Brown plans to address property tax system
PORTLAND — Gov. Kate Brown says she plans to work with state lawmakers in 2019 to craft a ballot referral to reform the state's property tax system.
Brown made the comment during a Q&A at the Portland City Club's Friday Forum at the Sentinel Hotel in downtown Friday, May 18, in answer to a question from former Portland Commissioner Steve Novick.
"The taxes we pay are based largely on what a house was worth in 1995 rather than what it's worth today," Novick said. "That means the people in recently gentrified areas, like inner East Portland, are paying low property taxes, whereas people in un-gentrified areas, like far East Portland, are paying high property taxes. Are you planning to work with Sen. Hass in 2019 to craft a measure to send to the voters to address this inequity?"
Brown responded that while voters need some education on how the property tax system works, she "would love to have the ongoing property tax conversation in the state again."
Sen. Mark Hass, D-Beaverton, chairman of the Senate Finance and Revenue Committee, proposed addressing the property tax system in bills filed in 2015 and 2017. He said he is uncertain whether he'll propose a third iteration of the legislation in 2019.
To date, Brown has placed other priorities over property tax reform and other problematic areas in the state tax code, Hass said.
She has called a special session for May 21 to expand a business tax break, after she received heat for signing a bill earlier this year that denied Oregon businesses a 20-percent tax deduction written into federal tax reform.
Hass said he could think of at least three other tax code problems that are more crucial to fix that expanding tax breaks for businesses, including unfair property tax system.
Some of his tax reform proposals have "always been just beyond arm's reach because more pressing needs come up," he said.
"I wish the governor was calling a special session to address these other tax issues because they're a much bigger problem."
The state property tax system, for instance, is in a state of collapse, Hass said.
"When you have someone who pays twice what their neighbor pays for the same house and that person says, 'This isn't fair I'm not paying it,' it's something that happens in third-world countries, but I'd like to think it's not something that happens in Oregon."
Voters must ultimately vote to change the property tax code, as it was written into the Oregon Constitution.
Measure 50, approved in 1997, enacted a permanent operating rate limit for all existing tax districts.
The rate was calculated largely by combining existing local tax levies. The tax rates cannot be changed by any action of the tax district and have remained stagnant since 1997, despite a burgeoning state economy in the past couple of years.
The complexity of the state's tax system is one of the challenges to passing a voter referral to reform it, lending credence to the governor's assertion that voters need more education before taking a vote.
One option is to propose a referral that simply asks voters whether they want an equitable property tax system, Hass said. If voters affirm that, then the state courts and the Legislature could pass policies to reform it.