By Hasso Hering | Posted: Sunday, April 12, 2009 12:00 am
Governor Kulongoski told the Oregonian he may try to use the growing budget plight to try to "reset" some conditions in the state, including the tax limits adopted in 1990 and 1997. He can try, but it will be pointless. Because those limits apply to the property tax, it's unlikely voters will give up the only protection they have against a potentially ruinous tax that can throw them out of their homes.
It might be worth remembering how we got to where we are.
For decades, Oregon had the so-called 6 percent limit on annual growth in the amount that a local taxing district could levy. It worked for a while but got out of hand during the 1950s and '60s, when (especially school district) voters all over the state routinely approved increases beyond the limit.
Eventually, the gap between what approved levies and the constitutional limit became so large that annual budget elections were required in most school districts. And if the
voters ever had enough - as happened a few times - the schools were out of luck and had to shut down.
Some reforms were enacted, but they were not enough to prevent towering tax rates that made voters anxious. Measure 5 was the answer in 1990. It limited school taxes to $5 per thousand of assessed value - at the time the same as market value - and other taxes for operating local governments to $10 per thousand dollars of assessed value. (Bond taxes could be outside those limits.)
In 1996, voters approved a more stringent limit, but it was so full of problems that the legislature proposed the fix which, in May 1997, was adopted as Measure 50.
That measure lowered assessed property values to what they had been a few years before and then limited annual increases in the value of each property - as long as it was not further improved - to 3 percent. It also locked in and made permanent the tax rates then in effect.
The result was that most homeowners' real estate taxes could rise no more than 3 percent a year, even if the market pushed actual values much higher.
A 3 percent annual limit on what people must pay was not unreasonable, more or less in line with inflation. But because of population growth and new construction, total tax collections in many jurisdictions after 1998 rose much faster than 3 percent a year.
In this way, the system struck a rough balance, shielding property owners from large increases on the one hand, and on the other raising the revenue of taxing units that provide the services people need.
The evolution and current structure of the property tax system may not be the easiest thing to describe or to follow without falling asleep.
But if the governor has hopes of coming up with something better - a system that does not threaten homeowners while supplying a steady though strictly limited income to local government - voters will want to see what that could possibly be. They're unlikely to buy it because chances are it will work no better than what we have. (hh)