Angry and Broke, Oregonians May Limit Property Taxes
A property-tax-limitation measure, versions of which failed in 1978 and 1980, is said to stand a good chance of passage by Oregon voters this November.
The proposed amendment to the state's constitution, known as Ballot Measure No. 3, would cut some school districts' revenue by as much as 25 percent, according to an analysis by the state finance department based on this year's tax collections, because public schools in Oregon are heavily dependent on local property taxes.
'We Were the Lucky Ones'
"In our case, we would have lost about 31 percent of our property-tax revenues [if the measure had gone into effect this year], and property taxes make up a little more than half of our budget," said Charles A. Clemans, superintendent of the 7,000-student Oregon City district outside Portland. "We were the lucky ones. Most districts would lose somewhere around 45 percent of their property-tax revenues. And it would get worse as years go on.
"It starts out being very, very serious and turns into a disaster," Mr. Clemans said.
Specifically, Ballot Measure No. 3 would:
Limit local property taxes to 1.5 percent of assessed valuation. The statewide average now, according to the state department of education, is about 2.2 percent, and property taxes in some localities have increased by 60-to-100 percent in recent years.
Limit the annual increase in property valuation to 2 percent or the increase in the Consumer Price Index, whichever is less.
Authorize the legislature, with the approval of the electorate, to abolish local property taxes, enact a statewide property tax of up to 1.5 percent, and redistribute the proceeds to school districts and other units of local government.
Restrict the legislature's power to increase statewide sources of revenue, such as income and sales taxes. Statewide tax increases now require the support of the majority in each chamber of the legislature; under the proposed amendment, two-thirds of the members of each chamber would have to approve new or increased taxes.
State and local school officials concede that property taxes are high in Oregon--and are increasing rapidly--but fear that the combination of property-tax cuts, restrictions on state revenue-raising authority, and the state's depressed economy would have a more severe impact on schools than did California's Proposition 13 and Proposition 2 in Massachusetts.
The Oregon state treasury's contribution toward local education budgets has always been relatively low, according to Jan Ryan, an assistant superintendent in the state department of education. In the past few years, the state share fell from about 38 percent of total costs to less than 35 percent, placing it 45th among the states.
Figures from the Advisory Council on Intergovernmental Relations, an autonomous federal agency that monitors state and local governments, confirm that Oregon's property-tax effort is indeed high--in 1980, the latest year for which such information is available, the statewide effort was 20.5 percent higher than the national average.
However, Oregon's total state and local tax effort in 1980 was about 93 percent of the national average, according to the advisory council. The primary reason for the discrepancy is the absence of a general sales tax in Oregon, which increases reliance on other kinds of taxes.
In the past two years, property taxes have also been pushed upward by cuts in state aid--financed primarily by income tax--and a 25-to-30-percent decline in collections on local timber taxes, a significant contributor to many districts' budgets.
As a result of the changing revenue mix, school budgets statewide increased by 9 percent last year, while property taxes increased by 20 percent, Ms. Ryan said. And in one district, total revenue was up only 2 percent, but property taxes rose 20 percent.
Leading the campaign in favor of the amendment is a group called Oregon Taxpayers, which petitioned successfully to guarantee it a place on the ballot.
"We feel that the chances are very good this time ... for two reasons: the mood of the people and the fact that the state is in deep economic doldrums," said William T. Dawkins, a political consultant to the taxpayers' group. "Our taxes have been going just straight up. A lot of people are unemployed and really in danger of losing their homes. Property taxes are just one nail in the coffin, but a very big nail."
Furthermore, Mr. Dawkins said, the anti-tax forces "are really organized this time," with a professionally run campaign and a budget of ''somewhere in the neighborhood of a quarter-million dollars."
The Oregon Committee--a coalition of education, municipal, and public employees' groups that has been formed to fight the measure--concedes that public-opinion surveys show that 60 percent of the voters favor the amendment.
"But that's about where we were two years ago when we started campaigning against it," Ms. Ryan said. "I think there's probably hope."
Safeguards Against Taxes
The Oregon Committee hopes to convince voters that there are already enough safeguards against spiraling property taxes, according to Mark W. Nelson, its political consultant. These include a "circuit breaker" that provides tax relief to those on low and fixed incomes; automatic annual referendums on most school districts' budgets; and state constitutional limits on the amount of annual revenue growth permitted to local governments.
One danger of the amendment, Mr. Nelson said, is that it "would just flat-out stop all general-revenue bonds," the traditional method in the state of raising large amounts of money for public-works construction and other major projects. "We'd have no way to borrow to improve the infrastructure to attract new industries and help existing businesses expand," he said.
State and local government units are so worried about the potential dimunition of their bonding capacity, according to state officials, that school districts, municipalities, and other government units have rushed to issue bonds before election day. More bond sales are scheduled in the next two months than in the first eight months of the year, state authorities reported.
Mr. Clemans said he doubted that the opponents of the amendment could match the campaign fund of Oregon Taxpayers. "We'll do some media, but our biggest effort is going to be person to person," he said. "Our belief, and I think it's been borne out by research, is that people talking to credible people is the best way to get the vote out."
Besides, he added: "Oregonians are fiercely independent sorts. The more you tell them how to vote, the less likely they are to vote that way."