Item 2F: Approval of League of Oregon Cities Priority Agenda

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%88%',1)28& 0SGEP'SRXVSP%QIRHQIRX ,.6 (IWGVMTXMSR The League’s proposed constitutional amendment would allow local voters the ability to consider a local option levy outside of compression, and would lengthen the maximum duration of a levy from 5 to 10 years. The amendment would not raise anyone’s taxes, but would empower voters to authorize a tax to be used for local operations that voters want. &EGOKVSYRH Under our current system, statewide limitations can prohibit local voters from having the ability to raise their own taxes to support services they demand. Measure 5 limitations prevent general governments (cities, counties and special districts) and schools to levying $10 and $5 per $1,000 of real market value respectively. Any taxes levied in excess of those limitations are reduced, or compressed, proportionally until the limitations are met. Local option levies, temporary levies in excess of the municipality’s permanent rate that are approved by voters to provide funding for operating expenses, are compressed first under this system. As a result, residents residing in a municipality in compression are essentially prohibited from even voting to raise their taxes to support services they demand. )\EQTPI Take for example the city of Sweet Home, a timber-dependent community of roughly 9,000 residents in Linn County. The city has a low permanent tax rate for a city of its size. As a result, the city has provided essential police protection and library services via a local option levy since 1986. In 2010, voters in Sweet Home approved these local option levies with 60 and 55 percent of the vote respectively. However, Linn County passed a local option levy of its own soon thereafter, and property values in Sweet Home fell. As a result, the local option levy revenue losses due to compression increased from $300,000 to $730,000 – nearly a third of what the levy was supposed to collect. As a result, the public safety and library services are not being provided at the level local citizens wanted. DEOH6WDWHZLGHFRPSUHVVLRQORVVHV 7 7XEXI[MHI-QTEGXW Compression is becoming a growing problem for local 5HYHQXHORVWWR3HUFHQWLQFUHDVHLQ FRPSUHVVLRQLQFRPSUHVVLRQORVVHV governments statewide. Since 2008-09, compression for )<LQPLOOLRQV VLQFH)< all local governments has increased from $51 million, or 1.13 percent of property tax collections, to $144 million, 6FKRROV or 2.8 percent of collections (see Table 1). All counties are &RXQWLHV in compression, as are half of all cities and more than 90 &LWLHV percent of all school districts. Last May, local voters approved 18 of 21 (86%) local option levies, including six out of six city levies and four out of five county levies. While voters may still be concerned about the state of the economy, in many instances they clearly realize the value of local government services and are willing to tax themselves to provide those services. Whether or not any local voters approve local option levies outside of compression limitations is irrelevant. What matters is that local voters currently do not have the freedom and opportunity to do so. For more information, visit www.orcities.org/toolkit or contact Chris Fick at (503) 588-6550 or cfick@orcities.org.