In Oregon, property taxes are a primary source of revenue for schools, local governments, and other authorized taxing districts. In the 2014-15 tax year, more than 1,300 local taxing districts imposed a total of nearly $5.8 billion in property taxes in the state. School districts were the biggest recipients of property tax revenue with a 41% share, followed by city government at 21%, county government at 17% and community colleges at 4%. The remaining revenue is collected by taxing districts for police and fire departments, hospitals, libraries, cemeteries, parks and a wide range of other public services.

Property Tax Reform in Oregon

The property tax system in Oregon underwent a major reform in 1997 after voters approved the passage of Ballot Measure 50. Measure 50's primary purpose was to lower property taxes and limit future property tax growth. It accomplished this by first separating the assessed value of a property, which is the value used to calculate property tax, from the real market value of a property. In the 1997-98 tax year, the assessed value of all property in the state was reset to a level 10% below the real market value recorded in the 1995-96 tax year. This immediately reduced property tax rates across the board.

Measure 50 also introduced a 3% annual growth limit on assessed property values. In most years since Measure 50 was implemented, real market property values rose more than 3% on a statewide basis. Thus, the gap between the assessed value of property in Oregon and the real market value grew to 24.5% in the 2014-15 tax year. This represented a substantially lower tax burden compared to the pre-reform system in which property was assessed at real market value. Under the reformed system, all newly built properties are assigned an initial assessment that matches the difference between assessed values and real market values of similar properties within the same county.

Finally, Measure 50 implemented permanent tax rates for the operation of all taxing districts in the state. Permanent rates were established for individual taxing districts according to historical operating costs. All subsequent rate changes are subject to voter approval. Permanent-rate taxes, known as operating taxes, are also subject to strict limits under Oregon's constitution. Total operating taxes for school districts are limited to $5 per $1,000 of real market property value, a 0.5% rate on any given property. Operating taxes for all other taxing districts combined are limited to $10 per $1,000 of real market property value, a 1% rate.

Types of Property Taxes in Oregon

Alongside permanent-rate operating taxes, taxing districts may also impose local option taxes and bond levies with voter approval. Local option taxes provide additional operating revenue to a district beyond its permanent rate. Local option taxes are governed by the same constitutional limits as other operating taxes and are the first to be reduced where those limits are breached. Bond levies, on the other hand, provide funds for capital projects and related investments. Bond levies are not subject to constitutional limits. In the 2016-17 tax year, permanent-rate operating taxes made up 76% of all property tax revenue in Oregon.

Average Property Taxes in Oregon

In the 2016-17 tax year, the average property owner in Oregon paid property taxes of $11.31 per $1,000, or roughly 1.13%, of real market value. At the county level, averages ranged from highs of roughly 1.28% in Linn County to lows of about 0.61% in Josephine County. Recall that property owners within a given county can pay very different tax rates depending on which taxing districts cover individual properties.

How Do Oregon Property Taxes Compare?

Comparing property taxes across state lines is a difficult proposition due to the vast differences in the way tax systems are designed. In Oregon, a seemingly simple factor, such as property valuation, can turn out to be complex and dependent on specific conditions within counties or even cities. States also tax different types of property in different ways. For example, Nevada property tax includes both real property and certain non-exempt items of personal property. Other states tax owner-occupied properties differently than rental properties or commercial properties.

With that in mind, the Tax Foundation, a nonprofit research organization, recently set out to cut through state-based differences by calculating the average effective tax rate for owner-occupied housing in all 50 states and Washington D.C. Oregon rates fall near the middle on a national basis. However, while recent reforms in Oregon have substantially limited growth in property taxes, homeowners in the state continue to feel a heavier burden than homeowners in neighboring states. According to the Tax Foundation, Oregon has an effective average rate of 1.01% for owner-occupied housing, while Idaho comes in at 0.75%, California at 0.76%, Nevada at 0.75% and Washington at 0.96%.

The differences are based on a wide range of factors, including both general tax levels and specific tax limits, as well as the methods by which owner-occupied residential property values are assessed. In California, for example, the assessed value of an owner-occupied property is set according to its most recent purchase price, with annual increases capped at 2%. Thus, many long-term homeowners in rising California property markets pay tax rates based on assessed property values far below their homes' real market values. In Idaho in 2018, homeowners got a tax exemption equal to one-half the market value of their houses and one acre of land, up to an exemption limit of $100,000. Given the local nature of property taxes, it's not surprising that each state has a unique system based on local history and local funding needs.

Utah Property Tax Guide

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