Oregon House takes up property taxes tomorrow

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by Bob Clark

The Oregon House Revenue Committee plans to conduct a hearing on House Joint Resolutions 7, 8, 13 and 20 this Thursday, 8am, at the Capitol (“What’s coming up at the Legislature this week“, Statesman Journal, March 2, 2013).  The first three of these Resolutions would seek approval of a majority of voters state-wide in the November 2014 general election.  Resolution 20 would seek approval of a majority of voters state-wide in the next available primary election if two-thirds or more of legislators agree in both House and Senate.  The following is a summary of each of these Resolution’s proposed property tax changes:

Resolution 7

Lifts the property tax rate limit for public education, currently set at a permanent limitation of $5 per $1,000 in real market value, if local school District refers an increase in the education property tax rate limit to District voters and voters pass such increase by a simple majority; provided 50% or more of District registered voters vote in such election.  The Summary of this Resolution also suggests an automatic increase in the state-wide property tax limit to $7.50 from the current $5 limit, if voters approve this Resolution in November 2014 (the next general election).  But the body of the accompanying Resolution does not mention such state-wide increase.

Resolution 8

Effectively, removes existing property tax rate limits for both public education districts (currently capped at $5 per $1k real market value) and other local taxing districts (currently capped in the aggregate at $10 per $1k real market value).  Taxing districts may refer levy increases without limit to district area voters, and such referrals if approved by a majority, replace Measure 5 property tax rate limits (above).  The five year levy term limit would remain unchanged.

I would suspect in places like the City of Portland property tax bills would escalate at a significantly faster pace than the pace set during the last ten to twelve years (which was about 3.6% per year for the average home owner located within the boundaries of the Portland Public School District, City of Portland and Multnomah County).  In other places, notably Beaverton with a history of school operating levy defeats, property tax bills might escalate at a slightly higher pace than under current property tax limitations per Measure 5.

Resolution 13

Recalibrates taxable assessed value of property at sales price whenever said property is sold.  Recalibration would occur after December 2016 whenever real property is bought and sold, such as with the sale of one’s home.

This could have a much more dramatic change in the property tax bill for a given house, or piece of property, than the other three Resolutions.  Most property tax bills are based in large part on year 1997 property value assessments (less ten percent plus 3 percent escalation per year since 1997), and for the average City of Portland homeowner such as myself sales price (approximately real market value) is almost 70% greater than tax assessed value (to which property tax rate is applied to determine property tax bill).  One should anticipate if passed by Voters (state-wide), Resolution 13 causing a degree of instability in the Oregon real estate market.  Home sellers and buyers would be tempted in theory to speed their real estate transactions in advance of January 2017; and thereafter, real estate transactions might be a degree slower than under existing property tax law.

In theory, some recalibration might make sense, but Resolution 13 should probably be modified so as to moderate its effect on property tax bill.

Resolution 20

Lifts the property tax rate limit for public education from $5 to $6.50; and permits school districts to increase it further to $7.50 if referred to District voters and approved by a majority (50% of registered voter requirement remains unchanged).

This Resolution is possibly the most moderate of the four in effecting property tax bills, as it is restricted to public education property tax rate limit and is specific in the body of its language concerning the increase in permanent property tax rate limit.  Being an observer of the City of Portland and its budgeting, I dare say this particular City government deserves no property tax rate limit increase.  OSPIRG, no less, has been critical of City of Portland budget transparency.

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Posted by at 12:07 | Posted in OR 77th Legislative Session, Oregon House, Taxes | 649 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    I thought about Resolution 13 a bit more after writing this short recap. If existing property tax rate limits were to remain unchanged and Resolution 13 become law, property tax limits would assist in some measure in moderating the effect on property tax bill after sale and purchase of a home or piece of real estate. That is, so-called tax compression would be useful in mitigating some of the increase (or in the infrequent case of Housing meltdown, decrease) in Resolution 13’s sharp change in property tax bills for newly sold and purchased homes.

    I am against changes in existing property tax law. Like Nike I am not asking for a cut in taxes, but rather certainty and stability in tax rates and tax structure. This said, I would consider it more reasonable for the legislature if it has to change taxes, to consider legislation which would prevent property tax bills from falling during economic meltdowns. I did a random survey of 400 homes located in the City of Portland, and found in the year 2011, about 20% of Portland homeowners actually saw a decline in their property tax bill due to a collapse in real market value of their homes. This is surely a lagged effect of the unusually severe housing bust of 2008 to 2010. The 20% segment were mostly of high end homes. Might a less intrusive way to bolster property tax revenue be to add a legislative proviso whereby a homeowner’s property tax bill can be held flat by the local taxing jurisdiction(s)?

    Another relates to the personal kicker. Personally, I think the basis of the kicker is badly structured to begin with, as it is based on a state economist forecasting revenue one or two years into the future, as this forms the basis for the budgeting process. I personally think of the kicker as a windfall when I receive it. I would be o.k. with allowing the state to retain it into a rainy day reserve fund until this fund exceeds one to two standard deviations of the last ten years of yearly revenue changes…or something of this sorts. Any excess, could then kick back to Oregon taxpayers.

  • T. Partee

    The over the top tax and spenders must be quarantined if there is to ever to be any hope for common sense sustainability.

    “In this present crisis, government is not the solution to our problem, government is the problem.” – Ronald Reagan

  • oregongrown

    Bob Clark:

    Well-written, concise article. I vote NO on all.

    That’s because I don’t believe for one minute that we can trust our own government to not tax us from our homes. The powers in this state have forgotten completely just why Measure 5 passed with a majority. Schools were taxing us from our homes. And indeed, saw nothing wrong with that. Just like now. Add up all of the taxes that were “for the children.” But not really.

    There is something wrong with every single proposal. And a complete lack of honesty; that is, all of these proposals are intended to RAISE property taxes, not lower them.

    I would vote NO on every single one. And to those that think there won’t be a huge explosion in property taxes if we do away with compression, think again. That is the only firewall we have to have a chance to stop the insatiable, relentless greed of government to take more and more from us, and still try to sell us that it’s good for us.

    Why do they think we work so hard anyway? To have the government confiscate our homes?

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