Chapter 186 Oregon Laws 1999

Session Law

AN ACT

SB 123

Relating to finance; creating new provisions; and amending ORS 294.381, 310.055, 310.060, 310.105 and 327.013.

Be It Enacted by the People of the State of Oregon:

SECTION 1. (1) This section applies to a taxing district that is located in a county in which:

(a) For the tax year beginning July 1, 1996, a taxing district imposed one or more serial or one-year levies that expired before the tax year beginning July 1, 1997;

(b) Between December 5, 1996, and July 1, 1997, voters approved one or more temporary levies to replace the levies described in paragraph (a) of this subsection and increased the amount being replaced;

(c) Each levy described in paragraph (b) of this subsection is treated as a local option tax under section 11 (7)(c), Article XI of the Oregon Constitution;

(d) The total amount of local option taxes described in paragraph (c) of this subsection that were imposed by the taxing district for the tax year beginning July 1, 1997, exceeded $1.2 million; and

(e) The total amount of replacement authority for the taxing district exceeds $900,000.

(2) For each taxing district described in subsection (1) of this section, the Department of Revenue shall recompute the amount of property taxes that would have been imposed by the taxing district for the tax year beginning July 1, 1997, making the following changes in the calculation of 1997-1998 operating taxes for all taxing districts within the county in which the taxing district is located:

(a) The total Measure 5 imposed tax estimate determined under ORS 310.210 shall consist of the total Measure 5 imposed tax estimate determined for the tax year beginning July 1, 1997, plus that portion of any local option taxes that represent replacement authority for a serial or one-year levy imposed for the tax year beginning July 1, 1996, and described in subsection (1)(a) of this section;

(b) A taxing district's Measure 5 imposed tax estimate shall take the replacement authority into account only if that taxing district imposed the serial or one-year levy for the tax year beginning July 1, 1996; and

(c) Measure 47 comparison taxes shall be allocated to taxing

districts in the county based on the ratio described in ORS 310.212 (8), substituting the Measure 5 imposed tax estimate determined under paragraphs (a) and (b) of this subsection.

(3) The rate of tax that would have been achieved for the tax year beginning July 1, 1997, had the operating taxes of the taxing district been calculated as provided for in this section, shall serve as the taxing district's statutory rate limit on operating taxes, to the extent the rate limit is less than or equal to the lesser of the district's permanent rate limit on operating taxes or statutory rate limit on operating taxes as determined under ORS 310.200 to 310.242 (1997 Edition).

(4) The department shall recalculate taxes for each taxing district under this section separately.

(5) As used in this section, "replacement authority" means that portion of the levy described in subsection (1)(c) of this section that would have been incorporated into the permanent rate limit of the taxing district if the levy described in subsection (1)(c) of this section were treated as a levy described in section 11 (7)(b), Article XI of the Oregon Constitution.

SECTION 2. Section 1 of this 1999 Act is added to and made a part of ORS 310.200 to 310.242.

SECTION 3. (1) For the tax year beginning July 1, 2000, the operating tax rate of a taxing district described in section 1 (3) of this 1999 Act shall be further reduced to a rate that will achieve a refund of excess taxes collected for tax years beginning July 1, 1997, July 1, 1998, and July 1, 1999.

(2) As used in this section, "excess taxes" means the amount by which a taxing district's operating taxes, as defined in ORS 310.055 (1997 Edition), that were imposed for tax years beginning July 1, 1997, July 1, 1998, and July 1, 1999, exceed the amount of operating taxes that would have been imposed for those tax years if the statutory rate limit determined under section 1 of this 1999 Act had been in effect. "Excess taxes" does not include any amount attributable to interest.

(3)(a) If a taxing district relinquished territory as the result of an annexation occurring after July 1, 1998, and before July 1, 2000, the amount of the excess taxes calculated under subsection (2) of this section for the taxing district that relinquished territory for tax years beginning July 1, 1997, and July 1, 1998, shall be allocated between the remaining territory of that taxing district and the annexed territory proportionately, on the basis of the assessed value of each territory for each tax year.

