Are Oregonians paying enough property taxes?

by Dan Lucas

Property taxes are very important to Oregon cities, counties and schools. While the state government’s general fund depends largely on income taxes, county and city governments get most of their tax base from property taxes, and school districts and community colleges get large portions of their funding from property taxes.

Measure 5 and Measure 50, which were passed by Oregon voters in the 1990s, served to slow the growth of property tax collections. Measure 5 limited property taxes to 1.5% of assessed value and Measure 50 limited how quickly the assessed value could be raised to 3% a year.

During the 42 years between 1971 and 2013, statewide property tax collections increased every year, except for five years in the 1990s. My property taxes when I lived in Beaverton went from $1,780 in 1990 to $3,275 in 2013 for the same house – an increase of 84% over 23 years.

Decades later, despite the steady increases in property tax collections, school districts like Hillsboro and Salem-Keizer still call out Measures 5 and 50 as sources of their budget woes.

A February 2014 research report from the Oregon Legislative Revenue Office (LRO) offers some perspective on the effect of those measures on property taxes. The report shows that statewide property tax collections in Oregon went from $2.8 billion in 1999-2000 to $5.2 billion in 2012-2013 — an 85% increase over the 13-year period in the report.

For comparison purposes, during that same 13-year period Oregon personal income taxes went from $4.1 billion to $6.3 billion — a 52% increase. Oregon’s population increased 15% during the 13-year period, growing from 3.4 million to 3.9 million. So both the increases in property tax collections and income tax collections have significantly outstripped population growth, and property tax collections have been increasing faster than personal income taxes, even with Measures 5 and 50.

All the increases in property tax collections are not evenly distributed in every Oregon county, city and other taxing districts. The LRO report notes “Property tax rates differ across the state. The rate on any particular property depends on the tax rates approved by local voters and the limits established in the Oregon Constitution.”

Home owners aren’t the only ones who pay property taxes in Oregon. Oregon businesses pay almost half of the property taxes. In 2012, they paid $2.4 billion out of the total $5.2 billion in Oregon property taxes.

As an example, the top two payers of property taxes to Marion County are PGE and NW Natural Gas. And like homeowners, those aren’t the only property taxes they pay in Marion County. PGE and NW Natural gas also pay property taxes to the City of Salem, Salem Mass Transit, Salem Suburban Rural Fire Protection District, Salem-Keizer School District, Chemeketa Community College and to the other cities in Marion County and their comparable taxing districts — as well as in the other counties in Oregon. So part of all of our monthly electric and gas bills goes to paying those property taxes.

With an 85% increase in statewide property tax collections over the last 13 years, it would be hard to make the case that Oregonians are not already paying enough in property taxes. Additionally, the valuation of your home may have little bearing on what you’re able to afford to pay in annual property taxes. That is especially true for those on fixed incomes.

To read more from Dan, visit www.dan-lucas.com