Cities, schools: property-tax limits putting the squeeze on services
SALEM, Ore. (AP) — Leaders of Oregon's cities and school districts want voters to undo some of the stringent restrictions they placed on property taxes in the 1990s.
Several mayors and school-board members made their case to state lawmakers on Wednesday, complaining that property-tax limits from two 1990s ballot measures are severely hampering their ability to pay for police and fire services, libraries, parks, road maintenance and teachers.
"Our revenues are not keeping pace with our expenses, and as a result each year we are forced into more cuts," Salem Mayor Anna Peterson told the Senate Finance and Revenue Committee.
Critics warn that that the local officials' proposals might raise taxes too high for people on a fixed income and could discourage some people from moving.
Local governments have set their sights on Measure 5 from 1990, which capped total property tax payments, and Measure 50 of 1997, which limited the growth of a property's assessed value. They aren't asking for an outright repeal of those two measures, but they do want the state Legislature to refer new ballot measures in 2014 that would limit their reach.
State government is funded primarily by income taxes, but local governments rely substantially on property taxes to fund their services.
Under limits created by Measure 5, property taxes are capped at $15 per $1,000 of the property's value — $5 for schools and $10 for all other taxing districts. If voters approve local levies that would put a property's tax bill above the threshold, local governments must lower their collections proportionately until the threshold is met.
The practice is known as compression. It can prevent school boards, cities, library districts and other taxing jurisdictions from collecting property taxes that voters have approved.
In a neighborhood at or near the cap, a tax levy approved to hire more police officers might end up reducing money available for the water district as all taxing authorities reduce their collections to fit under the cap.
That's happening in half of Oregon's cities, all counties and many school districts, said Chris Fick of the League of Oregon Cities.
"The voters of our district have consistently voted by large margins to support smaller class sizes, but that wonderful community support is losing ground to compression," said Betty Reynolds, a board member for the West Linn-Wilsonville School District. "If a local community chooses to raise money for its schools, we would hope they could realize the full value of that levy."
The measure sought by local governments would allow voters to exempt themselves from the Measure 5 property tax caps in future levy elections.
A separate proposal would undo some of the effects of Measure 50, which fixed the rate of growth of a home's taxable value at 3 percent per year. The local governments' proposal would reset a home's taxable value when it's sold.
Critics don't see the problem, saying voters were clear when they chose to limit the amount of government could collect in property taxes.
Changing the constitution to allow higher taxes could severely hurt people who already struggle to pay their tax bill, said Jason Williams, director of the Taxpayer Association of Oregon.
"These are people who will either lose their home or have their quality of life diminished," Williams said.
Increasing the taxable value of a home upon sale might discourage people from downsizing as they get older because a tax bill might be higher, said Shaun Jillions, a lobbyist for the Oregon Association of Realtors. He said real-estate agents value public services and are open to discussing changes in property taxes, but lawmakers should be careful not to propose changes that would make tax bills unaffordable.
Copyright 2013 The Associated Press.
'Cities, schools: property-tax limits putting the squeeze on services'
Well.... I'll give you 50% on the truth-o-meter on that one.Â
Admittedly, M5 and M50 (not to mention M11) have had a significant impact on municipal, county and state budgets. No question. I would even go so far as to say that there is some truth to the pleas by the Mayors. M5 and M50 were the brainchilds of Don McIntyre and his brand of 'conservatives' who were more concerned with their own bank accounts than the states operations.Â
However, I would argue that the various state employees unions wage and benefit demands, not to mention the whole PERS nightmare have had as much (if not significantly more) impact on those budgets than M5 & M50 combined. Then, there's the reality that our state legicritters and Lord Kitzhaber seem to be incapable of doing anything that even remotely resembles fiscal restraint....Â
I'd say there's plenty of blame to go around. But, just as has been the case thus far, have heart good citizens. There's always a fee, charge, surcharge, assessment or some other defacto tax that can be increased (complete with promises aplenty that it will solve all our problems) to cover any shortfalls. Then, that increase will get sucked into the afforementioned wage and benefits black hole, and the services will once again be sacrificed to make up for it.Â
Yeah.... You guys just approved a billion dollar train bridge that nobody wants. Maybe you should've budgeted your money better.