(b) Notwithstanding subsection (1) of this section, the operating tax rate of the taxing district shall be reduced to a rate that will achieve a refund of those excess taxes allocable to the remaining territory of the district for tax years beginning July 1, 1997, and July 1, 1998, plus the amount of excess taxes calculated under subsection (2) of this section for the tax year beginning July 1, 1999.

(c) The taxing district that relinquished territory shall make a payment to the annexing taxing district equal to the amount of excess taxes allocable to the annexed territory.

(4)(a) If a taxing district annexed territory as the result of an annexation occurring after July 1, 1998, and before July 1, 2000, the calculation of excess taxes under subsection (2) of this section shall be modified by adding the amount of the payment received from the taxing district that relinquished territory in the annexation to the amount of excess taxes otherwise calculated under subsection (2) of this section.

(b) Notwithstanding subsection (1) of this section, the operating tax rate of the annexing taxing district shall be reduced to a rate that will achieve a refund of excess taxes as determined under paragraph (a) of this subsection.

SECTION 4. ORS 310.055 is amended to read:

310.055. (1) As used in the property tax laws of this state, "operating taxes" means ad valorem property taxes that are subject to a permanent rate limit under section 11, Article XI of the Oregon Constitution, or statutory rate limit under ORS 310.236 (4) or section 1 of this 1999 Act, if applicable.

(2) For the tax year beginning July 1, 1997, operating taxes consist of the sum of the following (or such lesser amount as is certified to the assessor under ORS 310.206 (4)(b):

(a) The total amount of ad valorem property taxes as provided in ORS 310.200 to 310.242, except that the amount under this paragraph does not include:

(A) Local option taxes;

(B) Ad valorem property taxes used to repay taxing district bond or pension and disability plan obligations described in section 11 (5), Article XI of the Oregon Constitution;

(C) Ad valorem property taxes that would otherwise be subject to this paragraph, except that the taxes are of a taxing district other than a city, county or school district, and are used to support a hospital facility;

(D) Ad valorem property taxes that would otherwise be subject to this paragraph, except that the levy of the taxes was approved by voters prior to December 5, 1996, that met the voter participation requirements in section 11 (8), Article XI of the Oregon Constitution, and that are first imposed in the tax year beginning July 1, 1996, or July 1, 1997;

(E) Serial or one-year levies described in ORS 280.040 to 280.140 (1995 Edition) that replace levies that were imposed in the tax year beginning July 1, 1996, that were approved by voters in an election held after December 4, 1996, and that are first imposed for the tax year beginning July 1, 1997, if the rate or the amount of the levy is not greater than the rate or the amount of the replaced levy;

(F) Taxes imposed to pay principal and interest on exempt bonded indebtedness; and

(G) Urban renewal increment taxes; and

(b) The total amount of the following ad valorem property taxes, without reduction under ORS 310.200 to 310.242:

(A) Ad valorem property taxes of a taxing district other than a city, county or school district that are used to support a hospital facility;

(B) Ad valorem property taxes approved by voters prior to December 5, 1996, that met the voter participation requirements in section 11 (8), Article XI of the Oregon Constitution, and that are first imposed in the tax year beginning July 1, 1996, or July 1, 1997; and

(C) Serial or one-year levies described in ORS 280.040 to 280.140 (1995 Edition) that replace levies that were imposed in the tax year beginning July 1, 1996, that were approved by voters after December 4, 1996, and that are first imposed for the tax year beginning July 1, 1997, if the rate or the amount of the levy is not greater than the rate or the amount of the replaced levy.

(3) For tax years beginning on or after July 1, 1998, operating taxes consist of:

(a) Ad valorem property taxes imposed at the rate established as the permanent rate limit or statutory rate limit, if applicable, for the taxing district [for the tax year beginning July 1, 1997,] or such lesser [amount] rate as the taxing district certifies to the assessor under ORS 310.060; or

(b) If the district is imposing operating property taxes for the first time, ad valorem property taxes imposed at the rate established in the manner provided for by law as the permanent rate limit for the district or such lesser rate as the taxing district may determine.

