Winners and losers in Oregon’s property tax system

Tax caps cost Deschutes County schools millions; advocates call for reform

By Elon Glucklich / The Bulletin

On paper, the math looks simple.

A Bend Fire Department levy passed in May will raise $1.8 million annually over five years.

A Deschutes County 911 levy extended last year means $3.4 million to $3.9 million each year until 2017.

But Oregon’s complex property tax system, where constitutional amendments cap tax hikes for schools and local governments, means cities and schools in Central Oregon and across the state often collect thousands, even millions, less than officials first thought.

A new report by the League of Oregon Cities shows just how big a bite Oregon measures 5 and 50 have taken out of money for services, while figures from the Deschutes County Assessor’s Office highlight the significant local impact.

Local governments across the state have lost out on more than $210 million in revenue since July, The League of Oregon Cities report, released earlier this month, shows.

Backers of the tax caps say that’s just fine: The revenue stays in the pockets of taxpayers, giving them a larger measure of financial security while boosting their ability to spend.

But the city association, which lobbies the Oregon Legislature on behalf of municipalities across the state, argues the caps represent a sort of broken promise to taxpayers, who chose to support the schools and public services through tax hikes.

“You have so many voters who have voted to approve new levies,” Chris Fick, a policy analyst for the League of Oregon Cities, said, adding that 16 of the 21 local option levies proposed across Oregon in last month’s election passed — including the Bend fire levy.

“A lot of people don’t realize the full amount of those levies probably won’t be collected,” Fick said.

The Deschutes County impact amounts to about $4 million in potential revenue for government services lost since 2006, county assessor Scott Langton noted Thursday.

Last year’s county 911 levy extended a previous levy passed in 2008. That levy offered about $3.5 million each year for the department, which coordinates police, fire and emergency responses across Deschutes County.

But because of various tax caps, this year’s revenue came in $153,000 below expectations, and last year’s was $262,000 below.

The exact methodology is complex. Measure 5, passed by voters in 1990, capped tax levies on government districts at $10 per $1,000 of a property’s real market value. Measure 50, passed in 1997, put limits on the amount cities, counties and school districts could impose in the form of new levies, with some exceptions.

Langton said the 911 losses come from Redmond, where levies for government services currently make up about $10.17 per $1,000.

But for schools across Deschutes County, the losses are eye-popping, spurred largely by a smaller, $5 per $1,000 property value cap.

School districts in Bend and La Pine, Redmond and Sisters have missed out on nearly $14 million in revenue from levies since 2007. Almost all the losses have come since 2010.

“Even if voters have said yes” to a levy proposal, Langton said, “you might only get 75 percent” of the amount first thought, or even less.

Fick with the League of Oregon Cities said the organization lobbied the state Legislature last year to give local governments the option to pass levies at rates beyond the $5 and $10 caps, if voters in their jurisdictions approve. Their proposal didn’t gain much traction, but Fick said his group would likely be back with a proposal next year.

“We have more work to do informing voters how these caps are handcuffing them in seeking more support” for services, he said.

— Reporter: 541-617-7820, eglucklich@bendbulletin.com