Proposed by initiative petition to be voted on at the General Election, November 5, 1996.
RESULT OF "YES" VOTE: "Yes" vote reduces current property taxes; limits future increases; limits local revenues and replacement fees.
RESULT OF "NO" VOTE: "No" vote retains the existing property tax system with current limitations on property tax rates.
SUMMARY: Amends constitution. Limits 1997-98 property taxes to lesser of: 1995-96 tax minus 10 percent, or 1994-95 tax. Limits future annual property tax increases to 3 percent, with exceptions. Limits revenue available for schools, other local services funded by property taxes. Local governments' lost revenue may be replaced only with state income tax, unless voters approve replacement fees or charges. Provides no system for spreading revenue cuts among local governments. Restricts new bonds. Tax levy approvals in certain elections require 50 percent voter participation. Other changes.
ESTIMATE OF FINANCIAL IMPACT: This estimate is based on the following assumptions: increases in assessed property values and levies will continue at historic rates; local voters do not approve levies outside the new limits; new construction can be added to the tax roll in 1997-98; and existing bond levies are exempt from this measure even if not voter approved.
Direct revenue loss to local governments including school districts is estimated at $467 million in fiscal year 1998, $553 million in 1999, and increasing thereafter. Direct revenue losses to each type of local government unit, including local school districts, community colleges, cities, counties, and fire districts, will depend on legislative action.
Direct revenue gain to state government is estimated at $23 million in 1998, $27 million in 1999, and increasing thereafter because of increased personal and corporate tax receipts due to lower property tax deduction.
Direct one time expenditures required of counties in the first year of the measure for implementation by assessment and taxation offices are estimated at $1,650,000. Direct annual expenditures required by counties for assessment and taxation offices are estimated at $950,000.
PROPERTY TAX REDUCTION ACT
BE IT ENACTED BY THE PEOPLE OF THE STATE OF
OREGON:
Paragraph 1. The Constitution of the State of Oregon is amended by creating new sections 11g, 11h, 11i, and 11j to be added to and made part of Article Xl and to read:
Section 11g. Notwithstanding Section 32, Article I, Section 1, Article IX, Section 11, Article 11, or any other provision of this Constitution;
(1) Except as provided in subsections (3), (4), and (5) of this section, the ad valorem property tax on each property for the tax year 1997-98, excluding the portion of the tax that is levied to pay bonded indebtedness or interest thereon, shall not exceed the lesser of the following: (i) the ad valorem property tax on the same property for the tax year ending June 30, 1996, reduced by ten percent (10%), or (ii) the ad valorem property tax on the same property for the tax year ending June 30, 1995.
(2)(a) For tax years following tax year 1997-98, except as provided in subsections (3), (4), and (5) of this section, the ad valorem property tax on each property shall not exceed the tax for the previous year, plus three percent (3%).
(b) The portion of the property tax that is levied on each property for the payment of bonded indebtedness or interest thereon is exempted from the three percent (3%) annual increase limitation set forth in (a) of this subsection.
(3)(a) On and after the effective date of this section, there shall be no new or additional ad valorem property tax levies against real property unless the question of the levy has been approved by not less than fifty percent (50%) of voters voting in a general election in an even numbered year, or other election in which not less than fifty percent (50%) of the registered voters eligible to vote on the question cast a ballot.
(b) Nothing in this subsection shall affect taxes levied for the repayment of bonded indebtedness approved by voters in an election held prior to the effective date of this Act, or the issuance of refunding bonds to pay such bonded indebtedness. This subsection shall not require voter approval for the issuance of, or the levy of taxes to pay, bonds issued to refund bonds issued in conformance with this subsection.
(c) For purposes of this Article, capital construction and improvements for which bonded indebtedness may be authorized shall not include maintenance and repairs, the need for which could reasonably be anticipated, supplies and equipment which are not intrinsically part of the structure, but shall include public safety and law enforcement vehicles with a projected useful life of not less than five years or the period established for repayment of the bonds, whichever is greater.
(c) The ballot title of a bond measure which is subject to this section shall include a reasonably detailed, simple and understandable description as to the use of the proceeds and the approximate percentage each use is of the whole.
(d) If an election is conducted by mail and includes a question, the approval of which would result in a new or additional ad valorem property tax levy against real property, the front of the outer envelope mailed to electors shall be clearly and boldly printed in red with the following statement: CONTAINS VOTE ON PROPOSED TAX INCREASE.
(e) When an election includes a question regarding a new or additional ad valorem property tax levy, elections officers shall provide a timely notice of deadlines for the filing of voters pamphlet statements to each person who has requested in writing that they receive such notices.
(4)(a) In the event a property is improved during or after the 1994-1995 tax year, the ad valorem property taxes on that property may be increased, by reason of such improvements, in excess of the three percent (3%) limitation of subsection (2) of this section, except that the tax shall not exceed the lesser of (i) the average ad valorem property taxes paid on similar properties similarly valued and located in the same taxing code area, or (ii) the ad valorem property taxes on the property without regard to the new or additional improvements, plus the ad valorem property taxes on the improvements at the same dollar to value ratio as paid on the property without the improvements.