SECTION 5. ORS 310.060 is amended to read:

310.060. (1) Not later than July 15 of each year, every city, school district or other public corporation authorized to levy or impose a tax on property shall file a written notice certifying the ad valorem property taxes to be imposed by the taxing district and any other taxes on property imposed by the taxing district on property subject to ad valorem property taxation that are required or authorized to be placed on the assessment and tax roll for the current fiscal year. The notice shall be accompanied by a copy of a lawfully adopted ordinance or resolution that categorizes the tax, fee, charge, assessment or toll as subject to or not subject to the limits of section 11b, Article XI of the Oregon Constitution, identified by the categories set forth in ORS 310.150.

(2) For any ad valorem property taxes levied by the taxing district, the notice shall state as separate items:

(a) The taxing district's rate of ad valorem property taxation that is within the permanent rate limitation imposed by section 11 (3), Article XI of the Oregon Constitution, or within the statutory rate limit determined in ORS 310.236 (4)(b) or section 1 of this 1999 Act, if applicable;

(b) The total rate or amount of the taxing district's local option taxes imposed pursuant to ORS 280.040 to 280.145 that have a term of five years or less and that are not for capital projects;

(d) The total amount levied for the payment of bonded indebtedness or interest thereon that is not subject to limitation under section 11 (11) or section 11b, Article XI of the Oregon Constitution; and

(e) The total amount levied that is subject to section 11b, Article XI of the Oregon Constitution, but that is not subject to the permanent ad valorem property tax rate limit described in section 11 (3), Article XI of the Oregon Constitution, because the amount levied is to be used to repay:

(A) Principal and interest for any bond issued before December 5, 1996, and secured by a pledge or explicit commitment of ad valorem property taxes or a covenant to levy or collect ad valorem property taxes;

(B) Principal and interest for any other formal, written borrowing of moneys executed before December 5, 1996, for which ad valorem property tax revenues have been pledged or explicitly committed, or that are secured by a covenant to levy or collect ad valorem property taxes;

(C) Principal and interest for any bond issued to refund an obligation described in subparagraph (A) or (B) of this paragraph; or

(D) Local government pension and disability plan obligations that commit ad valorem property taxes.

(3)(a) The notice shall also list each rate or amount subject to the limits of section 11b, Article XI of the Oregon Constitution, identified by the categories set forth in ORS 310.150.

(b) If an item described in subsection (2) of this section is allocable to more than one category described in ORS 310.150, the notice shall list separately the portion of each item allocable to each category.

(4) For any other taxes on property imposed by the taxing district, the notice shall state:

(a) The total amount of money to be raised by each other tax, in the aggregate or on a property by property basis, as appropriate.

(b) Each amount that is subject to the limits of section 11b, Article XI of the Oregon Constitution, identified by the categories set forth in ORS 310.150.

(5) For any district authorized by law to place any other fees, charges, assessments or tolls on the assessment and tax roll, the notice shall state the total amount of money to be raised on a property by property basis.

(6) In addition to the notice required under subsection (1) of this section, any taxing district that is subject to the Local Budget Law shall also provide the documents required by ORS 294.555 (2).

(7) The taxing district shall give the notice and documents described in this section to the assessor and clerk of the county in which the principal office of the taxing district is located. If the taxing district is located in more than one county, it shall give the notice and documents described in this section to the assessor and clerk of each county wherein any part of the district is located.

(8) The Department of Revenue shall prescribe the form of notice required by this section. All amounts shall be stated in dollars and cents or ad valorem property tax rates in dollars and cents per thousand dollars of assessed value, as required by law. If the notice is given to the assessor and the clerk of more than one county, a copy of each other such notice given shall accompany every notice given. Upon the giving of the notice, every school district located in a county to which ORS 334.350 to 334.400 apply immediately shall supply a copy thereof to the school superintendent of the county wherein the district is located. Immediately upon receipt thereof every such notice and copy shall be filed in the office of the receiving officer.

(9) For good and sufficient reason, the county assessor may extend the time for the giving of the notice or correcting an erroneous certification for the current year up to but not later than October 1 as the county assessor considers reasonable.

SECTION 6. ORS 310.105 is amended to read:

310.105. (1) If a taxing district lying in two or more counties is entitled to offsets which have been provided by statute, the rates determined under ORS 310.090 shall be further adjusted to reflect the offsets.

