Property Tax Measures

Definition of Compression

What is compression?

The effect of Measure 5 and 50 on property taxes. If the Measure 5 limit is lower than the Measure 50 limit, compression occurs.

What does compression do?

Causes an individual property tax bill to be lower than what the local governments levied.

Why does compression matter?

The Library Levy (and other local option levies) are the first tax not collected if compression occurs.

Property Taxing Capacity and Compression

Two property tax limitations

Measure 50: limits the tax rate that is applied to the assessed value of a property. Tax relief comes from limiting the growth of assessed value to 3% per year.

Measure 5: limits total taxes on a property to $10 per thousand of real market value.

Whichever limit produces the lowest tax results in the tax bill on each property. If the Measure 5 limit is lower than the Measure 50 limit, “compression’ results. This causes a tax bill to be lower than the local governments levied. Compression reduces the taxes in this order:

1st - any local option levies are reduced. If this does not bring the taxes below the Measure 5 limit, then
2nd - permanent tax rate levies are reduced. If this still does not bring the taxes below the Measure 5 limit, then
3rd - taxes to pay debt that is not General Obligation Bond debt are reduced.

Examples

In each case, we will assume:
Total of all local government permanent tax rates = $12.00

Two local option levies:

Levy A = $ 0.50
Levy B = $ 0.25

Total of local government tax rates = $12.75

House A

Assessed Value: $150,000
Real Market Value: $200,000

Measure 50 taxes: $150,000 x $12.75 per thousand = $1,912.50
Measure 5 limit: $200,000 x $10.00 per thousand = $ 2,000.00

Loss from Compression: $0.00
Additional Capacity available for local option taxes: $87.50
(about $0.58 per thousand)

Permanent Tax Rate levies: $1,800.00 collects: $1,800.00
Local Option Levy A levies: $75.00 collects: $75.00
Local Option Levy B levies: $37.50 collects: $37.50

House B

Assessed Value: $156,863
Real Market Value: $200,000

Measure 50 taxes: $156,863 x $12.75 per thousand = $2,000.00
Measure 5 limit: $200,000 x $10.00 per thousand = $2,000.00

Loss from Compression: $0.00
Additional Capacity available for local option taxes: $0.00

Permanent Tax Rate levies: $1,882.35 collects: $1,882.35
Local Option Levy A levies: $78.43 collects: $78.43
Local Option Levy B levies: $39.22 collects: $39.22

House C

Assessed Value: $166,000
Real Market Value: $200,000

Measure 50 taxes: $166,000 x $12.75 per thousand = $2,116.50
Measure 5 limit: $200,000 x $10.00 per thousand = $2,000.00

Loss from Compression: ($116.50)
Additional Capacity available for local option taxes: $0.00

Permanent Tax Rate levies: $1,992.00 collects: $1,882.35
Local Option Levy A levies: $83.00 collects: $5.33
Local Option Levy B levies: $41.50 collects: $2.67

History of Property Tax Limitation Measures

1990 - Measure 5 passed

Limited total taxes for local government to $10 per thousand of real market value. The city and the county’s taxes are both under this cap.

May 1996 - Three-year library levy passed

Levy funding fiscal years 96-97, 97-98 and 98-99.

Nov 1996 - Measure 47 passed

Repealed by Measure 50 before it was implemented.

May 1997 - Measure 50 passed (rewrite of Measure 47)

Cut the property tax rate based on a set formula and capped it at 3% growth each year.
Based on assessed value.

Cut, capped and rolled the existing library levy into the County’s permanent tax base - the General Fund. This is what we call the “fossil levy” but it is part of the County’s General Fund and subject to allocation by the Board of County Commissioners.

Allowed voters to approve new, short-term option levies outside the permanent rate limit if approved by a double majority. The double majority does not apply to a general November election.

Measure 5 limitations still applied.

Restricted bond measures to exclude maintenance and repairs that could be reasonably anticipated.

July 1997 - Library hours cut

Library hours cut substantially due to reduced revenues from Measure 50.

Nov 1997 - 5-year library levy passed

Took effect July 1, 1998 and ended June 30, 2003.

Rate of 59.5 cents per thousand.

Compression from Measure 5 has an impact.

Nov 2002 - Renewal 5-year levy passed

(it actually passed in May of 2002, but was deemed invalid due to not meeting the double majority rule).

Took effect July 1, 2003.

Rate of 75.5 cents per thousand.

Compression increases due to other levies passing, lower property value growth & the effect of the Shiloh decision on urban renewal.