League of Oregon Cities: Property Tax Now and in Our Dreams Panel: Scot Langton, Deschutes County Assessor President Pete Truax, Mayor of Forest Grove Dr. Paul Warner, Legislative Revenue Officer Wendy Johnson, LOC Intergovernmental Relations Associate

Property Taxes Have Become More Stable

Oregon’s Property Tax Burden Has Declined (Property Taxes as a % of Personal Income)

Property Tax Relief Programs Have Virtually Disappeared (Includes State Funded PTR, ERA, NPH and HARRP, excludes SPTD)

Consequences of Oregon’s Property Tax Initiatives Advantages Disadvantages Stability and Predictability for Taxpayers Stability and Predictability for Local Governments Taxpayer Acceptance—far fewer appeals For Taxpayers: Horizontal Inequities More Regressive for Low Income Households For Local Governments: Not Responsive to Economic Growth or Change Inflation Nightmare

Potential Elements of Property Tax Reform (1) Tax Relief Homestead Exemption Circuit Breaker Expanded Senior Deferral Program Increase Value Limit Flexibility Moving Average Using Multiple Years Index to Inflation with Max and Min Reset at Time of Sale Modify CPR Calculation Return to Market Value/ Reset Rate Limits

Potential Elements of Property Tax Reform (2) Relax Rate Limits Increase Measure 5 Caps Increase Local Option Flexibility Expand Measure 5 Definition of Capital Increase Flexibility for Permanent Rate Adjustments Return to Constrained Levy System Expand Property Tax Base Reduce Impact of Exemptions and Partial Exemptions Add Taxable Property to the Base

Property Tax Exemptions– passed in 2015 HB 2126: vertical housing exemption sunset extension to 2026 HB 2171: nonprofit history and science museums exemption revision; nonprofit organizations exemption reform for 2016 HB 3125: new exemption for food processing machinery and equipment used to process grains, eggs, milk and bakery products HB 3492: new exemption for solar projects (payment in lieu of taxes)

SB 611– Central Assessment Centrally assessed= taxed on real property and personal property (both tangible and intangible) New property tax exemptions: Value of franchises of communication companies Value of satellites used to provide communications services directly to retail customers Caps intangibles using a historical or original cost formula Qualified high speed gigabit communication service projects Data Centers: further clarifications to ensure that data centers are generally not centrally assessed

SB 611– Central Assessment Revenue Impact (in $Millions): Impact Explanation: The revenue impact includes losses in revenue for local governments derived from the exemptions provided in the bill that would reduce value and subsequent taxes levied for existing companies in Oregon. The revenue impact does not include estimates for potential companies that could receive exemption under the qualified project investment exemption. This potential loss is not included because, while the exemption will be available to companies meeting the qualified project investment requirements, there is no assurance that an undertaking such as this will occur.   Fiscal Year Biennium 2015-16 2016-17 2015-17 2017-19 2019-21 Local Government (4.3) (8.8) (9.1) Local Education Districts (3.5) (7.2) (7.5) Total Revenue Loss (7.8) (16.0) (16.6)

Failed 2015 Property Tax Exemption Bills (But Issues Likely to Come Back) SB 938: industrial property improvements/deferral HB 3246: energy efficiency improvements/ greenhouse gas reduction improvements HB 2734: brownfield remediation costs

HB 2171– Comprehensive Tax Reform PROBLEMS TO ADDRESS IN PROPERTY TAX REFORM Permanent Rate (frozen at 1997) Assessed Value/Real Market Value Caps ($10 per $1000 on RMV) 3% Growth limit on Assessed Value Levy Time Lines Compression Property Tax Exemptions and Deferral Programs Intangible Property

THE END Questions and Answers….