Never enough money for schools is there? But if we keep throwing money at it, the problem will fix itself. Right. And as just posted, maybe the millions of dollars wasted by the cities and state, involving themselves in business where they have no place being, there might be enough to not saddle the tax payers with their incompetence.
Maybe if the state would stop funding failed solar power companies like SoloPower, they could spend those millions on education and public safety.
@pdxtvguy Maybe if you read the article, you'd understand that this is about local government, not state.
@Festivus ....then the State shouldn't have a department of education !
@Festivus @pdxtvguyCity, State, Federal, it's all the same.
It is not property tax limits putting the squeeze on services, it is overpaid public employees and PERS putting the squeeze on the system.
Ah... No!
If this is put on the ballot I feel it will pass given the two tax measures that were on the November ballot. They use terminology of "it is ONLY $30 more tax per $1000", so people buy into the idea since it's "ONLY" a small amount. What they forget is all those "small" amounts add up quickly. Before you know it the government has raised your property tax by hundreds of dollars a year and talked people into it.
As one friend mine who has run a few times for a state house seat explained about how Oregon does their budget.
The Governor notifies everyone that it is budget time again. Department "X" had a budget of $25 million for the year. They decide that they now need $50 million for the next budget year. The Governor looks at the purposed budget and says "$50 million is a bit much but I will authorize an increase to $35 million next year". Â
Department "X" then jumps up and screams "WE HAVE A $15 MILLION DOLLAR BUDGET SHORTFALL!!"
That is about the simplest way to explain it. Sadly I live in Mult. County and my property taxes are nearly $5k a year on a $200,000 house. Thankfully I'm only staying in it for a few years while I update it and then turn around and sell it.
Don't give Salem or any other government agency one more penny than you have to. Make them live like we have to live. Within the budget.
If they are worried about budget cuts then tell me why so many politicians are giving money to healthy kids healthy Portland to put fluoride in the water in Portland. Not one lives in Portland and is this taxpayer money they are giving? And the list keeps growing and growing..https://www.facebook.com/sethwoolley/posts/437742426304636
@poodlem I'm okay with fluoride in the water. I miss not having cavities.
If they do not have the money to provide adequate fire protection and schooling, why is Gresham building another new police station? When was the last time a policeman actually stopped a crime from happening? While very necessary, the police are mostly an "after the incident" type of force inwhich their main job performed is in the punishing of the criminal. My 1962 house is serving my usage quite well and will be for many years to come. I don't see why the police need a new station. We do however need schools which have adequate funding to teach the children. We need adequate fire and rescue protection. We need good working public utility services. We need decent roads. All this can be done wth the current budget funds as long as we stop these bloody "feel good" projects which serve no real function to the majority of the population. No more bicycle pathways! I used to ride my mountain bike 40 miles a day 4 days a week and not one mile was on a pathway trail. I am totally disabled is why I still don't do that. I never had a single car honk at me or driver express anger at me because I followed the rules. Now they build multi-million dollar bike paths instead of enforcing the laws. It's time our leaders got real about how and where our tax dollars are being used/spent. And it's up to each and every voter to educate themselves before they cast their next vote.
Years ago state agencies at the end of a fiscal year wasted money because they still had money in their budgets so they spent it on items that they didn't need instead of returning the excess back to the state . I'm not sure if this still the case but increases in every budget have to come from somewhere, and since the state is in a recession their isn't money to go around. The private sector loses money when the economy tanks, layoffs take place and some go out of business. the government still chugs along paying fat pensions high wages and wonders where all the money went. Downturns in the economy bring some common sense to  all . yetgovernment still spend,
My property taxes are high enough. Reduce the size of government first.
