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Does Oregon's Property Tax System Need Reform?

OPB | Nov. 7, 2013 12:06 p.m. | Updated: Nov. 7, 2013 3:22 p.m.

via Austin Kirk (Creative Commons)

via Austin Kirk (Creative Commons)

The City Club of Portland says Oregon’s property tax system needs a massive overhaul. The organization has released a new report which blasts the state’s property taxes for being both inequitable and insufficient at addressing voters’ needs.

The report also notes that the issue is really difficult to understand. Here’s the basics: at the heart of any conversation about taxes in Oregon are the limitations imposed by Measures 5 and 50. City Club says both need to be repealed.

  • Measure 5, passed in 1990, limited schools to taxing no more than $5 per $1000 of market value, and non-school government operations to no more than $10 per $1000 value.

Measure 5 led to compression — that’s when multiple authorities set levies that exceed the limit when combined. The City Club report says this leads to “local option levies that cannibalize each other.” For example, when Portland voters passed the Multnomah County library levy last year, it took a bite out of the city’s general fund and the Portland Children’s Levy.

  • Measure 50 further limited tax bills by taxing the assessed value of a property, rather than the actual market value. The assessed value is often lower than a property’s market value.

In this map you can see the drastic differences between assessed value (AV) and real market value (RMV) in certain parts of Multnomah county:

Ratio of assessed value to real market value in Multnomah County, 2011-2012 tax roll.

Ratio of assessed value to real market value in Multnomah County, 2011-2012 tax roll.

RVF&R, City Club of Portland

The limitations set by both Measures 5 and 50 have limited how much revenue the state collects. Due to compression, City Club says, Oregon’s counties are losing $34.3 million per year. School districts are losing $97.3 million. And property taxes aren’t able to keep pace with inflation.

The City Club may have a hard time convincing Oregon voters. A DHM Research poll last year found 47 percent of voters supported minor tweaks to the property tax system, but only 17 percent would support a major reset along the lines of City Club’s proposals. Some admit that there are problems with the current system, but that they pale in comparison to what came before.

We’ll hear more about the City Club report and discuss what changes could be made to Oregon’s property tax system.

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