I n light of the Legislature’s struggles this year with business and transportation taxes, you might conclude that far-reaching revenue policy is made, inevitably, with the volume cranked up to 11. But that’s not true. Even as they’ve noisily debated the merits of taxing gross receipts and bike sales, lawmakers quietly have set the stage for the biggest property tax hike you’ve never heard of. Gov. Kate Brown signed the product of their work into law Thursday.

There are many reasons House Bill 2088 has flown largely under the radar. It’s difficult to understand, as it deals with a fairly arcane part of Oregon’s bewildering property tax system. It doesn’t raise taxes directly. And it applies only to Multnomah County.

So far.

The circumstances it addresses also exist elsewhere, including in many cities in Central Oregon. Property owners outside of Multnomah County should think of this as a pilot project that eventually will expand.

HB 2088 takes aim at the way assessed values are calculated for new properties and for improvements to existing properties. Assessed values are critical for local governments and homeowners, as they’re used to calculate property taxes and may grow by no more than 3 percent per year. They are distinct from and usually lower than real market values, which rise and fall in keeping with the real estate market.

By and large, using a property’s assessed value as the basis for taxation is good for homeowners, who like neither high taxes nor big swings in their tax bills from year to year. But it’s often bad news for local governments, whose costs tend to rise faster than their constituents’ tax payments. So they look for ways to adjust the system.

HB 2088 takes aim at a calculation known as the changed property ratio. Never heard of it, right? It’s a key part of the calculation by which assessed values for new properties are established. The CPR is the ratio of average assessed value to average real market value for various property classes (residential, for instance) within a county. If assessed values in your county are, on average, 75 percent of real market values, the assessed value on your newly built home would initially be 75 percent of its real market value. After that, you could expect it to go up by 3 percent every year while your home’s real market value rose and fell with the real estate market.

To the chagrin of some local officials, this method of establishing assessed values does not consider variation within counties. The average ratio of assessed values to real market values in Multnomah County, for instance, is much lower than the ratio within the city of Gresham. As a result, new homes in Gresham enter the tax rolls with relatively low assessed values (and tax bills), which is good for homeowners, but not so good for city government.

Gresham’s tax dilemma is partly a consequence of Portland’s large and overheated real estate market, which has increased the countywide gap between assessed value and real market value. This gap, which produces a low CPR, provides an indirect tax break for owners of new property in less desirable suburbs like Gresham. If you care about housing affordability, this is a good thing. But if you care about collecting local taxes, as Gresham officials do, it’s bad.

Enter HB 2088, which would allow cities within Multnomah County to use a local CPR rather than a countywide CPR to set assessed values for new properties and improvements to existing properties. The results could be eye-popping. In a presentation submitted to legislators, Gresham calculated the initial tax bills for a sample property brought onto the tax rolls under the status quo and under the authority granted by HB 2088. The latter was more than 50 percent higher than the former. Gresham’s city council could impose the new method of calculation by a three-fifths vote.

The super-majority requirement is somewhat reassuring, but a council discussion about the adjustment of an arcane factor within a complex property tax system isn’t likely to generate a lot of public interest. Until it’s too late, anyway. Pity the county assessors who’ll have to explain to irate people why the taxes on their new homes are so much higher than the taxes on similar homes built only a year before.

As introduced, HB 2088 would have applied statewide. It subsequently was amended to apply only to cities in Multnomah County.

But if Gresham and other Portland-area cities use their new tax-hike authority, look for local officials elsewhere in Oregon, including some on this side of the Cascades, to cry, “me, too.” The Legislative Revenue Office complied a list of 15 cities whose residential valuations, it estimates, have the most to gain from a shift to citywide changed property ratio. One third of them are in Central Oregon, including Redmond, Sisters and Madras.

— Erik Lukens is editor of The Bulletin.