The problem is excessive government spending, not 'insufficient' taxation. That said, if there really are all these people voting for higher taxes, then provide them an easy way to donate more of their money for schools or whatever.
Strange how California has a lower property tax rate (1%) than Oregon ~10%. Perhaps if the enviro-wackjobs hadn't made the timber industry go away........
@TimBurr LOL! Using California as a model for anything is probably a bad idea. They're in worse trouble.
@TimBurr
California has a luxury tax (10%%), and a sales tax (7.5%%).Â
They also spend like drunken sailors.Â
We don't want to follow California when it comes to ANYTHING.Â
@Repoman Agreed. Just saying they've had a low property tax rate since the 70's.
@TimBurr@Repoman
They have the lowest property tax rate because they have high sales, income and a luxury tax.Â
The property tax rate is not why the timber industry died. Not even the "enviro-wackjobs" are the issue.Â
The issue is that timber is easier and cheaper to harvest in places like China, South America and Canada. So Home Depot buys timber from there instead of the US.Â
Meanwhile, teachers also want more pay and more vacation. Â
 Ballot Measure 5 didn't reduce taxes. They simply changed the value of people's property.
I was a senior at OSU when BM5 passed, and they Journalism, Broadcasting and other programs the way they're threatening to kill the Head Start hostage if the sequester happens. You better vote for it or they'll kill another one.
@Playanekes But it also centralized school financing to the state.  I still remember the hue and cry over this "unintended consequence" when BM 5 was passed.  Half the state threw up their arms and said, "we did WHAT?"
The money is already in the PERS account. If the state would review/reassess the pension funds (which the state cannot afford, from the looks of things) they'd have the money they need.
I know that will not happen.
Really, I'm trying to live, pay my fair share, raise my daughters, help them go to college...Â
I resent the state of Oregon telling me I'm not being fair by paying so little in property taxes, while firefighters and other public servants can retire early and live easy, high really.Â
Well if the Marxist Environmentalists hadn't destroyed the Timber Industry, many school districts and other municipalities would still be receiving the revenue.
@Constitution WarriorI think they prefer "progressive liberals". Not "Marxist".
And with all due respect...I think "pinko fascists" is a closer-to-the-mark, defining handle.
"Our revenues are not keeping pace with our expenses, and as a result each year we are forced into more cuts," Salem Mayor Anna Peterson"
Wake up, stupid Beyach!  That's exactly why those laws were enacted!  not keeping pace with expenses... Bah!
"The measure sought by local governments would allow voters to exempt themselves from the Measure 5 property tax caps in future levy elections." Â you know, individuals can gift directly to the school system, Â or to their pet organization...no need for an exemption clause law.
Rather than trying to figure out how to squeeze the tax payer for more, try living within your budgets, and when something new comes along that needs additional funding, for once, say "nope, we can't afford it."Â
But for God's sake quite holding our schools, police and fire services hostage!
Here we go again, and again, and again - scare the crap out of folks when in reality it is just a typical Liberal tactic to make you feel like you are abandoning our kids and those folks that are too lazy to find a job. I am beginning to think that there are too many Liberals running our gubmint and it never ceases to amaze me with the lame arguments they make in retaliation to some realist's comment(s). They become the grammar police, more taxes will cure it all, et al. Well, you live on your side of the river taking what you believe is real and we will enjoy the sunshine and cheaper everything over here, OK??
Feed me Seymour!
@Peregrine He didn't really mean it And a young Jack Nicholson
@Peregrine What a great movie and 99% of folks on this thread have any idea what you are talking about. Excellent one liner and I am actually envious of your wit!!!!
So glad I left Oregon 6 years and took my PERS pension with me. My property taxes are 1/3 of what I paid there. Utilities are so cheap here. Bought a brand new 3500 sq ft home for $255,000.00, sold mine in Oregon for $327,500.00. No state income tax to pay. Love it here.
