Chapter 821 Oregon Laws 1999

Session Law

AN ACT

HB 2039

Relating to finance; and appropriating money.

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

SECTION 1. (1) The Legislative Assembly finds that:

(a) As a result of section 11, Article XI of the Oregon Constitution, every property tax exemption or special assessment granted by the Legislative Assembly reduces local resources available for local public services.

(b) The Legislative Assembly creates property tax exemptions and special assessments, but cities, counties and special districts bear the cost of those exemptions in forgone property tax revenues.

(c) The demand for additional property tax exemptions and special assessments is likely to increase.

(2) The Legislative Assembly declares that adverse consequences to cities, counties and special districts may be eliminated by:

(a) Providing state funding for new exemptions and special assessments or new expansions of existing exemptions and special assessments; or

(b) Reducing or eliminating other existing exemptions at the time exemptions are created or expanded.

SECTION 2. (1) If, for tax years beginning on or after July 1, 2001, a new property tax expenditure is created, or an existing property tax expenditure is expanded, 50 percent of the amount of the property tax revenues of a city, county or special district that are forgone as a result of the new expenditure or expansion shall be funded by amounts appropriated to the Property Tax Expenditure Funding Account established under section 3 of this 1999 Act.

(2) Subsection (1) of this section applies:

(a) Only to the operating taxes, as defined in ORS 310.055, of the city, county or special district.

(b) To the extent that the legislative Act creating the new expenditure or expansion also did not offset the loss of revenue by repealing or restricting one or more property tax expenditures that were in effect for the tax year immediately prior to the tax year in which the new expenditure or expansion first applies.

(3) As used in sections 2 to 4 of this 1999 Act:

(a) "Property tax expenditure" or "expenditure" means a property tax exemption or special assessment of the assessed value of property for ad valorem property tax purposes.

(b) "Special district" does not include a taxing district that imposes property taxes for the purpose of funding the public school system.

(4) Legislation that extends the applicability or operative period of a property tax expenditure is not subject to the provisions of sections 2 to 4 of this 1999 Act.

(5) Legislation that authorizes a local taxing district to exempt a class of property from the taxes of that local taxing district is not subject to the provisions of sections 2 to 4 of this 1999 Act.

SECTION 3. The Property Tax Expenditure Funding Account is created in the General Fund. Amounts appropriated to the Property Tax Expenditure Funding Account for the biennium are continuously appropriated to the Department of Revenue for the purpose of making property tax expenditure funding payments as provided in section 4 of this 1999 Act.

SECTION 4. (1)(a) As soon as is practicable after the end of the regular session of the Legislative Assembly, the Department of Revenue shall determine the new expenditures and expansions that are subject to the funding requirements of section 2 of this 1999 Act.

(b) If an expansion of an existing property tax expenditure is subject to the funding requirements of section 2 of this 1999 Act, the department shall calculate a cost adjustment factor. The factor shall be a fraction, the numerator of which is the estimated statewide amount of forgone property taxes attributable to the expenditure for the year for which the determination is being made minus the estimated statewide amount of forgone property taxes attributable to the expenditure for the tax year immediately prior to the expansion. The denominator shall be the estimated statewide amount of forgone property taxes attributable to the expenditure for the year for which the determination is being made.

(c) The department shall distribute to each county assessor a list of:

(A) The expenditures that are subject to the funding requirements of section 2 of this 1999 Act because the expenditures are new expenditures; and

(B) The expenditures that are subject to the funding requirements of section 2 of this 1999 Act because the expenditures are newly expanded expenditures, along with each newly expanded expenditure's corresponding cost adjustment factor.

(2) Each county assessor shall estimate the amount of forgone property taxes of the county and of each city and special district in the county for each expenditure listed by the department. If a cost adjustment factor is applicable to the expenditure, the county assessor shall multiply the forgone property tax attributable to the expenditure by the expenditure's cost adjustment factor. After taking into account cost adjustment factors, the county assessor shall determine the total amount of forgone property taxes from expenditures listed by the department in subsection (1)(c) of this section and shall certify the total amount so determined for the county and for each city and special district in the county to the department. Certification shall be made on or before October 25 of the tax year.

(3) Subject to subsections (4) and (5) of this section, the department shall pay 50 percent of the amounts certified by the county assessor to the county and to the cities and special districts in the county.

(4) If payments are being made for the first fiscal year of the biennium, the department shall use no more than 50 percent of the Property Tax Expenditure Funding Account balance to make payments under this section.

(5) If the amount of moneys available to make payments under this section is less than the total amount being certified by all county assessors, the payments made under subsection (3) of this section shall be proportionally reduced so that the state does not accrue a debt in excess of the amount available for payment.

Approved by the Governor July 21, 1999

Filed in the office of Secretary of State July 21, 1999

Effective date October 23, 1999

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