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November 6, 1990 marked a historic change in Oregon's tax system. Ballot Measure 5, inspired by California's Proposition 13 (pdf) in 1978, passed by 50,000 votes out of one million cast. The law lowered and limited property taxes, and shifted school funding from local government to the state. Supporters believed it would mitigate soaring property taxes and equalize school funding statewide. Opponents warned of massive chaos created by deep budget cuts, especially to public schools.
In the aftermath of Ballot Measure 5, Oregon emerged from recession and experienced an economic boom in 1990s. As a result of rising property values triggered in part by an influx of new residents to the state, Oregon homeowners saw little relief, and in some cases, a rise in property taxes after Measure 5. So in 1996 Bill Sizemore introduced Measure 47, an initiative to cap the annual rate at which property taxes could rise. It passed, but the following year, problems with 47's legal wording prompted Ballot Measure 50, which also passed.
In the Measure 5 era, the dawn of an Oregon sales tax seemed like the next probable phase of a tax revolt, which would have created a "three-legged stool" of revenue streams for state funding. But in 1993, a sales tax measure failed by roughly 67%, preserving Oregon as one of five states in the nation without a sales tax. (Historically, Oregonians have rejected sales tax measures nine times.) In the intervening years since 1990, Oregon has faced an almost constant struggle with deficits and declining revenues. In January of this year, voters passed legislative referrals Measures 66 and 67, backed by teachers and public employee unions, which imposed higher state taxes on the wealthy and corporations.
The legacy of Ballot Measure 5 has continued to influence the way Oregonians view the state's tax system for the last 20 years. For those who experienced it first-hand, it remains one of the most contentious moments in Oregon voter history.
What do you remember about the debate over Measure 5? Have the prophesies for it come true? What impact has Ballot Measure 5 had on you? On Oregon?
GUESTS:
- Allan Bruner: Teacher at Colton High School
- Don McIntire: Author of Ballot Measure 5, President of Taxpayer Association of Oregon
- James Sager: Assistant Superintendent at NW Regional Education Services Dist.
- Jim Mayer: Reporter at The Oregonian
- Tom Linhares: Executive director of Multnomah County Tax Supervising and Conservation Commission
Tagged as: 5 · ballot · measure · property · taxes
Photo credit: morganperkins1987 / Creative Commons
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Property tax is a lousy tax because it puts people at the mercy of the money flow. If people with money buy houses in your neighborhood it raises the tax on your home, even if your income hasn't increased. You may be forced to sell your home.
Here's how to help the little guy: A homestead exemption. If you live in your home, you would get, say, $100,000 exempted from property tax. So if your house is worth $200,000 you only get taxed on half of that.
If your house is worth $1 million, you still get the $100,000 exemption but get taxed on 90 percent of its value.
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Since most of school funding, including transportation, comes from statewide taxes school districts don’t care how much transportation costs. They locate mega size schools on the fringe of town because land is cheap and mega size schools theoretically have lower operating costs. Unfortunately school size and location makes it impossible for most students to walk to school which causes the need for bussing. Transportation costs are eating too much of our education dollars. In California parents pay for bussing. We need to do something to reverse this trend, build smaller neighborhood schools and require parents to pay for bussing.
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Measures limiting increases in property taxes allow my wife and I to continue to live in our home. We have a mortgage that will not be paid off for another 15 years. We can not afford unrestrained property tax increases. Our income does not increase yearly. Our equity increases slowly. However equity is not money in the bank. The real estate boom of the last 10 years did increase our homes market value, but the market collapse of 2008 wiped out most of those gains.
It is unfair to expect homeowners, with or without mortgages to fund state and local budgets. I would venture a guess there are tens of thousands of rental units in the state. Maybe it is time for a monthly rental tax or surcharge. Let renters bear a real portion of the tax burden. Maybe renters would be less likely to vote for tax increases if they experienced the real cost of a tax increase. A visible extra charge on a rental bill would give renters a feel of the tax burden homeowners experience. I don't think rental rates reflect the tax burdens of rental property owners.