(2) Adjustments under this section shall be made to ensure that the rate of taxation is uniform throughout the taxing district.

(3) Adjustments made under this section shall not affect the permanent rate limit determined for purposes of section 11 (3), Article XI of the Oregon Constitution, or the statutory rate limit determined in ORS 310.236 (4)(b) or section 1 of this 1999 Act, if applicable.

SECTION 7. ORS 294.381 is amended to read:

294.381. Each municipal corporation which has the power to levy an ad valorem property tax shall estimate the amount of revenues that will be raised in the ensuing year through the imposition of taxes upon the taxable property within the municipal corporation. The estimate shall be computed as follows:

(1) Add the estimated unappropriated ending balances referred to in ORS 294.371 to the estimate of expenditures.

(2) To the sum obtained in subsection (1) of this section add the amounts of moneys reserved pursuant to ORS 294.366 or any other law.

(3) From the sum obtained in subsection (2) of this section, subtract the estimate of budget resources excluding the amount for taxes to be certified to the assessor for the ensuing year.

(4) To the remainder obtained in subsection (3) of this section, add an estimate of the discount allowed by ORS 311.505 and an allowance for taxes which will be imposed but not collected in the ensuing year. For purposes of this subsection, no allowance for discounts or uncollectibility shall be made for the amounts of offset which will be received by the district in full, and only the statutory discount amount allowed to the municipal corporation shall be added to the estimate provided in this subsection for any taxes which are paid by the federal or state government.

(5) The sum obtained in subsection (4) of this section is the preliminary estimate of ad valorem property taxes.

(6) The preliminary estimate of ad valorem property taxes shall be compared to the amount of projected revenues to be raised by imposing on the assessed value the total rate of the following:

(a) The permanent rate limit or statutory rate limit, if applicable, determined under ORS 310.200 to 310.242 or section 1 of this 1999 Act, or a lesser rate of operating taxes proposed by the municipal corporation.

(b) The total rate of local option taxes proposed to be certified to the assessor for the ensuing tax year.

(c) The total rate for all taxes imposed to pay principal and interest on bonded indebtedness or imposed to meet obligations described in section 11 (5), Article XI of the Oregon Constitution.

(7) If the estimates determined under subsections (5) and (6) of this section differ, the estimates shall be reconciled by making adjustments to any of the following:

(a) The estimate of expenditures used in subsection (1) of this section;

(b) The estimate of budget resources other than ad valorem property taxes used in subsection (3) of this section;

(c) The operating tax rate, to the extent the operating tax rate does not exceed the municipal corporation's permanent rate limit or statutory rate limit, if applicable; or

(d) The local option taxes to be certified to the assessor.

(8) The reconciled amount determined under subsection (7) of this section shall be the municipal corporation's estimate of ad valorem property taxes to be certified to the assessor for imposition for the ensuing year.

(9) For purposes of this section, if an ad valorem property tax is to be certified to the assessor as an amount, the rate of the tax shall be the amount divided by the assessed value of property that was used in making the estimate under subsection (6) of this section.

SECTION 8. Section 1 of this 1999 Act and the amendments to ORS 294.381, 310.055, 310.060 and 310.105 by sections 4 to 7 of this 1999 Act apply to tax years beginning on or after July 1, 2000.

SECTION 9. Section 1 of this 1999 Act is amended to read:

Sec. 1. (1) This section applies to a taxing district that is located in a county in which:

(a) For the tax year beginning July 1, 1996, a taxing district imposed one or more serial or one-year levies that expired before the tax year beginning July 1, 1997;

(c) Each levy described in paragraph (b) of this subsection is treated as a local option tax under section 11 (7)(c), Article XI of the Oregon Constitution;

(d) The total amount of local option taxes described in paragraph (c) of this subsection that were imposed by the taxing district for the tax year beginning July 1, 1997, exceeded $1.2 million; and

(e) The total amount of replacement authority for the taxing district exceeds $900,000.

districts in the county based on the ratio described in ORS 310.212 (8), substituting the Measure 5 imposed tax estimate determined under paragraphs (a) and (b) of this subsection.

