Is OSU Benton County’s Biggest Property Tax Cheat?
There’s a stealthy little debate about taxes going on. It’s not about whether paying more or less of them is a good idea—that debate is anything but stealthy. The quieter, but still vital question is that of property tax exemptions, and whether they’re worth it for the municipalities that shoulder them. It’s a significant question for Corvallis; Oregon State University is a property tax exemption bonanza. So what’s the fallout?
If state property were subject to the same property tax all other home and business owners are, it would have meant an additional $454,770,211 of taxable Benton County property in 2013 alone, according to Benton County tax records. That could be roughly $4.5 million of school, police, and public improvements. OSU owns only a small portion of that; most of the university’s holdings are in the $138,830,197 of tax-exempt property listed as “literary, charitable, and scientific organizations” by the county.
Assessing real numbers can be difficult here, but according to its 2013 annual report, OSU owns over 10 million square feet of property in its 396 buildings. That doesn’t count all the farmland and other large swathes of property without buildings that it owns as well. However, further complicating the impact tracking is that not all of OSU’s property is in Benton County. The university has research and farm sites all over the state.
What fuels the debate is that property taxes are in some ways a zero sum game. Before 1990, they were exactly that. Any property’s value exempted from the tax rolls had to made up by the other taxpayers. Under this system, business owners were understandably displeased as they bore a disproportional brunt of the property tax burden, which paid for the police and other county services that OSU also benefitted from. Measure 50 was passed in 1990, which permanently lowered property tax rates severely curtailing the ability of the state to shift tax losses due to exemptions.
Additionally, it’s worth noting that the desire for OSU to be treated as just another business, without the tax exemptions it enjoys, might also invite the desire for its labor practices to conform to the private sector. There’s no way to directly calculate it, but it would result in massive job losses and benefit cuts. Part of the burden the university bears for the community, arguably in exchange for the tax breaks, is the carrying of employees a private company would have laid off long ago. Due to its dealing with public sector unions (as opposed to private sector or none at all), OSU employees enjoy disproportionate job security to the private sector, which helps keep Benton County afloat during times of economic stress.
But the underlying factor is still there: OSU benefits from a lot of the things that the county provides with their property tax revenue, but OSU doesn’t contribute.
At least not by paying into direct property tax revenue.
OSU does contribute greatly to basically every other income stream the state and county have. There’s orange in almost everything around here.
* 16,070 – The number of employees OSU insures for workers compensation, according to its annual report. Most of these employees are right here in Corvallis. They live, and consume and produce right here in Corvallis, to all our benefit.
* $25 million – The amount OSU merchandise brings in retail sales per year. A lot of that money is going to local businesses hiring local employees.
* $540 million – The amount of OSU research funding at OSU for 2011-2012 total. That is a lot of research cheese that has led to over 100 active licenses, 227 patents and local startups seemingly springing up every day. The OSU Advantage Accelerator is adding to those numbers bringing entrepreneurs and innovation to Corvallis.
* $581 million – Total OSU payroll costs for 2013. That generates a lot of tax revenue that goes to a lot of different places.
* $892 million – Total OSU revenues for 2013. That’s a lot of economy centered right here. It’s like having a pretty huge company right in our backyard. Oh, wait—it’s exactly like that.
* $950 million – The gross impact of student and visitor spending on Linn and Benton counties is enormous. Nearly a billion dollars enormous. Without this, Benton County would be a much less functional place to live.
* $2 billion – The gross impact statewide of university spending.
These numbers also don’t capture the benefits a major university brings to the community. Free concerts, art exhibits, and speakers are constantly cycling through the college. The crafts center, La Sells, Fairbanks Gallery, and OSUsed surplus sales are just some of the many resources that local community members take advantage of on a regular basis. And of course having major football, basketball, and baseball programs provide residents a local sports culture that only Eugene and Portland can match in the state.
Look to Albany and Lebanon to see what Corvallis would probably look like without OSU: lower home values, lower salaries, higher unemployment numbers, and less small business innovation. In Corvallis, the median home value is $272,800 versus $163,700 in Albany. Per capita income in Corvallis is 3% higher than in Albany ($22,837 vs. $22,133), even though Corvallis has a large portion of its population as full-time students who tend to make far less (or nothing) than their full-time employed counterparts. Skewing those numbers even further is the fact that a lot of Albany residents work in Corvallis (usually for OSU) bringing higher salaries back to Albany with them, whereas there aren’t nearly as many full-time students living in Albany and commuting to Corvallis for school, and thus bringing down per capita income.
That’s the clincher. OSU may not exactly pay their “fair share” of property taxes, and that can certainly miff local business and property owners. But the upside far outweighs the downside. And not just for locals who enjoy all the culture and community betterment the university brings, but also the business owners who get an influx of out-of-state and out-of-county cash coming in to their registers. It’s always hard to swallow the bitter pill of a higher tax burden, but in this case it should be plain to all that OSU’s presence is worth the cost.