The New Era - All about Sweet Home since 1929

Levy reduction would be timely, if not overdue


May 6, 2020

A proposal by city staff to decrease the Police Department levy by 30 cents per $1,000 of property value is something we should all appreciate.

For one thing, that proposal will allow the City Council a chance to keep an implicit promise from city officials in 2015, when voters approved levy increases of $1.45 per $1,000 for law enforcement and 35 cents for the library as part of an effort to combat the effects of compression.

The compression rate was 38 percent that year, and nearly all of Sweet Home properties were in compression. Because voters had approved tax increases for other agencies, particularly the Linn County Law Levy, the Sweet Home Police Department was seeing a significant funding decrease, thanks to that compression.

Things have changed.

The compression rate is now 19 percent, which is the lowest – or among the lowest – recorded since compression became a component of Oregon’s property tax system in 1997.

Back in 2015, with nearly all Sweet Home properties under compression, the increase was not the reason for increases in property tax bills. It merely shifted the amount of money going to Albany following the addition of new countywide rates and the increases to existing countywide rates.

Since 2015, local real market property values have increased dramatically, widening the gap between assessed value and real market value, which has decreased the compression effect. By fall 2018, many properties previously so were no longer compressed.

By November 2019, a third of properties were out of compression, and about three-fifths would be out under the pre-2015 tax rates.

A portion of the tax bills for those properties is, in fact, the tax increase councilors explicitly said they weren’t imposing back in 2015.

At that time, the council and staff discussed decreasing the levy rate, should compression rates decline. Councilors were nervous about requesting such a large increase, and their expressed intention was not to increase tax revenue except by shifting the limited resources available under compression, to return that money from Albany to Sweet Home.

It’s time to restore the rate to what was implicitly promised.

Incidentally, the vast majority of increases in property tax bills in the past two years have nothing to do with the $1.80 increase approved in fall 2015. Rather, they are a result of rapidly declining property tax compression. No matter what, property tax bills were always going to increase dramatically when compression declined.

The 2015 increase represents $15 per month for a home with an assessed value of $100,000.

City staff’s recognition of that 2015 unofficial obligation is commendable. Ideally, they would go further, reducing the two levies by the full $1.80. That’s the unofficial obligation.

That said, we recognize and appreciate the challenges the city faces – especially in the face of a newly uncertain economy, which would increase compression again if real market values begin falling. The city’s proposed reduction by 30 cents amounts to $230,000, according to the city’s proposed budget now in the approval process (see page 1).

We appreciate the city’s recognition of the obligation and hope that it continues to find ways to relieve the tax burden on Sweet Home property owners, most of whom have seen large increases in tax bills the past two years.

The City of Sweet Home doesn’t bear the full responsibility for this quandary.

The Linn County Board of Commissioners and Linn County Sheriff’s Office should also reduce their Law Levy by some amount for the same reasons. The levy has been increased multiple times, specifically to counter the effects of property tax compression. That compression effect is largely gone.

This is really about justice and equity for Sweet Home property owners. Sweet Home has drawn the short end of the stick and has been paying the price for more than two decades as voters countywide adjusted the county Law Levy upward, compressing Sweet Home.

Ultimately, it was that action, along with the formation of a 4-H district and a local option levy for the Veterans’ Home, that led the Sweet Home City Council, in figurative self-defense, to request that increase in 2015 rather than watching its share of tax revenue continue to evaporate at the ballot box.

But that further contributed to the compression effect and ensured that Sweet Home’s tax rate remains the highest in the county.

An even better solution would be for county and city officials to work together to find a way to stop charging Sweet Home residents for patrol services they do not receive.

Here in Sweet Home, we can understand the county’s incentives and frustrations.

Measure 50, approved by voters in 1997, created this system, and while we applauded it then and continue to support its intent – providing restraints on governments that can never get enough tax money, the measure came with a few hiccups.

One of those is the compression issue, which is particularly exacerbated in the relationship between Linn County and Sweet Home because both were, thanks to a flaw in Measure 50, unable to roll the local option levies up for renewal into their permanent rates.

Rather, their local option levies were required to carry the brunt of the compression effect instead of spreading it out fairly and equally among all the taxing districts’ permanent rates, which are compressed after local option levies.

The vast majority of Sweet Home’s property tax funding is derived from local option levies. At $1.41 per $1,000, Sweet Home’s permanent rate is puny compared to other taxing districts.

The issue isn’t replicated between Linn County and Lebanon, nor between Linn County and Albany. In fact, the relationship between Linn County and Sweet Home is the sole incidence of this in the entire state.

The blame falls squarely on the architects of Measure 50, and it is a tragedy that Sweet Home taxpayers have had to bear the full weight of this failure for 23 years.

As a reminder, property tax compression is the friend of those who hate paying taxes. It can get confusing, thanks to the convolutions of Measures 47 and 50 from the 1990s. But ultimately, that property tax compression is literally the limitations on property taxes. It has other idiosyncrasies that can be discussed elsewhere.

Though we support Measure 50 in concept, we remain ever disappointed in the unintended consequences that have hit Sweet Home harder than any other place in the state.

And while we understand why our local leaders might want to keep these levies where they’re at, they need to remember who’s paying the price.


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