Bulletin E-Edition:
3% higher property tax bill may startle you
Actual home values have plunged, but that’s not how taxes are tallied, though legislators may change that
By Nick Budnick / The Bulletin
Published: October 18. 2009 4:00AM PST
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SALEM — For a month, Jefferson County Assessor Patsy Mault has been hearing from people whose property values have plummeted.
They hope to hear that their taxes will, too.
So Mault fills them in: They won’t.
“After I explain it to them, they understand,” she said. “They may not like it, but they understand.”
Deschutes County tax bills were mailed Thursday, and Crook County’s on Friday. Jefferson County’s will go out Monday.
In all three counties, property tax bills in most areas will climb about 3 percent, despite the fact that values of many homes are dropping by 20 percent or more. In some areas, taxes will jump even more than 3 percent because of new local levies and bonds.
The explanation is not simple, which is why Deschutes County Assessor Scot Langton will have extra people at the front counter and handling phone calls. He expects the office to receive 1,000 calls within a couple weeks, many of them from homeowners confused by a law he calls “incredibly complex.”
‘Assessed value’
Under tax measures approved by voters in 1996 and 1997, property taxes are not based on a property’s actual market value. Instead, they are pegged to an “assessed value.”
Measure 50, passed in 1997, set land’s assessed value at 1995 levels minus 10 percent.
It then limited future tax increases by saying that assessed value could grow no more than 3 percent a year — no matter what happened to the real market value of your property.
Taxpayers, therefore, saw their tax bills grow only slowly, while in some years, market values soared. For instance, in the first 10 months of 2005 alone, the median home price in Bend jumped 18 percent.
Now, however, they’re seeing the flip side. Even as market values go down, taxes will rise.
That’s because assessed values are still catching up to real property values.
In Deschutes County, for instance, the county’s overall property assessment is only 47 percent of the actual property values, according to Langton.
In Crook County, the gap is smaller.
For that reason, Crook County Assessor Tom Green said that questions over the unintended consequences of Measure 50 are “kind of coming to a head now.”
The conundrum “has brought Measure 50 more into focus than it ever has been,” he said.
By next year, Green says, assessed value will have caught up with market value in parts of Crook County, meaning tax bills for individual property owners will stop going up.
“I suspect we will see market value drop below (assessed value), especially in our downtown Prineville area,” he said.
On the other hand, local governments and agencies that rely on property taxes have for years counted on 3 percent property tax hikes to help cover inflation in payroll and the cost of services.
So, as landowners’ tax bills stop going up, agencies could face a new budget crisis.
“We’re going to see, for the first time, the taxing (agencies) probably are not going to get their full 3 percent increase,” Green said. “It’s going to be a difficult time for taxing districts to maintain the services that they have.”
In the Legislature
Lawmakers in Salem have been talking about how to fix Measure 50. They’ve even formed an unofficial work group to put together a report by early 2011.
The work group will study four counties, and therefore includes four assessors, including Langton.
“Mathematically, I find it interesting and kind of a puzzle,” he said of Measure 50. “But, as a matter of government, it should be transparent to the taxpayer. I think it missed its mark by a long shot on that.”
Lawmakers hope to pursue a property tax reform measure in the 2011 session.
Nick Budnick can be reached at 503-566-2839 or at nbudnick@bendbulletin.com.
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