PORTLAND, Ore. (KATU) — More and more local government leaders across Oregon want lawmakers to start the process of changing voter-approved property tax laws, as local governments face multi-million-dollar budget shortfalls ahead of the fiscal year beginning this summer.
Cities and counties said caps on property tax revenue growth don’t allow them to keep up with rising expenses – especially with inflation, healthcare costs, and Oregon’s Public Employees Retirement System, or PERS.
Local governments blameMeasures 5and50. Put simply, Measure 5 limits property taxes in proportion to a property’s real market value, while Measure 50 caps assessed property value growth at three percent a year.
“Property taxes – which are their main revenue sources – are just not enough to pay for general government services,” Jenna Jones, a tax and economic development lobbyist for the League of Oregon Cities, said.
Jones said her organization surveyed cities in 2023 and found nearly a third of respondents expected budget shortfalls in the coming years.
Washington County also recently announced steps it could take to close a $20 million shortfall; Multnomah County leaders reported a $21 million shortfall. Portland reported a $92.8 million shortfall, at least part of which is due to property tax revenues.
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Jones said the property tax system is broken and prevents cities from adequately providing services for taxpayers. Mayors across Oregon said the budget shortfalls are proof.
The League of Oregon Cities supports multiple pieces of legislation that set up workgroups to review Oregon tax laws.
The long-term plan is for the legislature to refer something to voters to change how property taxes are levied.
“Our biggest thing is getting the legislature to help us convene the necessary people to start talking about [this],” Jones said. “What is the new property tax system that replaces the one that we currently have that is actually adequate, that’s fair, that’s equitable for local governments and for community members alike?”
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Overhauling the property tax system, and getting voters to approve increasing their own tax bills, could be a big ask.
The Portland Metro Chamber shared polling this yearwhich showedseven in 10 Metro voters felt their taxes were too high for the services they receive.
Bill Sizemore was the architect of Measure 50 – which came out of Measure 47 passed in 1996. He estimated it’s saved taxpayers at least $15 billion.
He told KATU local governments are “hungry for more tax revenue” regardless of how much they have, and said governments should do what families have done as their expenses went up at a faster rate than their income.
“Before you go to the taxpayers and say, ‘hey, you need to pony up more money because we can’t afford our budgets,’ look at the interior of your own budgets and say, ‘where are we really spending money that we really can’t afford,’” Sizemore said.
He said voters sent a clear message when they approved Measure 50 in 1997.
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“We have to live on a budget. You have to live on a budget, and a three percent increase per year is sufficient for you to survive, just like it would be sufficient for us to survive.”
The current law allows voters to approve levies and bonds to pay for specific things – like police and fire. Gresham voters recentlyapproved a public safety levy.
Sizemore said it gives taxpayers the power to supplement government budgets when they agree to. However, those tax measures typically expire, and local governments said it leads to a lack of certainty for policy makers.