(3) The rate of tax that would have been achieved for the tax year beginning July 1, 1997, had the operating taxes of the taxing district been calculated as provided for in this section: [, shall serve as the taxing district's statutory rate limit on operating taxes, to the extent the rate limit is less than or equal to the lesser of the district's permanent rate limit on operating taxes or statutory rate limit on operating taxes as determined under ORS 310.200 to 310.242 (1997 Edition).]

(a) Without the supplemental statutory reduction described in ORS 310.222 (6), shall serve as the taxing district's permanent rate limit on operating taxes; and

(b) With the supplemental statutory reduction described in ORS 310.222 (6), shall serve as the taxing district's statutory rate limit on operating taxes.

(4)(a) The levy described in subsection (1)(c) of this section, or a successor levy, shall be reduced by an amount equal to the expiring serial or one-year levy last imposed in the tax year beginning July 1, 1996.

(b) To the amount determined under paragraph (a) of this subsection shall be added the amount by which the levy described in subsection (1)(c) of this section and extended on the assessment and tax roll for the tax year beginning July 1, 1997, exceeded the amount of the levy described in subsection (1)(c) of this section, or a successor levy, that was extended on the assessment and tax roll for the tax year beginning July 1, 1998.

[(4)] (5) The department shall recalculate taxes for each taxing district under this section separately.

[(5)] (6) As used in this section, "replacement authority" means that portion of the levy described in subsection (1)(c) of this section that would have been incorporated into the permanent rate limit of the taxing district if the levy described in subsection (1)(c) of this section were treated as a levy described in section 11 (7)(b), Article XI of the Oregon Constitution.

SECTION 10. The amendments to section 1 of this 1999 Act by section 9 of this 1999 Act do not take effect unless the amendment to the Oregon Constitution proposed by Senate Joint Resolution 1 (1999) is approved by the people at a special election held throughout this state on the same date as the next biennial primary election.

SECTION 11. ORS 327.013 is amended to read:

327.013. The State School Fund distributions shall be computed as follows:

(1) General Purpose Grant = Funding Percentage x Target Grant x District extended ADMw.

(2) The funding percentage shall be calculated by the Superintendent of Public Instruction to distribute as nearly as practicable the total sum available for distribution of money.

(3) Target Grant = Statewide Target per ADMw Grant + Teacher Experience Factor.

(4) Statewide Target per ADMw Grant = $4,500.

(5) Teacher Experience Factor = $25 x {District average teacher experience - statewide average teacher experience}. "Average teacher experience" means the average, in years, of teaching experience of certified teachers as reported to the Department of Education.

(6) District extended ADMw = ADMw or ADMw of the prior year, whichever is greater.

(7)(a) Weighted average daily membership or ADMw = average daily membership + an additional amount computed as follows:

(A) 1.0 for each student in average daily membership eligible for special education as a child with disabilities under ORS 343.035, applicable to not to exceed 11 percent of the district's ADM without review and approval of the Department of Education. Children with disabilities eligible for special education in county correctional facilities shall not be included in the calculation of the 11 percent.

(B) 0.5 for each student in average daily membership eligible for and enrolled in an English as a Second Language program under ORS 336.079.

(C) 0.2 for each student in average daily membership enrolled in a union high school district or in an area of a unified school district where the district is only responsible for educating students in grades 9 through 12 in that area.

(D) -0.1 for each student in average daily membership enrolled in an elementary district operating kindergarten through grade 6 or kindergarten through grade 8 or in an area of a unified school district where the district is only responsible for educating students in kindergarten through grade 8.

(E) 0.25 times the sum of the following:

(i) The number of children 5 to 17 years of age in poverty families in the district, as determined by the Department of Education from a report of the federal Department of Education, as adjusted by the school district's proportion of students in the county receiving free or reduced price lunches under the United States Department of Agriculture's current Income Eligibility Guidelines if the number is higher than the number determined from census data and only if the school district had an average daily membership of 2,500 or less for the 1995-1996 school year, and as further adjusted by the number of students in average daily membership in June of the year of distribution divided by number of students in average daily membership in the district, or its predecessors, in June 1990;

(ii) The number of children in foster homes in the district as determined by the report of the Department of Human Resources to the federal Department of Education, "Annual Statistical Report on Children in Foster Homes and Children in Families Receiving AFDC Payments in Excess of the Poverty Income Level," or its successor, for October 31 of the year prior to the year of distribution; and

(iii) The number of children in the district in state-recognized facilities for neglected and delinquent children, based on information from the Department of Human Resources for October 31 of the year prior to the year of distribution.

