The Strange State of Oregon Property Taxes: March City Club Recap

Property taxes, and the difficulties of funding services within the current Oregon tax system, were up for discussion at March’s City Club meeting this week.

No one seemed to disagree that current property tax rules, particularly limitations imposed in the 1990’s, are problematic. Agreement on solutions was not as easy to come by. Meanwhile, preliminary budgets for the City of Corvallis are in and the general fund is projected to be in a deficit.

Nancy Brewer, City of Corvallis Finance Director, said that after a decade of cuts, there was no clear consensus on what to cut or how to raise revenue. “People say, ‘Cut the budget,’” she said. But when asked where to cut the budget, “Cut the budget,” is the only response.

Well, the City has been cutting the budget. Expenses have been cut over $6 million over the last three fiscal years, largely by “trimming” staff while trying to maintain services. Brewer said that there is nothing left to cut that won’t affect the services someone enjoys. “Anything that we do at this point,” she said, “someone is going to be unhappy.”

Many factors contribute to budget imbalances including increased demand for services and lower property values. Current property tax rules, however, exacerbate problems and limit what voters can do to help solve the problems.

For example, due to Measure 5 passed in 1990, property tax for all general government and schools is limited to 1% and .05%, respectively, of real market value. Even if voters approve special levies locally, this measure still applies.

Allegra White, League of Oregon Cities Research Coordinator, said that Corvallis School District 509J is losing $3,770,000. Voters approved a special levy but because of the limit imposed by Measure 5, the school district can’t collect as much as the levy allowed for.

White also spoke about the problems caused by Measure 50, passed in 1997. Measure 50 set assessed value at 1996 levels and then capped growth on assessed value to 3% per year.

The measure has created unequal tax burdens in some neighborhoods. Houses in gentrifying neighborhoods have assessed value capped at 3% growth per year since 1996 even though their market value may be much higher than that. On the other hand, homes in neighborhoods with high 1996 market values may have much higher assessed values now, even though they have the same market value as houses in the gentrifying neighborhood.

Next month’s City Club meeting will focus on the arts community in Corvallis. For more information, visit http://www.cityclubofcorvallis.org.

by Lana Jones

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