Sean C. Morgan
Property values across Linn County increased by 11 percent for real market and 4 percent for assessed values, driving up property tax bills and decreasing property tax compression, according to the county’s assessment information released in October.
In Sweet Home real market value increases drove up property taxes imposed by local option levies by 14 percent, while taxes imposed by permanent rates increased by about 4 percent, roughly the increase in assessed valuation from 2017-18 to 2018-19.
Property taxes are calculated 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. County taxpayers’ bills also include 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 swimming pool, which is up for renewal in this election, as it and other 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, which 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. The local option levies are $7.58 for the Police Department and $1.17 for the Public Library and are subject to compression.
For a majority of Sweet Home properties in recent years, that means property tax bills increases by the percentage increase in real market values. For properties that are not in compression, property tax bills may increase by 3 percent based on the growth in assessed value.
City Finance Director Brandon Neish said he budgeted this year for an increase in permanent rate revenue of 4 percent, about $671,000, which is what the city expects to receive. He budgeted an 8-percent increase in local option levy revenue, but the actual income will be higher, about 14 percent.
In the police levy, the city imposes a rate of $7.86 per $1,000, $3.7 million. After compression, the city will receive $2.8 million, a reduction of 24 percent. Compression rates have exceeded 33 percent in recent years.
For the library, the local option levy, $1.17 per $1,000, imposes $554,000 in taxes. Compression reduces the revenue to $423,000, a reduction of 24 percent.
Paying the bills are Sweet Home property owners. Of 10 bills examined by The New Era, bills increased by 2.9 percent to 15.3 percent. Just three were below 8 percent. One of two 15-percent increases was for Mayor Greg Mahler’s home. One bill increased by 13.2 percent, was nearly out of compression based on increases to real market value and should no longer see large increases in the future. The average was 9.65 percent.
By comparison, 10 rural properties around Sweet Home averaged an increase of 2.98 percent. Just one, at 5.3 percent, exceeded 2.9 percent. They ranged from increases of 2.6 percent to 5.3 percent. With lower combined tax rates, rural properties tend to be out of compression, and taxes grow based on increases to assessed value, which is capped at 3 percent.
Accounting for the city’s permanent rate, which is not generally compressed, total compression for Sweet Home was 20.5 percent.
“It was a pretty good jump,” Neish said of real market values. “From the city’s standpoint, we’re glad to see this.”
The revenue comes back to the community in the form of services, Neish said, and it’s the city’s job to make sure it’s spent efficiently and appropriately.
When the city was building the budget for this year, projections looked rocky five years ahead. The increase makes the projection look a lot better five years out.
The library already looked healthy, Neish said.
Recognizing the increase in local option levy revenue, “part of this year’s budget plan will be looking at this tax levy,” Neish said.
He does not expect the large increases in real market values to continue at the same rate, he said.
“Our biggest concern right now is the General Fund (which is funded partially by the permanent rate),” Neish said. “The way the costs are going in the General Fund and what the five-year picture looks like, it’s going to need some help.”
The real market value of property in the Sweet Home Fire and Ambulance District increased from $1.26 billion to $1.39 billion. The assessed value increased from $831 million to $857 million. Imposed taxes increased by $26,000 to $1.538 million.
The Sweet Home ambulance rate applies to a limited amount of rural property. The real market value of that area increased from $140 million to $142 million. The assessed value increased from $89.6 million to $91.9 million. Imposed taxes increased about $800 to $32,000.
The real market value of the Sweet Home School District increased from $1.46 million to $1.6 billion. The assessed value increased from $963 million to $993 million. Imposed taxes increased from $6.48 million to $6.7 million.
Linn County real market value increased from $14.5 billion to $16.1 billion. Assessment value increased from $9.8 billion to $10.2 billion. Imposed taxes increased from $37.7 million to $40.4 million.
Total taxes among all districts countywide increased from $165.4 million to $174.7 million.
The highest property tax rate in Linn County continued to be Sweet Home, which had a combined tax rate of $24.70 per $1,000 of valuation. Property in the surrounding areas had a total tax rate of $12 to $14 per $1,000.
Lebanon property owners were taxed the second highest in the county at $21.34 per $1,000. A portion of Lebanon has a rate of $21.48 per $1,000. Albany and Brownsville also had combined rates larger than $20 per $1,000. Rates in Linn County cities range from $13 to $17 per $1,000.