The Capitol, where tax proposals are pending.
It is no news that the Oregon property tax system is a total mess, but efforts to fix it so far would only make it worse. One such Band-Aid is House Joint Resolution 21, which calls on the voters to amend the Constitution to impose a minimum county tax rate of $2 per thousand everywhere in the state.
The idea is to help counties whose permanent tax rate, set by Measure 50 in 1997, is less than two dollars. Those counties are Columbia, Lane, Klamath, Polk, Clatsop, Hood River, Douglas, Coos, Josephine, Curry, Tillamook and Linn.
In Linn County, voters have generously approved hefty local option levies to support law enforcement to the point where the total county tax rate ($4.29) is the sixth-highest in the state. In many of the others, though, voters have refused to step up and law enforcement and other county government functions have been cut way back.
Things got so bad in some counties that Gov. John Kitzhaber, before he resigned, had considered how the state could step in. One way out is HJR 21, on which the House Revenue Committee held a hearing in in early May but has not yet acted.
One of the provisions in the bill is that compression — the system of forcing the sum of all operating tax levies on a property to fit within the constitutional rate lid of $15 per thousand dollars of assessed value — would not apply to the proposed $2 minimum tax rate of counties. Benton County Commissioner Annabelle Jaramillo testified for the measure and said that the compression exemption would apply only to the counties that benefit from the $2 rate. That seemingly would affect Linn County, where the permanent county tax rate is a mere $1.27 per thousand, and where HJR 21 would force it up to $2. So this proposal would reward Linn County voters, who have voluntarily raised their property taxes, by forcing them to swallow another two-step increase — on the rate itself and the elimination of compression — without a local vote. And that would not be right.
The property tax system needs fixing because even well informed citizens don’t understand all of it, and because it is unjust. It has resulted in unequal taxes on like properties, and it has produced weird results when a big taxpayer wins a refund. (The Hewlett-Packard refund case in Benton County is still on appeal, but the early result was that taxing districts such as Albany were billed for part of the refund due HP even though the city and the others don’t benefit from HP’s taxes.)
Quick fixes like HJR 21 are not the answer, though. They create only more complications. We need a total overhaul of the system that procides simplicity and fairness along with tax limits at least as strong as those we still have. (hh)
Thank you for reporting on another bill I was not aware of. I agree that this seems like another poorly thought out bill, similar to a few others this term that have really left me disappointed with the current group of legislatures.
You’re exactly right that the property tax system is a disaster. The legislature would have to find a compromise that is seen as “Fair” to have any chance of making a constitutional change pass the voters. So maybe we should think about what are the elements of “fair”?
1) Should all properties be assessed equally on their value, regardless of when they were constructed or last sold? (Not talking about the tax rate here, just whether all properties are evaluated/taxed the same.)
2) Should property taxes only be assessed to individuals, or should property owned by businesses/corporations be taxed also?
3) Should there be an absolute maximum tax rate set state-wide?
4) Should there be an absolute minimum tax rate set state-wide?
5) Should people who live within cities pay some property taxes to the county?
6) Should people who live outside of cities pay some property tax to cities?
7) Should voters be allowed to approve bonds and/or levies outside of any maximum tax rate?
8) Should tax rates be automatically adjusted to match inflation?
9) Should seniors get tax preferences just because of their age?
10) Should property taxes be collected based on a single state-wide rate an be returned to cities/counties based on population?
11) Should areas designated for economic development get tax breaks to encourage development?
12) Should religious and non-profit organizations be exempt from property taxes?
There are probably a hundred other questions that could be asked, but maybe this is a start.
Good questions. I’ll take your survey in just a minute. Another interest of mine as I have watched my grandparents (in California back in the 70’s) and now my mom (here in Oregon today) both retire on a very limited income being pummeled by property taxes. In both cases they own their houses and paid taxes on them for 50 years, but their incomes drastically dwindled in retirement, such that the ever rising property tax becomes a real burden, in both cases preventing them from doing basic maintenance such as fixing the roof.
So my question would be
13) Should the property tax have a maximum that is a specific percentage of the homeowners income.
The exact percentage could be negotiated. It should be high enough such that it is not reached by a person (or couple) who works full time. I would like to see it at 8% or so. This would provide protection for someone who is laid off for an extended period of time, or retires, or is forced to retire early which happens frequently today, or who is downsized and has no choice but to work at $10 /hour job.
The current property tax provides no connection between one’s ability to pay and the money demanded by the state (unlike our income tax and the sales tax in other states).
FYI: My dad died early of a heart attack before he could retire. While he left some money, it was far short of what he had planned. My mom made some money quilting, and still does, she is 75 this year. Her income is about 1500/month or 18000/year. While she owns her home, the tax bill is over $3000/year. So over 16% of her income goes just to the property tax — before food, heat, utilities, medical, auto, home maintenance, etc.
I made a Survey Monkey survey for these questions – but I had to limit it to 10 (dropped the City/County payments). If you want to take it here is the link address:
https://www.surveymonkey.com/s/FFKBQQ9
This link will show results:
https://www.surveymonkey.com/results/SM-2P5ZRC7D/
1 response per computer is allowed. I filled out the survey choosing the not sure option on all questions, except 1 question that did not have Not Sure. I’ll try and delete that record later after any real responses are put in.
Thanks. This should be interesting.
7:15 pm. I deleted the first response that I put in as a test. There are currently 4 responses tabulated. I’ll leave it open for a couple of days longer.
I have closed the survey. There were 8 responses, The results link will still work.
If you’d like to do something like this again, just let me know.
Wow, with only 6 voting so far (a limited sample size), I’m surprised by some of the answers so far — especially questions 1, 3, and possibly 9.
As I mentioned in my earlier post, I would modify 9 to reflect income (not just age), and see if the response varies.
The answers to 1 and 3 (equal assessment values and exemptions for churches and non-profits) seem to indicate a desire for fairness — everyone should pay their share. I get that. But this simple desire does not take into consideration, one’s ability to pay.
As a very real for instance, I attend my mother-in-laws church here in town. While the church has been there since before my wife was a child (so 50+ years) the congregation has dwindled and aged. They have a sign on the wall which shows church expenses and church donations during the week. They bring in very little money (several hundred a week)
So the result of taking away the exemptions very likely would be the state closing 100’s of such churches (and non profits as well) all across the state, forcing them to sell, and taking away very meaningful social and religious parts of many folks lives.
But back to linking property taxes to ones’ ability to pay. If this were applied to churches, non profits, and even businesses as well as individuals, then there could be a solution.
-Shawn
Ability to pay has some baggage with it that you need to be aware of.
Like the progressive income tax and applications for govt. assistance, people would have to disclose all their financial information, or it has to be linked directly into the income tax system. Since property taxes are run county-by-county, that means a a new level of bureaucratic involvement, so there will clearly be some additional costs.
The income tax also only goes by current income in a year, not overall wealth. Someone could potentially have relatively modest income, but own significant wealth through property, art, land, savings accounts, etc.
Yet it is certainly a item that could be discussed. In the end, any compromise means that people have to give on what they want, versus what they are willing to accept.