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MailTribune.com
  • Lowering tax rates, raising hopes

    A revenue-neutral tax idea could provide local options
  • We are not big fans of the idea to raise property taxes by linking a homeowner's tax bill to the market value of the home instead of the assessed value. We think it would do little to resolve the inequities in taxes paid and would add more pressure on the already beleaguered housing market.
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  • We are not big fans of the idea to raise property taxes by linking a homeowner's tax bill to the market value of the home instead of the assessed value. We think it would do little to resolve the inequities in taxes paid and would add more pressure on the already beleaguered housing market.
    We also think it has a snowflake's chance in hell of being approved by Oregon voters.
    But the idea gives us another idea that would not automatically raise rates, but could give local governments a chance they do not have now to ask voters for additional support. More on that in a bit.
    The current property tax system arose out of the passage of Ballot Measure 5 in 1990, which rolled back property taxes and capped the amount local governments could ask for. That was followed in the late '90s by measures 47 and 50, which restricted the growth rate of property taxes, among other things.
    Those ballot measures limited property taxes, a good thing for homeowners and business owners, who were saw no end in sight to the increases in their property tax bills. But it left local governments and the state in a world of hurt, as Oregon already had no sales tax, meaning its two-legged stool became a 11/2;-legged stool. The effects of that are evident today in the ongoing local government financial crises, the massive increases in user fees and development charges and the steady deterioration of government services.
    A return to the "good old days" of massive property taxes is out of the question. First of all, they weren't such good days for property owners who were asked to shoulder an unfair share of the load. Beyond that, any change would require statewide voter approval and that is just not going to happen.
    The proposal to relink property taxes to the market value of homes, after they are sold, would return that inequity in spades for some homeowners. While the current system is far from perfect, the new idea could mean identical homes, sitting side by side, would be taxed at different rates because one had been sold and the other hadn't.
    The idea also would put another hurdle in front of the local housing market, which has suffered almost as much as any market in the country following the bursting of the real estate bubble. No one wants a return to the bubble days, but we also don't want to further delay recovery.
    Our idea, which we recognize could be an equally tough sell to some voters, also hinges on a return to using market value for tax purposes.
    But it differs in that we think the shift should be revenue-neutral. All properties should be shifted to a market-value base for property taxes, but the property tax bills would remain the same. While the home value being taxed might go up, the per-thousand tax would go down.
    That accomplishes two things. It puts property owners on a level playing field, with similar houses being assessed for similar tax amounts.
    Beyond that, by reducing the tax rate per $1,000 in value, it would give local governments some room under the property tax caps to go to their local voters and ask for more support.
    One of the sad results of the current system is that a community that wants to support its schools or police department or parks cannot because most local governments are at or near the caps on per-thousand tax rates.
    This idea would give governments the option of asking their constituents for more financial support. Then it would be up to the community to decide, returning some local control to the process.
    This is no simple process to undertake or to get approved. Assessor's offices would face a big task (although homes already have market and assessed values assigned) and many voters would not even want to consider the option of allowing the majority to decide. Then again, isn't that part of our democratic process?
    While it would certainly require plenty of tweaking beyond this simple outline, it seems like an idea worth considering.
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