If projected revenues are up, why do we need new taxes?
Editor's note: This is the second in a multipart series exploring tax measures before the Oregon Legislature during the 2021 session
As the Oregon Office of Economic Analysis presented their revenue forecast
they said that the "Oregon March forecast puts kicker credit back in play," which is interesting because we're supposed to be in a recession and like planes lining up to land as a major airport, the revenue bills have been queuing up in the Oregon House Revenue Committee, chaired by Representative Nancy Nathanson (D-Eugene), where all bills for raising revenue must originate.
They did hedge. Saying, "kicker credit is far from a sure thing since the tax season has yet to get under way," but they are cautiously projecting a personal kicker of $571 million and a corporate kicker of $420 million, though this money doesn't kick back to corporations. It goes to K-12 education, which frees up general fund money for the Legislature to spend as they wish.
Bills for raising revenue also require a three-fifths majority vote in each chamber to pass. Because of this, as Democrats barely have the numbers in both chambers to win a tax vote, it's easier for them if they can find a way to pass a revenue increase that doesn't require the super-majority. They can do this in many ways, including changing the eligibility requirements for qualifying for a tax.
Oregon's kicker law is a part of the Oregon Constitution and can be found in Article IX, Section 14:
(1) As soon as is practicable after adjournment sine die of an odd-numbered year regular session of the Legislative Assembly, the Governor shall cause an estimate to be prepared of revenues that will be received by the General Fund for the biennium beginning July 1. The estimated revenues from corporate income and excise taxes shall be separately stated from the estimated revenues from other General Fund sources.
(2) As soon as is practicable after the end of the biennium, the Governor shall cause actual collections of revenues received by the General Fund for that biennium to be determined. The revenues received from corporate income and excise taxes shall be determined separately from the revenues received from other General Fund sources.
(3) If the revenues received by the General Fund from corporate income and excise taxes during the biennium exceed the amount estimated to be received from corporate income and excise taxes for the biennium, by two percent or more, the total amount of the excess shall be retained in the General Fund and used to provide additional funding for public education, kindergarten through twelfth grade.
(4) If the revenues received from General Fund revenue sources, exclusive of those described in subsection (3) of this section, during the biennium exceed the amount estimated to be received from such sources for the biennium, by two percent or more, the total amount of the excess shall be returned to personal income taxpayers.
|Post Date: 2021-02-25 16:04:28||Last Update: 2021-02-25 16:02:16|
Big government dream: A self-increasing tax
Editor's note: This is the first in a multipart series exploring tax measures before the Oregon Legislature during the 2021 session
As one of the few states without a general sales tax, Oregon depends heavily on property tax for revenue. Real property is taxed based on its value -- know as ad valorem
taxes. As real estate prices spiked in the 1990s -- along with taxes -- citizens began to become resentful of the tax windfall enjoyed by their governments. In 1996 the citizens of Oregon passed property tax reform as Measure 47. There were some technical problems with Measure 47, so in 1997, the Legislature sent Measure 50 to the voters, which fixed the problems by repealing Measure 47, but keeping the tax cuts.
For 1997-98, the assessed value of a property was set at 90 percent of the property’s 1995-96 assessed value. After 1998 the growth in assessed value was limited to three percent annually. New properties are calculated by multiplying the ratio of assessed to real market value for similar property in the county by that property’s real market value. This means that if you have a home where the assessment has been rising only three percent in 1989 and you build a similarly valued home nearby, the tax rates would be similar.
Property values, especially with the policies in Oregon, tends to increase at a rate greater than three percent, so over the decades, most properties have seen a huge gap between the real market value -- what a home can sell for -- and the assessed value, which is capped to increase at no more than three percent annually.
State Representative Rob Nosse has introduced HJR 13
which proposes an amendment to Oregon Constitution providing that, for purposes of ad valorem
property taxation, the ratio of maximum assessed value to real market value of property must be equal to three quarters of the market value.
It also exempts from ad valorem property taxes lesser of first $25,000 or first 25 percent of real market value of each homestead and requires the legislature to enact laws for administration of exemption, including adjusting $25,000 for inflation.
This means that property taxes would no longer be capped at three percent annually. They are only required to lag behind market value. The legislative revenue office has not done any analysis on what dollar amount this will raise, but it has to be significant, and will grow over the years.
As with all changes to the Oregon Constitution, only the people can do that, so this bill is a referral to the 2022 ballot. This resolution has not be scheduled for a hearing.
|Post Date: 2021-02-23 13:04:07||Last Update: 2021-02-23 15:48:24|