Under Oregon’s property tax law, a local option levy gives individual communities the ability to supplement state funding for their local schools. In November 2016, voters in Corvallis renewed a five-year local option levy, originally approved in 2006 and renewed in 2010, at a rate of $1.50 per $1,000 of assessed value. Local option taxes are used to fund teachers at all schools to sustain class sizes; instructional coaches to improve teaching and learning; music, physical education and art instruction for elementary students; vocational and technical education opportunities; counseling for students; and support for high school athletics and activities. In fiscal year 2018-19, local option revenues represented about $7.2 million, or 9.3% of the district’s general fund operating revenues.
Limitations on Property Taxes
Oregon’s property tax system as we know it today is shaped by Measures 5 and 50, two constitutional amendments that introduced statewide limitations on property taxes. Most properties have a “gap” between their Measure 5 real market value and their Measure 50 assessed value. Because local option levies can increase taxes up to the Measure 5 limit on real market value, local option levies “tax the gap” between assessed value and real market value. When taxes on a property exceed the Measure 5 limit, the tax rates are reduced or “compressed”.
Local Option Revenues and Expenditures
The projection of local option revenue can be difficult to calculate due to the volatility of real market values and the application of property tax limitations on individual properties. In the last three years, local option revenues increased by an average of 20.8%. This year, while assessed values increased more than expected, compression losses increased when a decrease was expected. Overall, local option revenue this year was budgeted to increase by 12.83% but the current projection reflects a 0.00% change from the prior year and about $800,000 less revenue than budgeted.
The majority of funds received from the local option levy (91%) pay for over 74 full-time staff positions or about 10% of the district’s total staff. The report at the link below provides graphs and charts showing the trend in property values, the budget and current revenue projections, and the 2019-20 adopted budget local option levy spending plan. Adjustments will be made to account for the decrease in local option revenue that was not planned for in the adopted budget.