OR: City’s Pot Tax Take Comes In Higher Than Expected

Photo Credit: Jae C. Hong

Local and state marijuana taxes are generating quite a bit of green for the city of Eugene.

City officials have received more money in pot taxes than they initially projected for the current budget year — and they expect the same higher-than-expected amounts to continue into 2019.

In 2016, Eugene voters approved a 3 percent tax on local retail marijuana sales.

City officials had initially projected receiving $320,000 in tax revenue for this budget year, which ends June 30.

But in December, after the budget was adjusted, the amount of taxes received so far prompted officials to increase the annual estimate to $425,000.

The city first budgeted $100,000 in state tax for the current fiscal year. But officials later changed that to $900,000, including a $500,000 back payment from the state in pot tax revenue from the previous fiscal year.

Even though pot taxes exceeded initial projections, the amounts represent a tiny source of revenue for a municipal government with a total annual budget of $677 million. The city, for example, is projected to receive $114 million in property taxes in the current year.

City councilors had previously decided that local pot taxes should be spent on social services, the new community court and parks security.

Based on the earlier projection, the city had budgeted $250,000 for community justice, $50,000 for parks security and $20,000 to administer the tax.

The city decided to spend the extra $105,000 on community court, a program that links offenders who commit minor offenses downtown to social services and supervision by a case manager.

The city is carrying the same projected $425,000 into the new budget year that starts July 1.

Oregon cities receive a 10 percent share of the statewide marijuana tax, and it’s allotted based on their population and number of marijuana licensees.

The city is budgeting $400,000 in state taxes for the coming fiscal year, said Twylla Miller, the city’s acting finance director.

The state tax distribution to Eugene goes to the city’s general fund, which pays for its day-to-day operating costs, primarily employee expenses.

Marijuana remains illegal under federal law.

Last week, Miller told the city’s budget committee that the city isn’t budgeting an increase in either local or state tax revenue in the coming budget year, which ends in June 2019.

A drop in retail marijuana prices and ongoing uncertainty about a federal crackdown on states that have legalized recreational pot could affect pot sales and future tax receipts, she said.

“We will continue to budget conservatively for this revenue source,” Miller told the budget committee, which is composed of the eight city councilors and an equal number of resident representatives.

City Manager Jon Ruiz will unveil his proposed budget in April.

Based on current projections, there will be no shortfall in the coming budget, although the city isn’t flush with money, Ruiz told the budget committee on Monday.

The advisory group will review Ruiz’s proposed spending plan and possibly make changes before sending it to the City Council for final approval in June.