how we fill the potential budget gap.”
Stine said he’d like to get more feedback from the community before making a decision on where to spend this new pot of money, or what type of project local residents support.
“At this point, I cannot say the amenity is a pool or an event center,” he said.
Councilor Dick Gordon said the city needs as much money as it can to prevent cutbacks in city services from the PERS debt, so keeping the pot dollars in a side account for a possible match is appealing.
“We need to pay down PERS as much as we can,” he said.
If the match doesn’t come through, another option is to use the cannabis money to help get federal grants for law enforcement that could free up general fund dollars to pay for PERS.
Gordon said Oregon is at odds with federal Immigration and Customs Enforcement, so it raises a question mark over the city’s eligibility for the grants.
He doesn’t think revenues from the cannabis tax are enough to pay off a municipal pool even with a 20-year bond.