Maybe some one could address the deflated property tax rates for downtown Portland condominium owners. Those properties enjoy 30 year tax breaks. Most residents of Multnomah County don't get any property tax breaks.
I can't wait to hear a guest tell me my property tax rates are not high enough.
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Measure 5 has created legal tax inequity between neighboring properties. Taxation is supposed to be equal under the law. Why should I pay a greater proportion of the tax burden because I remodeled and added on to my house or because I bought a new house? My son, a young person and fairly new homeowner is paying a disproportionately high amount of the tax burden at a time in his life when he can ill afford to. Yea it’s great for people that stay in the same home for a long time but it is simply unfair.
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I worked for the county in a job I thought I would retire from when measure 5 passed it was the beginning of the reason I left that job. After measure 5 I saw an "us and them" attitude and a defensiveness about the service we provided that was not there before. It created an unacceptably stressful atmosphere and things got MORE expensive because everyone started double and triple guessing every decision.
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Measure 5 and its offspring halved tax rates for commercial property owners and developers, while doing nothing for the typical homeowner. If the media paid more attention to the funders of ballot measures (as well as political candidates), voters would make wiser choices in their own self-interest.
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I think is is very telling how Oregon followed California into the Proposition 13 Taxation Cuts which have lead to the budget crisis, school underachievement, and loss of services. We are handicapped by lacking the alternative taxing tool of sales tax.
We are following the mistakes of California instead of cleaning our house and balancing the budget. California is in crisis. You don't have to be Nostrodamus to show we will follow. In fact, we almost elected our own Governator( No experience, popular, jock athlete)
Be prepared for tax escalations AND less services. Our schools continue to lag and our students--which a generation ago lead the world--now test in math and science at the same level as Mexico.
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Property taxes are killing us. We've been in our home for 30 years, and taxes are now a whopping $7800. I get so tired of people bemoaning passage of Measure 5. Who can afford this? It discriminates against older Oregonians--because we could never afford this home now--and it's going to force us to move. Our home is not income producing, and it should not be used as a county piggy bank. Property taxes infuriate me. They bear no relationship to the homeowner's ability to pay.
We need a sales tax!
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No, we don't need a sales tax; you need to learn how to live within your means.
(If you have a $7800 tax bill you're living in a million dollar home....)
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My biggest gripe with taxes for education is the accountability for the end reslt: Teachers work hard to educate and babysit the uncaring masses then get chastized when the kids don't get the test scores to show that they are being educated. We should thank all of our teachers for doing a hard job, and let kids fail, and get held back in school if they don't meet the qualifications for advancing to the next higher grade. I'd be willing to double my education propert taxes if that standard was adopted.
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I wonder if we could somehow require and enable parents to train their children to some minimum levels before they even start school because parents ought to be held to some level of accountability for their childs success or failures. And even during the school years.
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The most lasting and damaging impact of Measure 5 was the way it restructured school funding. Measure 5 shifted responsibility for education funding from local to state government and created caps on the percentage of property taxes that could be allocated to education. Initially, the impact of Measure 5 was mitigated to some degree by a growing economy and equalization grants that provided short-term help to some underfunded school districts. But now school districts throughout the state are struggling to survive.
Oregon's State Legislature has heard the complaints about underfunded public K-12 schools. Schools that are additionally burdened by testing requirements established by No Child Left Behind. But as much as State Legislators might want to redirect funding towards education, they are hamstrung by the property tax allocation limits established by Measure 5.
If we are going to improve education funding in Oregon, the legislature needs to revise the state's constitution and eliminate the property tax distribution limits created by Measure 5. This revision will require an intense voter education effort to help Oregonians understand why a revision is necessary. Additionally, any voter education efforts will need to be agile enough to counter the misinformation and scare tactics that will inevitably follow any efforts at reform.
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This guy on the air right now, McIntire, sounds like another one of those "Tax not me, tax not thee, tax the fellow behind the tree" types.
Maybe if we hadn't destroyed the funding basis for Oregon's educational system, kids would be able to write without having to depend on SpellCheck (a stupid genius if I ever saw one), add without needing a calculator, and read, for crying out loud!
