Property Taxes

As the single largest source of tax revenues for cities, property tax revenues fund essential city services including police, fire, roads, water, parks and more.

The property tax system in Oregon has been heavily influenced by Measures 5 and 50. The passage of Measure 5 in 1990 instituted limits on the amount of tax that can be levied per $1,000 of a property’s real market value (RMV). Those limits (caps) are $5 per $1,000 for revenues used for educational services and $10 per $1,000 for revenues used for general government (other than educational services). The latter generally includes services by cities, counties and special districts. The limits apply only to operating taxes, not bond levies.

The passage of Measure 50 in 1997 added another layer of limits to the existing property tax restrictions imposed by Measure 5. Measure 50 instituted a permanent operating rate limit for all cities, counties, school districts, and special districts in existence at the time. The permanent rates were largely set by combining all of the tax levies that existed for that district at that time, though the process was complicated.1 Those highly variable and inequitable permanent rates have been frozen at the 1997 rates ever since. The rates reflected budgets at that time but fail to reflect changes in community circumstances, including the lack of timber payments. The total tax rate of a taxing jurisdiction can exceed the established permanent rate only with the passage of a bond levy or a local option levy. These exceptions are voter‐approved temporary measures.
Measure 50 also created what is known as assessed value (AV). The assessed value of a property was established by reducing a property’s real market value in 1995‐1996 by 10 percent. Measure 50 required taxes to be assessed on this discounted assessed value rather than the real market value as it was prior to Measure 50. Measure 50 then capped annual growth on the assessed value to 3 percent, no matter the changes in real market value. Note that there are special ratio rules to apply for property that is significantly improved or for new properties that came on the tax roll after 1997. This complex AV system has resulted in significant inequities in taxes compared to real market values of homes throughout the state.
Today all properties are subject to the limits of both Measures 5 and 50, and the county assessors must calculate both AV and RMV, making adjustments as necessary to comply with the limits. The house graphic on the next page depicts the two calculations that must be made. If the tax extended is greater than the maximum allowable tax under Measure 5 limits, the difference is reduced, or compressed, and is not collected on the property.