Proposals under consideration by the Oregon Legislature could substantially increase property taxes.
Although no concrete plan has emerged, the League of Oregon Cities has advocated reworking the tax limits and structure approved by voters in the 1990s. These limits and how they are implemented have essentially defined Oregon property taxes for the last 20 years.
Although Grant County Assessor David Thunell said many assessors believe Oregon has the most complicated property tax system in the nation, understanding the two key measures that established the current system provides a basic overview.
Before voters approved Measure 5 and Measure 50 in the ’90s, Oregon’s property taxes were based on a levy system. Budget committees for the taxing districts — such as cities, school districts and counties — would determine the total amount of funding needed, and this total was divided up proportionately among the properties in the district based on their real market value. A property worth $50,000 would pay half the tax of a property worth $100,000.
The tax rates charged by each district could vary from year to year. If the budget committee determined $100,000 was needed and the property values in the district totaled $1,000,000, the rate would be 10 percent. If $150,000 was needed for the same property values, the rate would be 15 percent.
Most levies, however, were limited to a maximum growth rate of 6 percent per year, unless voters approved higher increases.
In 1990, Oregon voters approved Measure 5, a constitutional amendment limiting property taxes to a total of $15 per $1,000 of real market value — up to $10 for general government and $5 for education.
Taxes were still based on the levy system, unless the resulting tax rate exceeded these limits. If either education or general government taxes exceeded its limit, property owners would pay only that maximum rate, rather than a proportion of the levy.
Measure 50, approved by voters in 1997, ended the levy system, established permanent tax rates for all the districts and separated assessed value from real market value.
Assessed values for each property in 1997-98 were set at 90 percent of the 1995-96 real market value. Assessed values were limited to a 3-percent increase each year. Although taxes were based on the reduced assessed value, the Measure 5 limits remained tied to real market value.
Instead of levies with variable tax rates, a permanent tax rate was calculated for each district using a complex formula based on what the districts would have raised under the old system, while incorporating a tax cut, and dividing the total by the new assessed values. These permanent rates multiplied by the assessed values of properties are still used to compute property taxes today.
Certain properties are assessed differently, such as those designated for farm or forest use, and exemptions also reduce tax amounts for certain people or properties.
In 1999, the Oregon Legislature established the forestland program as a special tax assessment, and changes were made to calculations for farm use special assessments. Although taxes are still based on the assessed value and the real market value is still the estimated selling price, for these special assessments the Measure 5 limits are based on the reduced special assessment, known as the Measure 5 value, instead of the real market value.
After the amount of tax due for a property is calculated, exemptions — such as those for veterans — reduce the amount due for those who qualify.
Editor’s note: This is the second entry in the Eagle’s 2017 “Your Taxes” series, in which we will examine all 27 taxing districts in Grant County so you know where your property taxes are going.