Oregon’s Constitution and measure 50
With a goal of ensuring that property owners voters wouldn’t be blindsided by tax increases as the result of increases in the value of their properties, voters passed Measure 50 in 1997. Measure 50 amended the state’s constitution to place limits on how much the assessed value of a property can increase every year. With few exceptions, a property in Oregon cannot be assessed by more than three percent greater than it was assessed in the prior year. For instance, if a property was assessed at $500,000 in 2023, it can only be assessed at a maximum of $515,000 in 2024 for the purposes of property tax collection. This maximum applies even if the real market value of the property is much greater than that.
This cap has the effect of limiting the increase in revenues that the various taxing authorities can bring in through property taxes. During periods when inflation is below or near the three percent threshold, the implications aren’t necessarily dire for local governments. After all, if the costs of providing government services rise near the three percent cap on increased assessed property values, then little, if any, disparity should result. However, since inflation increases the costs of providing services (via increased government worker wages and costs of materials, for instance), if inflation greatly exceeds three percent, then city and county tax revenues won’t be able to keep up with the increasing costs of providing services, unless new taxes are imposed.
Citizens face their own belt-tightening
The disparity between inflation and increases in revenues is not limited to local governments. Taxpayers also face price pressures as the result of inflation. While wages have increased alongside the increase in inflation, many citizens report that their wages are utterly failing to keep pace with the actual costs of living. From the beginning of 2020 until the end of 2024, U.S. worker average hourly earnings rose at an annual rate of approximately 4.7%. This is about on par with the U.S. Consumer Price Index (CPI) over the same period, however, since the CPI excludes items such as groceries, fuel and the actual prices of homes (the CPI instead uses a metric called “owner-equivalent rents), the actual effects of inflation on the taxpayer are greatly understated. Since the lower a family’s income, the greater the percentage of a household’s budget food, fuel and housing make up, the consequences of inflation more greatly affect those lower on the income ladder.
With few options, cities, counties opt for new taxes, cuts to services
With limits placed on how much a property can be re-assessed for every year, city and county governments have opted to attempt tax levies and fee increases to bridge budget shortfalls. Coos County made multiple failed attempts to impose a tax levy on property owners with one failure in the May 2024 election and another in last November’s primary election. Both would-be levies were aimed at raising more revenue specifically to fund jail and Sheriff’s office operations. Curry County made similar failed attempts at increasing revenues with new property tax levies.
As long as the rise in costs of paying employees and other expenses continues to exceed Oregon’s constitutional limit on assessed property values, cities and counties in the state will have to make tough choices. Many counties are already operating with skeleton crews, and many departments are spread so thin as it is, that cutting personnel in some departments would render that department completely inoperable. In Coos County, some departments are staffed by just one or two employees. Unfortunately, both the taxpayers and the government entities are both being attacked by the same monster – inflation.