Article XI, sections 12 to 14 of the Oregon State Constitution

In this post, we look at Article XI, sections 12 to 14 of the Oregon State Constitution.  Article XI is about "Corporations and Internal Improvements".  The title is a bit of a euphemism since what most of this Article has been about is property taxes.  In the examined sections, it talks about structures (corporations) which are quasi-governmental such as Public Utility Districts, Public Transportation Systems and Metropolitan Areas.

Section 12

This section defines Public Utility Districts. This defines some specific rules for such a corporation.  An example is the Tualatin Valley Water District.  These corporations are set up for the greater good to provide services to all within their service area.  However, given the power of eminent domain and the fact that they provide water or power, it is conceivable that they can do an individual harm.  These corporations also have the power to impose ad valorem levies which have to be approved by the people during an election.

Section 13

This section states that if a city, county, political subdivision, public agency, or municipal corporation takes over a public transportation system, this change in ownership cannot be used to negate previous promises as to pay levels or retirement benefits.  This section was passed in 1966.  I don't know if there was a specific case that brought it up or if people in those time just had such leftist leanings that this kind of sentiment was popular.  The phrasing in this section has only subjective criteria to be fulfilled "fair and equitable", and as such anything prosecuted under this section of the Oregon State Constitution would be problematic.  I don't know if the Legislature then followed up with statutes that gave some specifics.  If there are, then any cases brought forward would rely on those.

Section 14

This section creates an ambiguous entity called a Metropolitan service districts.  The constitution doesn't really prescribe limits, it says that the specifics go into a charter which is then approved by the people during an election.  These entities are then equivalent to counties, but do not replace counties.  This section encompasses those entities that might have been created under Section 12.  In fact, it would, in my mind, be possible to have a PUD created under section 12 put a measure to the electors to approve an amended charter that now moves them to a status under section 14.

Article XI, section 11c to 11L of the Oregon State Constitution

In this post, we look at Article XI, entitled "Corporations and Internal Improvements".  Section 11c through 11L deal with property tax rules.

Section 11c

This section states that the taxing limits in 11b are in addition to any other taxing limits in the constitution.

Section 11d

This section states that section 11b does not imply that the limits imposed are minimums or required rates to be applied, especially if there are existing statutes or laws that exempt certain kinds of property.

Section 11e

This section specifies that 11b through 11e which were all included in the same ballot, will not all be invalidated if for some reason one of the sections is invalidated.  This is called severability.

Section 11k

This section invalidates Section 11 subsection (8) which had requirements on participation levels to be able to pass a measure relating to ad valorem property taxes.

Section 11L

This section has 5 subsections.  This section has new rules superseding the rules in section 11 and 11b for bond measures that are for "capital costs".  These rules are written so broadly that pretty much all the other subsections in 11 and 11b regarding rules for bond measures in taxing districts can be circumvented by 11L.

Commentary

Clearly, the area of ad valorem property taxes has been one that has a controversial history.  We see the tracks of several rounds of trying to fix these issues.  Oregon clearly had some high levels of property taxes in some jurisdictions such that the Legislature passed proposed amendments and they were passed by the people in a referendum.  Having moved here from elsewhere in 2010, I have to say I was surprised about how high the property taxes were.
The other thing is how many lettered section 11's there have been.  And the final one has a capital "L" because it would have looked like 111 if it had been a lower case "l".
Section 11 and its lettered cousins are to some extent a result of politics.  Often it is difficult to remove rules, especially rules that are seen to rein in government.  So, instead, layers of rules have been added that create new categories of objects and the trick is that the old objects that were subject to the old rules turn out to be new objects and subject to the revised rules, which I believe in this case are looser.  These sections are confusingly written and proposing to wipe the slate clean by repeal and more clearly written rules on ad valorem taxes would in the end only be a good thing.  The problem is that both sides would attack the new rules because of elimination of stuff they like in the old rules.

Article XI, Section 11b of the Oregon State Constitution

We now look at Article XI, Section 11b of the Oregon State Constitution.  Article XI is entitled "Corporations and Internal Improvements".  Section 11b deals with Property Taxes.  It has 5 subsections and we will look at all of them in this post.  In some cases, clauses in Section 11 modify what is in section 11b.

Subsection (1)

This subsection defines the maximum allowable tax per $1000 of value of a property.  The ends up as $5.00 per $1000 for the school system and $10.00 per $1000 for other uses than schools.

Subsection (2)

This subsection defines "real market value", "tax", "incurred charges", and "local improvement".

Subsection (3)

This subsection provides an exception to the rules of subsection (1).  The exception being taxes for bond issue re-payments which were separately voted on.

Subsection (4)

This subsection instructs what to do when the limits of subsection (1) are exceeded.  Which is to proportionally reduce taxes until the meet these limits.