Once the new improvements are added to a property and the ad valorem property tax attributable to the new or additional improvements is determined, the ad valorem property tax attributable to the improvements may be increased in subsequent tax years in the manner allowed under subsection (2) of this section.
For the purpose of this subsection, "improvements" mean new construction, reconstruction or major additions, remodeling, renovation or rehabilitation of real property including siting, installation or rehabilitation of manufactured structures, but shall not include minor construction or general, on-going maintenance and repair.
(b) In the event a property is rezoned, resulting in a higher assessed valuation, ad valorem property taxes on that property may be increased in excess of the limitation set forth in subsection (2) of this section, except the tax shall not exceed the average ad valorem property taxes paid on similar properties similarly valued and located in the same taxing code area, and the ad valorem property tax increase exceeding three percent (3%) per annum shall not be in effect until the first tax year after the property is actually used in a manner or for a purpose consistent with the new zoning unless the zone change was requested in writing by the property owner(s).
If prior to the effective date of this Act the ad valorem property taxes on a property have been increased due to a zone change not requested by the owner of the property, and the property has not been used in a manner or for a purpose consistent with the new zoning, and there has not been a transfer of ownership, the property shall be reassessed for the tax year 1997-98 consistent with the zoning effective immediately prior to the unrequested zone change or the actual use of the property, whichever results in the greater tax. Thereafter, the tax may be increased only within the limitations of this Act until there is a transfer of ownership or the property is used in a manner consistent with the new zoning. Transfer of ownership by inheritance shall not be considered transfer of ownership for purposes of this subsection.
(c) If a property is subdivided into two or more separate parcels, the tax on each newly created parcel shall not exceed the average tax paid on property similarly valued to the newly created parcel and located in the same taxing code area.
(d) If there is a lot line adjustment between existing, adjacent properties that does not create a new lot of record, the tax on each newly created parcel shall be adjusted according to any increase or decrease in value, but the combined ad valorem property tax on the properties shall not be increased more than is permitted under subsection (2) of this section for the tax year in which the lot line adjustment is taken into account..
(e) If a property is placed in a different taxing code area, the ad valorem property tax on that property may be increased in excess of the limitation set forth in subsection (2) of this section if:
(A) The taxing district annexation that resulted in the property being placed in the different taxing code area was approved by a majority of voters casting a ballot in a general election in an even numbered year or other election in which not less than fifty percent (50%) of the registered voters eligible to vote in the election cast a ballot, and
(B) the increased tax on the property does not exceed the average ad valorem property tax paid on similar property similarly valued in the same taxing code area.
(5) For the first year following disqualification for exemption or special assessment, or in the event a property is added to the assessment and tax rolls as omitted property, ad valorem property taxes on that property may be increased in excess of the three percent (3%) increase limitation set forth in subsection (2) of this section, except the tax shall not exceed the average ad valorem property taxes paid on similar property similarly valued in the same taxing code area.
(6) In no case shall the assessed valuation of any property exceed its real market value.
(7) If it is necessary to allocate among political subdivisions of the state, or departments or agencies within those political subdivisions, any revenue reductions resulting from this Act, redistribution of revenues shall be done in a manner so as to (i) prioritize public safety and public education, and (ii) minimize any loss of local control of cities and counties to state government;
(8)(a) No government product or service that on or after June 30, 1995 was wholly or partially paid for by ad valorem property taxes, shall be shifted, transferred, or otherwise converted so as to be wholly or partially paid for by a fee, assessment, or other charge except state income taxes, without prior voter approval. If such a shift, transference or conversion of a property tax to a fee, assessment, or other charge except state income taxes, occurred without voter approval after June 30, 1995 and prior to the effective date of this Act, for tax year 1997-98 and subsequent years, the ad valorem property tax on each such property, the owner or user of which continues to be subject to such a fee, assessment, or other charge except state income taxes, shall be decreased by an additional amount equal to the portion of the fee, assessment, or other charge which was formerly paid through property taxes until such time as voters approve the fee, assessment, or other charge.
(b) The limitations of (a) of this subsection shall not apply to a new or increased fee, assessment or other charge, the imposition or enactment of which directly results in an equal or greater offsetting reduction in property taxes levied in the same taxing district, providing that the reduction is in addition to the reductions and limitations set forth elsewhere in this Act.
Section 11h. Whereas some property owners may prefer not to have their property taxes reduced by this Act, and voluntarily would provide support for public schools in excess of the limitations of this Act; to facilitate their doing so, the state legislature shall adopt legislation to implement a mechanism whereby a property owner may conveniently make an annual, voluntary contribution in conjunction with property tax payments, and designate the school or other public entity to which the additional revenue shall be disbursed as a voluntary contribution.
Section 11i. The Legislative Assembly may adopt and amend legislation to implement the provisions of sections 11g and 11h of this Article.
Section 11j. SEVERABILITY of Sections 11g, 11h, and 11i of this Article. If any portion, clause or phrase of Sections 11g, 11h, and 11i of this Article is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, the remaining portions, clauses and phrases shall not be affected but shall remain in full force and effect.