(And by "we" I mean the voters of Oregon in 1990. I was living in Washington at the time, but I grew up here and I live here again, now.)
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The value of our house dropped, yet our property taxes increased. A call to Multnomah County resulted in my finding out that our property taxes increase by 3% a year irrespective of the value of our home. Moreover, our property taxes subsidize those who can't pay their property taxes. What needs to be done to get a Prop 13 initiative on the ballot (i.e. one that is even more aggressive than Measure 5)? Additionally, if my money is going to help with Portland Schools, why is it that schools keep having funding issues, resulting in more people moving to Vancouver, which has better schools? Enough already!
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Let's ask Don how this affected his kids...
Oh, and Don's comment about the $60,000 ranch house in Eastern Oregon having a $3000 tax bill is very misleading - the reason that house had a tax bill that high was because it was sitting on a huge chunk of land!
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Prior to Measure 5 my property taxes spiraled out of control. I complained to Multnomah County about the unfairness of my tax bill increase but was denied relief. Then Measure 5 passed. My 2010 property tax bill finally caught up with what I was charged in 1990. I'd probably be paying three times as much in property taxes had Measure 5 not passed.
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This Don McIntire is using the logical fallacy of argument called "The Straw Man". He creates a fictional character as a bad guy and then knocks down his "Straw Man". In this case his "Straw Man" is Teachers Unions as the bad guys.
No, teachers are not the bad guys, in fact they are the realistically underpaid good guys!
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If your property taxes are so overwhelming you should buy a smaller home or consider renting.
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I purchased my home in January 1986 for $95,000 in a run down neighborhood close to Portland's city center. Today my property taxes are $8,400 a year. ($700 a month in property taxes alone!) That's too much. Now the city is charging an additional $30 to take the leaves from the trees on the street they also force us to care for.
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I'm guessing even with the downturn, your city-center property is worth a lot more than $95,000. I'm sure when you choose to sell your property you'll make a pretty penny and somehow be able to afford those $8,400/year taxes. Considering a 100% mortgage on $95,000 would be something like $400/mo, the $700/mo ($1,100/mo) you are paying in taxes doesn't get much sympathy from me as my mortgage is more than that for a home that is only worth twice as much as yours was in 1986 (so it's probably worth about 1/5th or less than what your property is worth today).
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If you pay $8,400, then your property is worth about $1.2 million -- property you paid $95,000 for. You should be ashamed to come whining to us about poor you and your taxes.
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Tell the city that you're going to keep your $30 leaf fee, and use the leaves to mulch your own yard. They make great insulation around your bushes over winter, and the excess can be used to add to your compost pile or mowed into your lawn with a mulching mower. Remind them that they chose to put the trees in, and they can jolly well figure out how to take care of them without your $30, and without expecting the residents of the neighbourhoods to take care of the trees.
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Excellent point! People with children (AKA "Breeders") use more public services directly than do those of us who have not reproduced, whether or not by choice. People who breed should be paying more for their usage of government services, proportional to their family size. Maybe then, we can either balance the resources needed, or reduce the rate of population increase or both!
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Yeppers!
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Relax you guys. My four kids are all very productive members of society. They will be part of the unluck demographic that is working like dogs to pay yours and my social security and medicare.
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I was one of those desperate property owners in rural NE Oregon who was in danger of loosing everything. The recent housing bubble is only a continuation of peoples trying to get something for nothing that has been going on here since at least the late 1960s. The 5 & 10 acre parcels all around me keep getting bought and resold every few years for a profit. I was one of the few people who was bent on staying and trying to make a living with my home-based business. I was getting more and more deliquent on my property taxes. I had four kids in school, a big garden, a house and a business I had built with my own hands, and was about to loose it all. Something had to give.
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Renters pay property taxes through their rents and leases. I cannot imagine any landlord who would not pass his taxes through to his renters, they are not in the charity business.
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The woman who complained about her $7,000 property tax bill -- she has a million dollar home! I'm sure she doesn't think of herself as rich, but she is.
