October 31,2012 VouR CO/ tMUNITV Page 7
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over the past five years, Fick said.
Rainy day funds are down 16 per-
cent. Some 42 percent of cities re-
port being less able to address their
financialneeds this year, and nearly
half of cities believe that their city
will be even less able to meet fi-
nancial needs next year. Forty-nine
cities saw property tax revenues de-
cline in the 2011-12 fiscal year.
Cities have employed a num-
ber of different strategies to bal-
ance budgets, cutting road main-
tenance, reduced staff, spending
on operations and infrastructure
and required employees to pick up
more of their health care costs, he
said. In some cases, cities have cut
public safety.
The LOC Board of Directors
has made revenue reform a long-
term priority, working toward re-
forms of Measure 5 and Measure
50, Fick said.
Measure 5, passed by voters in
1990, capped property taxes for all
general governments, including cit-
ies, counties and special districts, at
$10 per $1,000 of real market value
and schools at $5 per $1,000 of real
market value.
The maximum tax on a prop-
erty valued at $300,000 is $3,000
for general government and $1,500
for schools.
Measure 50, passed by voters
in 1997, created a new assessed
valueby subtracting 10 percent
from the 1995-96 fiscal year real
market values. It capped the annual
grow.th of assessed value at 3 per-
cent. It set permanent tax rates for
all taxing districts and shortened
the maximum length of a local op-
tion levy from 10 years to five.
Local option levies fund the
Sweet Home Police Department,
the Public Library and Linn County
law enforcement services. A School
District 55 local option levy pays
for the operation of the swimming
pool.
Assessed values increase more
slowly than real market values,
which increased considerably with
the housing bubble, he said. As-
sessors calculate taxes using the
Measure 50 system and then check
them against the Measure Five lim-
itations.
This process creates compres-
sion, which occurs when the value
of property taxes on an individual
property, based on assessed value,
is greater than $10 for general gov-
ernment or $5 for schools when
compared to real market value.
Half of all cities are in compres-
sion, and lost revenue is increasing
dramatically, he said. Cities have
seen it increase 161 percent over
the last four years.
Local option levies are com-
pressed first, all the way to zero,
before permanent rates are com-
pressed, Fick said. "That means that
local voters that approve additional
taxes on themselves often can't re-
ceive the services they support."
Overlapping jurisdictions can
have a detrimental effect on other
governments, he said. Sweet Home
illustrates the problem.
Sweet Home has a permanent
rate of $1.42 per $1,000. Voters
last renewed local option levies for
police and fire services in 2010.
The library's rate increased by 20
cents.
In 2011, Linn County renewed
its local option levy for law en-
forcement.
Along with declining real. mar-
ket values, the county levy increased
compression from from $300,000
a few years ago to $824,000 last
year.
"As a result, the police and li-
brary services the voters voted to
support will not be provided at the
same levels," Fick said. The prob-
lem isn't confined to Sweet Home.
A change in the 9-1-1 rate in De-
schutes County would increase
compression in Redmond. A library
district would increase compres-
sion in Portland. Albany increased
its local option levy rate in 2012,
increasing compression on Linn
County.
Voters may support local op-
tion levies they don't have to pay,
Fick said. In Portland, a third of
property owners don't pay the full
cost of a countywide local option
levy, and another quarter don't pay
anything at all.
Measure 50 bases assessed
values on 1995-96 real market val-
ues, Fick said. As a result many
properties don't paytheir fair share
for services.
In Portland, two similar neigh-
borhoods hold different assessed
values while sharing similar real
market values, resulting in property
owners in one neighborhood pay-
ing substantially more in taxes.
The real market value of the
homes in one area runs between
$250,000 to as high as $380,000,
while assessed values are $73,000
to $82,000, with tax bills of $1,150
to $1,800.
In the other area, real mar-
ket values run from $270,000 to
$311,000, while assessed values
range from about $214,000 to
$252,000. Property tax bills there
are more than $4,000 per year.
This problem isn't confined to
Portland, Fick said. It appears in
cities of all sizes.
Oregon is unique in that its as-
sessed values are not recalibrated
when a property is sold, Fick said.
The LOC is pushing for two
reforms to the property tax system
to address these problems, Fick
said. "First, we believe local voters
should be empowered to pass local
option levies outside of compres-
sion and for a'maximum length of
10 years.
"Second, we believe property
taxes should be reset to market val-
ue when a property is sold or recon-
structed. The sale of a property is
both a market-driven determination
of its worth and an owners ability to
pay their fair share."
Voters across the state support
local option levies, Fick said. Since
1997, 45 cities have passed local
option levies, and 34 have passed
them more than once. Sixteen
counties have passed local option
levies.
The benefits of the two mea-
sures the LOC proposes are numer-
ous. Fick said. First. it empowers
local voters to pass local levies out-
side of compression for the services
they want.
"Second, it can reduce the un-
intended consequences, where the
desires of additional services in one
community can detrimentally harm
the services provided in another,"
Fick said. Third, the measures im-
prove the fairness of the system by
recalibrating values, requiring all
property owners to contribute to a
levy passed in their communities.
"Neither of these two mea-
sures will increase anyone's taxes,"
Fick said.
The video may be viewed at or-
cities.org by clicking on the "Legis-
lative" link and scrolling down to
"New LOC Videos" and "Oregon's
Property Tax System."
The council took no action re-
lated to the video or the LOC legis-
lative concepts.
Present at the meeting were
councilors Marybeth Angulo, Jim
Goufley, Greg Mahler, Scott Mc-
Kee and Mayor Craig Fentiman.
Absent were Ron Rodgers and
Mike Hall.
In other business, the council
adopted an ordinance that will re-
quire property owners to maintain
their properties to specific criteria
when they are considered vacant
and blighted. Among the require-
ments, the properties must be se-
cured to prevent access. Boards
used to secure the structure must
be painted the same general color
as the house.
The council also appointed
high school students Natasha Ben-
son, freshman: Karson Rodgers,
sophomore: and Nelson Rodgers,
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