As the Multnomah County auditor, Steve March mostly concerns himself, understandably, with county business. He’s looked at the sheriff’s troubles with overtime and the county’s overspending on cell phones. And he even created a helpful tool to let you know whether anyone in county government was taking those recommendations seriously.
Now March has widened his lens rather significantly. The interactive report the Multnomah County Auditor’s Office released yesterday isn’t concerned with misspending in the Multnomah Building—it’s taking on the state constitution. March is preaching the woes of Oregon’s oft-maligned property tax structure. More importantly, his staff has waded through mounds of data to give you an idea why you should care.
The short answer: Our property tax system is horribly inequitable, with people in some of the county’s poorest areas paying taxes vastly out of step with people in more well-to-do areas. What’s that look like? Check out this map in the new report, which examines how property taxes for homes might change if they were anchored in a property’s market value (which is not how it works now; I’ll get to that in a second).
- Multnomah County Auditor’s Office
And here’s what all those colors mean.
So if homeowners’ property taxes were tied strictly to market value, folks in the well-gentrified areas in inner NE/SE would expect to see their taxes rise—in some cases considerably. And people in Gresham and Fairview, where the gelato shops and twee beer bars have been slower to proliferate, would see some pretty solid relief (as would people in East Portland and the West Hills).
“This is gonna change at some point,” March said yesterday as we went over the report in his office. “It’s gotten so inequitable I believe it violates the equal protection clause of the federal constitution.”
The fault, in March and many other people’s eyes, lies largely in Measure 50, the 1997 switch that fundamentally changed how Oregon properties are taxed.
In order to provide some tax relief, the measure largely decoupled your property tax bill from current market values. Instead, it set your bill at 90 percent of your home’s market value in 1995-96, and made it so it could only rise at a maximum of 3 percent a year—twee beer bars or no.
And it worked! Oregonians were paying less tax. But Measure 50 created some serious problems too. One biggie, March says, is that the market value on the books for 1995-96 wasn’t always a true reflection of the property’s value. Whole swaths of the state may have been locked in at values under their actual worth—with a big limit on how quickly they could increase. It’s complicated, and there’s a lot more, but the upshot is that progressive Oregon is doing a very bad job of fairly spreading the property tax burden.
It’s not just homeowners, obviously. By March’s estimation, the bulk of industrial properties in the county should be paying less property tax. And most commercial property owners should be paying far more. Apartment buildings, too.
Go to the report if you’re curious how your neighborhood—even your street—stacks up.
It’s not clear how these scenarios play out in other parts of the state, and March makes clear he’s not advocating any specific tax plan. But he says our system needs to be tied more-closely to a piece of land’s actual value on the market. And he felt he should say something, even if it is a touch out of step with the usual duties of a county auditor.
“When a state issue impacts county residents so significantly, it’s important to speak up,” he says. “And, more importantly, to show data.”
I agree the Oregon property tax system is in need of revision. But the reports legend is also in need of revision. Also their “similar properties different taxes slide”. The legend ends at “Increases more than 15%”. If my Richmond house were to be taxed at market value my taxes would go up 150%, other houses near me would go up 200% or 300%. Those were the first two random properties near me I looked up on Portland Maps. Maps can have more than 5 colors and ranges can be larger than 10%, and should when the upper range is at least a factor of 20 larger.
They show a slide with two houses valued at $374,000 where one paid ~$1,992 a year and the other ~$5,211. Which implies the actual rate should be $5,211, but fail to mention that a $374k house at market value would pay ~$8,976 a year. The ~$5,211 assumes a assessed value of around $217,000, not $374k.
The report seems a little misleading on how much taxes would go up if Oregon switched to Real Market Value for taxable value. Again, I know the system is bad. But we should not sugar coat it.
LAND VALUE TAX
So you’re telling me all the people in North Portland crying about “gentrification” are not only getting large increases (profit) in their property values from investment in their neighborhoods but they are also getting some of the most favorable property tax rates in the whole county?
Surprising but not exactly a shocker.
“Generally five to seven color categories is recommended.”
http://en.wikipedia.org/wiki/Choropleth_ma…
But yeah, the breaks could be better.
http://en.wikipedia.org/wiki/Jenks_natural…
There is a large problem with revising the property tax system. It’s one of perception, not reality, but that is commonly what politics is based on.
