Sean C. Morgan
Real market property values in Sweet Home increased nearly 12 percent from 2017 to 2018, causing increases in property tax bills and in tax revenues, according to data released earlier this month by the Linn County Assessor’s Office.
Assessed values also increased by more than 4 percent around Sweet Home. Assessed values may increase by up to 3 percent per year when they are less than the real market value. Assessed values can increase by a larger amount based on new construction.
Inside the city limits, the aggregate real market value of property increased from $543.9 million to $707.3 million, an 11.67-percent increase. Across the Sweet Home School District, the combined real market value of property increased from $1.35 billion to $1.46 billion, an increase of 8.1 percent.
Inside the city limits, the combined assessed value of property increased from $442.3 million to $464 million, an increase of 4.9 percent. Within the School District boundaries, combined assessed value increased from $992.7 million to $962.9 million, a 4.4-percent increase.
To calculate tax bills, tax rates are imposed based on assessed values. The result is then compared to real market value and limited to $10 per $1,000 of valuation for general government and $5 per $1,000 for education. When real market values grow faster than assessed values, this will cause property taxes to increase.
When real market values become large enough that the entire tax rate imposed at assessed value is less than $10 per $1,000 for general government and $5 per $1,000 for education compared to real market value. Bond levies are not counted against the limits.
Inside Sweet Home city limits, the combined tax rate is $24.7331.
Tax rates, including bond levies, permanent rates and local option levies, in the City of Sweet Home include Linn County, $4.2936 per $1,000; Linn-Benton-Lincoln Education Service District, 30.49 cents per $1,000; Linn-Benton Community College, 67.37 cents per $1,000; Sweet Home School District, $6.9178 per $1,000; City of Sweet Home, $10.4357 per $1,000; Sweet Home Fire and Ambulance District, $1.8208 per $1,000; Sweet Home Cemetery District, 21.66 cents per $1,000; 4-H Extension, 7 cents per $1,000.
Property in the School District around the City of Sweet Home is taxed at rates ranging from about $12.50 to $14.85 per $1,000.
Taxing districts imposed $3.47 million in property taxes inside the Sweet Home city limits, up from $3.09 million last year, an increase of 12.26 percent.
Across the School District, taxing districts imposed $6.48 million in property taxes, up from $6.16 million, an increase of 4.8 percent.
As values increase, rates decrease for bond levies, although the same tax is collected. Locally, the School District and the Fire and Ambulance District impose levies to pay for bonds. The School District completed major renovations at Sweet Home High School with a bond approved in 2001. Another bond, approved in May, will pay for renovations at Sweet Home Junior High. The Fire and Ambulance District is using a bond approved in November to pay for new equipment and building improvements.
Local option levies, temporary levies approved by voters periodically and used by the city to pay for library and police services, the county to pay for law enforcement and the School District to pay for pool operations, are the first type of tax rate to be reduced when taxing districts exceed property tax limitations in relation to real market values. The effect is called “compression” by public officials. Compression decreases as real market values rise faster in comparison to assessed values and property owners pay more of the tax rate imposed based on assessed values.
For the School District, changes in property tax revenues are generally offset by increases or decreases in state funding, which is derived from the state income tax, resulting in little impact to the district’s budget.
The city budgeted its 2017-18 fiscal year based on an assumption of 4 percent growth in property values and 4 percent tax delinquency, said Finance Director Pat Gray. It overestimated compression in its library budget and underestimated compression in its police budget. Aggregate compression was 33 percent.
Gray is projecting that the General Fund will receive an additional $44,500 in property tax revenue, a total of $631,000.
She projects that the police levy will generate an additional 8.24 percent, $190,000 for a total of $2.3 million.
The library levy will generate an additional, 13.73 percent, $47,107, for a total of $343,000, Gray said.
The real market value for the entire county was $14.5 billion. Its assessed value was $9.8 billion.
An example of how rates and assessments affected tax bills, a random Elm Street property increased in assessed value from $81,730 last year to $84,180 this year, a 3-percent increase. Its real market value increased from $86,400 to $99,940, an increase of 15.7 percent. The property tax imposed on the property was $1,674.58, up from $1,460.24 last year, an increase in property taxes of 14.7 percent.
The property remains in compression. As real market values increase faster than assessed value, the property tax will continue to rise annually by more than the 3 percent increase caused by the annual limit on the growth of assessed value. While the property is in compression, if real market values decrease, the property tax imposed would decrease.