In Oregon, tax reform discussions typically focus on the need to even out the wild revenue swings of the personal income tax. Certainly, that's still a problem, and Gov. John Kitzhaber has vowed to make it his next big policy initiative. But there is another tax in Oregon's system that badly needs an overhaul.
The property tax is a favorite target for those who dislike government in general and taxes in particular. It's not hard to see why: The property tax is the only one that arrives in property owners' mailboxes every year showing the total amount owed and where it goes.
Nearly two decades ago, voters' frustration with what they saw as out-of-control property tax increases led to the tax limitation ballot measures of the mid-1990s. Those measures rolled real market values back to 1995 levels and limited annual increases to 3 percent, among other things.
As is so often the case with complex legislation enacted by initiative, those changes led over the years to unintended consequences. The result, today, is a property tax system that treats similar properties unequally, ties the hands of local governments trying to pay for needed services and can prevent local entities from collecting all the money local voters have approved.
In an effort to address these problems, the City Club of Portland issued a report last week that recommends a sweeping overhaul of the property tax. Club members will vote on the report in the next week before taking an official position on it. Meanwhile, the report offers plenty of thought-provoking ideas about improving the system.
Read the full report online at http://pdxcityclub.org/2013/Report/Oregon-Property-Tax/HTML.
For starters, the report found the tax treats similar properties unfairly. A guest opinion in Sunday's paper by Chris Frick of the League of Oregon Cities noted one example of two houses in Medford that sold for the same price. One owner will pay nearly $2,000 more in property tax than the other despite an identical real market value. In addition, the report found the tax burden falls more heavily on low-income property owners.
The report also found the caps on total tax rates result in "a confusing, uncoordinated proliferation of tax jurisdictions that cannibalize each other and make accountability more difficult."
What to do? The report recommends asking voters to repeal Ballot Measures 5, 47 and 50 and replace them with base levies subject to review by the citizens, and base assessments on a rolling average of real market value.
There may be better answers and better solutions, but offering voters a chance to revisit the changes they made nearly 20 years ago has merit. Just making the property tax system less confusing would be a good start.