The equitable thing to do would be for all properties to be taxed at their RMV, rather than assessed value, but to leave the total tax collected for the county the same. There is the problem – there is such a large measure of distrust for government that many people would believe (perhaps rightly) that the “government” would see a net gain in tax revenue.
At the time the previous property tax measures were passed, there was a large belief that the county assessors were colluding to increase the market values so that revenue would increase, and not basing it on actual property value.
So the assessor/tax collector needs to figure out a way to regain the trust of the populace, and perhaps bite the bullet and live with a year or two of no net tax revenue increase. The question is whether any local and state politicians have the political will to even imagine, much less implement, such a thing.
The tax limitation was an initiative and flawed. It was flawed because it subsidized gentrification, and as the report notes, created inequity.
The taxable valuation of traditionally African American neighborhoods were set at an historic low point for property values in those neighborhoods. So home buyers qualified for loans based on $100 then to $200 per month now property taxes while other parts of the city were paying $300 then to $600 now or more per month in property taxes for the same real market price home. Ironically the actual property values in some of the higher tax paying areas have been flat or declined.
A solution that would discourage gentrification would be to set property taxes to the real market value when the home is sold. An equitable solution would include equalizing the rates to real market value over time between neighborhoods, including for multi-family, commercial and industrial properties which have the same neighborhood inequities.
Portland and Salem, Eugene, Corvallis and Bend pay the property taxes for the state which are then redistributed to the remaining counties for schools. So the big picture would include a small planned and predictable increase in the state budget, making the income tax more progressive and tax rationalization in the counties, including some tax-averse tea party counties.
R: you say “Portland and Salem, Eugene, Corvallis and Bend pay the property taxes for the state which are then redistributed to the remaining counties for schools. So the big picture would include a small planned and predictable increase in the state budget, making the income tax more progressive and tax rationalization in the counties, including some tax-averse tea party counties.”
the state has no property taxes. it has a inciome tax.portland is not paying the state anything.
Used to rent in King, a couple blocks off Alberta. My landlords pay around $600 a year in taxes.
Bought a similarly sized house in Montavilla, out past 82nd. I pay $2300 a year in taxes, and that’s expected to go up a couple hundred bucks EVERY YEAR.
Shit’s fucked. My old landlords could sell their house for 2x what I could sell mine for. Yet I’m paying almost 4x the taxes.
For some reason, Tualitin Valley Fire and Rescue puts together the best maps that illustrate the problem.
This one shows all the blue in N/NE that is getting a sweet deal on their taxes, at the expense of everbody in E portland in a more granular way.
http://www.opb.org/images/upload/c_limit,h…
From this article:
http://www.opb.org/radio/programs/thinkout…
@fancycat: I don’t think anybody is suggesting we just “switch over to FMV” Measure 50 did do one thing right, and thats put the breaks on rapidly increasing property tax for folks who live in traditionally poorer neighborhoods that gentrified. But it utterly failed by not making that tax reset on the sale of the home, thus making those neighborhoods more attractive to prospective buyers to begin with, thus accelerating the gentrification instead of slowing it.
Oh wow. I take that back. They *Are* suggesting a revenue neutral tax redisitribution based on FMV.
Their statistical analysis looks at median income, while glossing over the fact that there are lower income folks who live in N/NE who’s properties have appreciated over the years. By obfuscating that fact in ‘median income’ they’re ignoring the *drastic* impact that would have on those neighborhoods. We’d see low income flight from N/NE in that case.
I agree that property tax amounts need to be regulated better; I’m just sad as a Portland-native (Hawthorne-area) to see my parents’ and neighbors taxes go up, just because their neighborhood became trendy in the 1990s. Some of them are on fixed incomes and need every dollar (or thousands of dollars) they have. They bought their homes in the 60’s and 70’s for $30-40k and aren’t financially able to pay taxes for houses worth $300-400k.
Taxes not based on income are for assholes.– Had to add some sort of snarky comment to be able to post in the Mercury comment section 🙂
System Administrator: The auditor’s office isn’t advocating a straight market-value tax. This was just supposed to illustrate some of the inequity in tax rates as a springboard for discussion.
As with so many things (groceries, interest rates, etc.), those residents who can least afford it are overcharged for goods and services. We didn’t know when moving into north Portland, that it was historically a lower income area, and pay quadruple in property tax what homeowners in NE and other higher income areas pay, with home values also being at least double + in those areas. Inequity persists in supposedly liberal, fair-minded Portland.