Measure 5 should be replaced with a $250,000 homestead exemption, indexed for inflation. In other words, the first $250K of house value -- no tax at all. But above that, and most imiportantly all business property -- pay your fair share. (In case you're wondering, my house is around $500K so yes I'd be one of the people paying.)
Measure 5 used fears of people with modest homes to get a big tax break for the rich and companies. The homestead exemption would prevent that.
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I would pay zero property tax under your plan. But I do know a few Farmers and Ranchers who could be devastated. I agree we need a formula that is tied to a persons ability to pay. But it needs to also consider both a persons ability to pay in the short run and their ability to make a living in the longer run.
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I am a retired Oregon school district CFO and would like to correct one misconception. Property taxes are not "sent to Salem" as has been mentioned several times. They are collected by the counties in which school districts reside and then transmitted directly to those districts. They are then deducted by the state from the each district's education funding formula.
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I am a big supporter of public education. After much deliberation I voted for measure five, primarily because it contained a provision that required the legislature to ensure that education continued to be funded at the same level that it had been. This to me meant that the burden of funding education was imply being shifted from property taxes to general fund and that the legislature would need to prioritize education funding higher than it was at the time. That seemed appropriate.
Unfortunately, it didn't work ut that way. the legislature simply did not fund education at the same level. When I called my legislators (Gail Sibley and Kate Brown) they told me that it is "impossible" to do that and that I should have known it would be impossible. That, of course is simply not true.
Now, 20 years the wiser, I better understand that these elected officials will do whatever they darn please, regardless of what we tell them. And like fools we keep electing the same people.
What I find most difficult to understand is that my property taxes, in real dollars, have never gone down year over year. Yet funding for education has-- how can that be?
I agree with the premise that public education should be a primary use of general fund dollars. I also agree that the people who run the education systems should say how much is enough. If they would do that I would fight hard to help them get it.
However, I also agree that public education does not need to include everything that is included. Why is it my responsibility to teach English as a second language in a country where the primary spoken language is English?
One of your guests said there are children for whom we spend $250,000 per year to educate. Really? It doesn't seem to me that we should be doing that if we can't afford to provide the basics. And just what does that entail, anyway? A quarter million dollars for one child leaves a lot of room for waste.
Despite Measure 5 I now (due to difficult financial circumstances) have to pay more in property taxes that I did in federal and state income taxes COMBINED. What's up with that?
Sign me,
misled and really frustrated
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I am blind and self-employed. I am fortunate enough to own my home, due to my late husband's life insurance. However, property taxes continue to climb due to increasing assessed value. I have always thought that funding schools via property taxes is foolish, at best. I have no children, but realize that funding schools is important. We need to do it in a more equitable way. It's time to separate property taxes from school funding. I would happily pay a higher income tax, because that is tied to my income and my ability to pay!
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In our '99 study of Salem's property tax effects under M5/50, we found inequities in the shift of tax burden from higher value properties to lower value ones. This distortion has not been corrected since passage of M50.
The study is available at www.progress.org/geonomy.
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Specifically, the Salem study we conducted is here:
www.progress.org/geonomy/Highlights.
One way to correct the M5/50 distortions is to use a cap on revenue growth pegged to an index such as personal income growth, as has been proposed in WA. This would entail use of fair market values under responsible, equitable terms instead of relying on the unfair assessed values.
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That is an interesting site. Geonomy.
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Measure 5 may have shown benefits by limiting property tax increases, however the great equalization of school funding across the state that was initially touted never seemed to materialize. The ripples of Measure 5 are still being experiences in the schools. Measure 5 re-routed money into a state pool that was then payed out to counties or 'areas' on a per-student basis, which was supposed to bridge the urban-rural disparities in school funding. The problem was that the state opted to fund different areas at different rates, with some areas funded at nearly twice the rate of others. Withers vs. Oregon contested that it was unconstitutional for the state to discriminate via funding levels, which was shot down. Several years later the ruling was appealed and upheld that the state had the right to fund some counties more than others. Most of the conversation during this program focused on special needs students usurping excess funds, but the reality is that students in certain areas of the state were not granted the same amounts of resources, tools, etc. as their peers in other areas, which put them at a disadvantage when entering the work force of colleges and universities. Some districts had to hold bake sales to raise money to keep their music and art programs, while other districts were simultaneously receiving enough money to invest in technology and keeping class sizes smaller. If this isn’t systematic inequality I don’t know what is, and I don’t believe that Oregon has the constitutional right to award a better education to some but not all of its students.