@samsloohouse Wait until they take that 9% state tax gross up back for out of state retirees. You might not be gloating quite so much.
@I812Â Good luck with that and there are so many ex-pats from that horrible state and thank GOD that it will come down to incredible lawsuits that will cost taxpayers millions to cover. Uncle John would rather tax and spend - because he loves Omama - rather than cut spending. There is no way one can have a decent conversation with a Liberal that they do not bring-up more taxes to solve the problem with gubmint spending...
@boned You won't get any argument from me on King Kitzhaber but you will get one on the out of state retireees tax break. The tax break and subsequent 9% gross up resulted from a federal lawsuit because the states cannot treat federal retirees any diffently than state retirees. Because Oregon was unwilling to waive federal retiree taxes the solution wa to tax state retirees, although that violated the contractual obligation. The courts ruled that Oregon could tax state retirees if they made them whole, hence the gross-up. Oregon retirees living out of state do not pay Oregon income tax on their retirement soy are not subject to the same contractual obligation since there is no harm. The State is on much better legal ground with this argument than the one in partially taking away the annual COLA adjustment.
Out of state retirees will see their pensions reduced once all the dust settles, in my opinion.
@boned Oregon is not a horrible state.  It's filled with horrible politicians.
Place this on the ballot and Portland would surely vote it in. Portland Loves taxes, because the children and social services will suffer.Â
More taxes and more streetcars please!
@portlandborn83 I'm still waiting for the Aerial tram ski lift from downtown portland to the top of timberline.Â
""Our revenues are not keeping pace with our expenses, and as a result each year we are forced into more cuts," Salem Mayor Anna Peterson told the Senate Finance and Revenue Committee."
Hmmm, that sounds like the same problem a compulsive shopper has. Government keeps negotiating fat employee contracts, keeps adding services, and keeps doing the same things but expects a different result? If revenues are not keeping pace with expenditures try reducing expenditures and see what that does to the bottom line. If is simple math but you will find the results pretty amazing!
Â
I am glad the Ivory tower people never get cuts. It always seems to be the people who do the work. I would like to see a "vacancy" sign in front of the ivory tower
Governments MUST learn to operate on their budget AND put some money away for rainy days. They can't reward themselves with these real healthy salaries, benefits, and retirement pensions. The rest of the world is have a difficult time trying to make ends meet when private sector employers are cutting hours and wages and benefits. Private sector pensions don't exist for those making less than 200K per year.Â
Here's a way to make the need for additional revenue from the legal taxpayers. Cut off any and all funding for any illegal, their anchor etc. No ESL classes, no medical care, and the only legal assistance is DEPORTATION
@FreerideNOT You need to do a little research. Illegals pay more in taxes than they get in services because they refrain from applying for some services and are not qualified for others. There is a net gain in taxes paid by those working here illegally. There is a lot wrong with our immigration picture but a tax burden is not among them.
@I812Â @FreerideNOTÂ Can you site source.
@TreeWizard @I812 @FreerideNOT No. You are only looking at part of the picture. If you look at the total picture you will find a net gain in taxes paid by unauthorized immigrants.Â
@I812 @TreeWizard @FreerideNOT "$79 million and $118 million to educate an estimated 9,400 to 14,000 children who were unauthorized immigrants.35" That stood ou, and. "$79 million and $118 million to educate an estimated 9,400 to 14,000 children who were unauthorized immigrants.35" "Most of the studies that include both revenues and costs for multiple programs show that state and local governments spend more on unauthorized immigrants than they collect in revenues from that population." Sort of proves you wrong right?
@TreeWizard @I812 @FreerideNOT Here is one link and you can find more of this type of information by searching the Congressional Budget Office: http://www.cbo.gov/publication/41645
@FreerideNOTÂ they're already letting illegals out of jail.
@FreerideNOTÂ Yeah, that'll cure the problem. Â *rolls eyes*