Sean C. Morgan
At this point, property owners should have or soon will have received property tax statements, most of them showing increases in property tax bills.
Property values across Linn County increased by 8.9 percent for real market and 4.6 percent for assessed, driving up property tax bills and decreasing property tax compression, according to Linn County property tax assessments released this month.
For the city of Sweet Home, real market value increases drove up property taxes imposed by local option levies by 7 percent, while taxes imposed by the permanent rate increased by about 1.8 percent.
Property taxes are assessed based on assessed property value. The total tax is then compared to real market values and limited to $10 per $1,000 for general government districts and $5 per $1,000 for education districts. Property tax bills are reduced proportionately to meet that limitation.
The reduction is referred to as property tax compression. Compression is highest when the gap between the two values is smallest. The state constitution limits the growth of assessed value to 3 percent per year. New construction and remodeling allow assessed values to increase at a larger rate, accounting for the 4-percent increase in assessed valuation throughout the county.
Real market values fluctuate largely based on comparable sales data, and the growth or decline of the value is not capped.
Local option levies are compressed first. They include the tax levies that fund the Sweet Home Police Department and Sweet Home Public Library. It also includes the Linn County Law Levy, which partially funds the Linn County Sheriff’s Office, the Juvenile Department and the District Attorney’s Office. On the education side, the Sweet Home School District has a local option levy for the pool. Local option levies must be renewed periodically by voter approval.
Permanent rates are written into the state constitution and do not require periodic renewal. Sweet Home has a permanent rate of just $1.41 per $1,000 of value. The rate is substantially lower than other cities, an artifact of the creation of property tax limitations at the same time as a levy renewal in 1997’s Measure 50. It is small enough that it is generally unaffected by compression. Permanent rates become compressed only after local option levies are completely compressed. Permanent rate revenue is collected in the city’s General Fund.
The local option levies are $7.58 for the Police Department and $1.17 for the Public Library and are subject to compression with many homes in Sweet Home this year.
For properties that are not in compression, property tax bills may increase by 3 percent based on the growth in assessed value.
As real market values increase relative to assessed value, compression falls and tax bills increase at higher rates.
For most Sweet Home properties in recent years, that means property tax bills have increased by more than 3 percent annually.
City Finance Director Brandon Neish said the compression rate, a calculation that includes all property in Sweet Home, is about 19.8 percent – the percentage of property taxes reduced after being compared to real market values based on the property tax limits. Last year, the compression rate was about 24 percent. In 2016, the compression rate was 38 percent.
The city budgeted a .4-percent increase in all property tax revenue for 2019-20 compared to actual 2018-19 revenues, from $3.853 million to $3.868 million, while all property tax revenue last year represented an increase of 18.1 percent from the prior year.
Revenue for 2019-20, a total of $4.091 million, is more than budgeted by 5.8 percent and more than last year’s actual revenue by 6.2 percent.
The city budgeted $663,000 for permanent rate tax revenues. Neish said the city will receive $670,000. For the police, the city budgeted $2.798 million. It will receive $2.977 million. For the library, the city budgeted $406,000 but will receive $444,000.
In Sweet Home, real market values increased from $682 million to $741 million. The assessed value increased from $474 million to $492 million.
The real market value of all the property in the Sweet Home Fire and Ambulance District increased from $1.4 million to $1.5 million. The assessed value increased from $857,000 to $891,000. The district will collect $1.6 million in tax revenue, up from $1.5 million, which includes general fund revenue and bond levy revenue on a total tax rate of $1.80 per $1,000 of property valuation.
An additional Sweet Home ambulance service area applies to a limited amount of rural property. The real market value of that area increased from $142 million to $143 million. The assessed value increased from $91 million to $94 million. The district will receive $33,000 in tax revenue this year, up from $32,000 last year.
The real market value of the Sweet Home School District increased from $1.6 billion to $1.7 billion. The assessed value increased from $993 million to $1 billion. Imposed taxes from $6.7 million to $7 million. The district’s share of state school revenues is offset by local property taxes.
Linn County real market value increased from $16.1 billion to $17.5 billion. Assessed value increased from $10.2 billion to $10.7 billion. Imposed taxes increased from $40.3 million to $42.5 million.
Total taxes throughout all districts in Linn County increased from $175 million to $183 million.
The highest property tax rate in Linn County continued to be Sweet Home, which had a combined tax rate of $24.67, a reduction of 3 cents per $1,000 of assessed value. Property in the surrounding areas had a total tax rate of $12 to $14 per $1,000.
Lebanon was the second highest with a combined tax rate of $21.02, a reduction of 46 cents per $1,000 of assessed value. Albany and Brownsville also had combined rates larger than $20 per $1,000. Other Linn County cities ranged from approximately $14 to $18 per $1,000.