(F) An additional amount as determined by ORS 327.077 shall be added to the ADMw for each remote small school in the district.

(G) All numbers of children used for the computation in this section must reflect any district consolidations that have occurred since the numbers were compiled.

(b) The total additional weight that shall be assigned to any student in average daily membership in a district, exclusive of students described in paragraph (a)(E) and (F) of this subsection shall not exceed 2.0.

(8) Transportation Grant = 70 percent of Approved Transportation Costs.

(9) Local Revenues are the total of the following:

(a) The amount of revenue offset against local property taxes as determined by the Department of Revenue under ORS 311.175 (3)(a)(A);

(b) The amount of property taxes actually received by the district including penalties and interest on taxes;

(d) The amount of revenue received by the district from the county school fund;

(e) The amount of revenue received by the district from the 25 percent of federal forest reserve revenues required to be distributed to schools by ORS 294.060 (1);

(f) The amount of revenue received by the district from state managed forestlands under ORS 530.115 (1)(b) and (c);

(g) The amount of revenue received under ORS 334.400 by a school district in an education service district that provides equalization under ORS 334.400;

(h) Moneys received in lieu of property taxes; [and]

(i) Federal funds received without specific application by the school district and which are not deemed under federal law to be nonsupplantable; and

(j) Any positive amount obtained by subtracting the operating property taxes actually imposed by the district, based on the rate certified pursuant to ORS 310.060, from the amount that would have been imposed by the district if the district had certified the maximum rate of operating property taxes allowed by law.

(10) Notwithstanding subsection (9) of this section, Local Revenues do not include the amount of revenue actually received by the district, including penalties and interest on taxes, that is used for payment of bonds issued to finance or refinance an unfunded obligation for prior service costs under a contract of integration pursuant to ORS 238.685 (2)(a).

(11)(a) Facility Grant = 6 percent of total construction costs of new school buildings.

(b) A school district shall receive a Facility Grant in the distribution year that a new school building is first used.

(A) "New school building" includes new school buildings, adding structures onto existing school buildings and adding premanufactured structures to a school district if those buildings or structures are to be used for instructing students.

(B) "Construction costs" does not include costs for land acquisition.

SECTION 12. (1) If a school district certifies a rate pursuant to ORS 310.060 that is less than the maximum rate of operating property taxes allowed by law, the county assessor for each county within which the school district is located shall determine the amount of operating property taxes that would have been imposed by the school district if the school district had certified the maximum rate of operating property taxes allowed by law.

(2) Each county assessor who is required to calculate an amount under subsection (1) of this section shall report that amount to the Department of Education.

SECTION 13. Except as otherwise specifically provided, the amendments to ORS 327.013 by section 11 of this 1999 Act affect the State School Fund distribution commencing with the 1999-2000 distribution.

SECTION 14. The amendments to ORS 327.013 by section 11 of this 1999 Act and the provisions of section 12 of this 1999 Act shall first apply to the biennium beginning July 1, 1999.

SECTION 15. (1) For the fiscal year beginning July 1, 1999, the local revenues of a school district wholly or partially located within a county in which operating tax rate adjustments are to be made under section 1 of this 1999 Act shall include only that portion of the amount determined under ORS 327.013 (9)(j) that exceeds the amount by which operating taxes of the district are reduced under section 1 of this 1999 Act.

(2) The State School Fund distribution of a school district for the fiscal year beginning July 1, 2000, may be increased or decreased to reflect the adjustment to local revenues of the school district made under subsection (1) of this section.

Approved by the Governor May 5, 1999

Filed in the office of Secretary of State May 5, 1999

Effective date October 23, 1999

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