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I've always felt that people aren't so concerned about the level of taxation (absolute $ amount) as they are about the things (services, etc) that it goes to support. One of the things about property taxes is that we often have a say on that taxation -- a specific amount for a specific service (public schools, local libraries, fire protection, sewer line extension, etc). Even the most ardent anti-tax advocate can point to things that we need to fund our government to do for us. And, even the most ardent pro-government advocate can point to things that the government should stop or scale back. Wouldn't everyone feel better if they had a say in where their own tax dollars go? Someone that has school-age kids could support schools while someone that loves the outdoors could support parks. Someone that operates a trucking business can support roads while hunters can support wildlife. Done on a wide scale -- for state income tax for example -- the totals could roll up to the Legislature for them to allocate within the broad funding catagories (education, public safety, transportation, environment, etc). It would be a form of true taxpayer representation and most people would feel good about what their own taxes go to support. What's wrong with that model?
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As proof of your concept, our local school district passed a bond levy last month to build a new grade school and middle school. And they did it by over 70 % of the vote. This in an economy that is especially bad in our part of the state. Seniors were writing letters to the editor essentially saying they were ready to eat cat food if they had to, to save their school from consolidation.
Now that's motivation.
Unfortunately, for your larger plan, the devil is probably in the details. The larger public mood is subject to whim and manipulation that makes the congress look like stoics. Oregon has made small moves in that direction in the past. Hopefully someone will post here about how that has worked or not.
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Wow. I would just like to impart my absolute disappointment in the show today. Where were the voices of those of us who have been most effected by this measure: the students of our failing schools? I have struggled my way through my education, having racked up tremendous amounts of federal loans, and am now a recent graduate trying to start my career in the midst of this recession. Thanks for all the help, prior generations! Mr. measure 5 actually had the gall to say he's glad for how this has turned out and then called a woman who phoned in "heartless"?! What a piece of work. He cites a problem with property taxes not being linked to the services they require. If it weren't for social services (such as the federally mandated educational system for the people), property on American soil would be worth nil. That's how it connects. Those who "earned" their property would not have been able to do so if our government had not ensured an environment supportive of the livelihood of its people. Intertemporal trade. Look it up. When does my generation get its share? By the way, the points regarding who actually gained from the tax cuts should have been brought up on air.
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As with passing of measure 5, I saw my property taxes at first being reduced. But over the years I have seen my property taxes increase with inflated county assessments and passing of school bonds that we were promised would be paid by Salem equally among all state schools districts.
So why is Multnomah school districts asking the homeowners yet again, to pass another bond for building repairs while the governor is asking Salem to pay rural school districts repairs out general funds? Why do the Multnomah homeowners have to pay higher property taxes and then pay into the general fund while rural school districts won’t ask their own local communities to foot the school repair bills?
So now I would ask the one question that no one’s in Salem wants to talk about, the ever growing school population? In the past we could offer free education to anyone born here, but can we keep doing this with a limited amount of resources available? As it is, class sizes have grown to a point that makes it difficult for teachers to teach and students to learn as test scores have proven!
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cut govt expenses .. especially the pay and benefits of civil servants and property taxes will go down >. this state is run by and for the public employees
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Comments are now closed.
Five was another of those "tax cuts for the wealthy".
It was presented as a boon for the little guy but the real beneficiaries were/are the people who owned major and or expensive "properties".
Office buildings, hotels and motels, factories, big private timber holdings, ship and rail facilities, very large ranches, Utilities, shopping malls, etc; Monopoly Game type properties.
They want the services of government but they want someone else to pay their fair share to fund those services.