Subsection (5)

This subsection applies only between 91 and 96 and it stated that the State would make up the reduction in school system funding per a calculation and limits as described in law.

Article XI, Section 11 of the Oregon State Constitution (part 2)

In this post, we continue looking at the subsections of Article XI, section 11 of the Oregon State Constitution.  Article XI is entitled "Corporations and Internal Improvements".  Section 11 deals with a property tax reduction that was voted on by the people back about 1995.  In the previous post, we looked at subsections (1) through (9).  We now continue...

Subsection (10)

This subsection  defines two terms: Ad Valorem Property Tax and Improvements.

Subsection (11)

This subsection defines real market value.  Direct taxes are limited to $15 per $1000 of real market value except taxes to pay back bonds.  If the $15 per $1000 is exceeded, then there is a calculation on how taxes get reduced to that level.

Subsection(12)

This subsection says that a bond to pay back an older bond is included in the provisions.

Subsection(13)

This subsection defines what can be purchased using bond money.  It does include cop cars and firetrucks, provided that their useful life is deemed 5 years or more.  It does not allow maintenance expenses, supplies and equipment.

Subsection(14)

This subsection states that taxes for paying off bond principal and interest are calculated on assessed value not real market value.

Subsection(15)

This subsection discusses urban renewal project funding based on an increase in value and increase in taxes collected, that these additional taxes shall go to funding the urban renewal project only.

Subsection(16)

This subsection grandfathers any urban renewal projects that were enacted from the limits and reductions in subsection (1).

Subsection(17)

This subsection addresses how to handle the taxation year of 1997 in case the amendment passes.

Subsection(18)

This subsection references two different sections of the constitution which have stipulations that taxation has to be done equally.  I do not really see anything from my reading (although it is somewhat superficial), but I suspect that there were doubts expressed and as a result this was inserted as a precautionary measure.

Subsection(19)

This subsection directs that a law is written to limit the ability of local taxing districts to impose new fees or other charges, especially as a means to make up for lost revenue due to the tax reduction.

Subsection(20)

This subsection simply states that if a part of this section is invalidated, the rest remains valid.  This points to the fact that probably some of this really should have been issued as a public law instead of cluttering the constitution with so may details.

Article XI, Section 11 of the Oregon State Constitution

In this post, we will look at section 11 of Article XI of the Oregon State Constitution.  Article XI is entitled Corporations and Internal Improvements.  Section 11 deals with property tax.  It is actually quite long and will need to be looked at in 2 separate posts.

Section 11, Subsection (1)

This subsection created a reset to assessed property values and generally established that the assessed value could not be increased by 3% per year unless something special happens to the property during that year.  There is also a limit in (1)(f) that the assessed value cannot exceed the market value.  These kinds of dampening structures might make things seem unpainful for home owners during good times, but there are dangers for the state/city/county in bad times.

Section 11, Subsection (2)

This subsection defines that the reset and increase limits in subsection (1) should apply to properties in special circumstances to a certain extent and that laws may be made to define the exact rules to do so.

Section 11, Subsection (3)

This subsection seeks to define a rate limit for property taxes. But since there are some special cases to be considered, this subsection is quite long and complexly worded.

Section 11, Subsection (4)

This subsection describes what kind of levies can be imposed via a question on the ballot for voters to vote on.  However, the levy can only be in force for 5 years, or for capital projects, 10 years.

Section 11, Subsection (5)

This subsection defines additional exceptions to the tax reduction and increase limits imposed on subsection (1).  As an example, where there was a levy created to pay for a bond issue for a capital project, this would not be reduced nor would it be subject to the increase limit if that was the original plan.

Section 11, Subsection (6)

This subsection provides yet another exception to the reduction clause which is any levy or tax paid as property tax that goes to fund the local hospital.

Section 11, Subsection (7)

This subsection provides rules for dealing with levies in ballot questions which are contemporaneous with the proposed constitutional amendment.

Section 11, Subsection (8)

This subsection gives participation percentage requirement for any election other than the biennial general election.

Section 11, Subsection (9)

This subsection states that the State will provide, out of the general fund, money to the public school system that might be lost due to the reductions in subsection (1).

Article XI, Section 7 to 10 of the Oregon State Constitution

This post looks at sections 7 to 10 of the Oregon State Constitution.  Article XI deals with Corporations and Internal Improvements.  In Section 7 to 10, we will look at taking on debt.

Section 7

This section limits the amount of debt that the state can take on.  In general, $50,000 and specifically for road building, 1% of the cash value of taxed properties.

Section 8

This section states that the State shall not assume the debts of counties, towns or other corporations.

Section 9

This section limits cities or counties from investing in joint stock companies.

Section 10

This section limits counties from taking on debts in excess of $5,000.  However, it does allow for issue of bonds to take on debts to undertake improvement projects.

Article XI, Sections 4 to 6 of the Oregon State Constitution

In this post, we will look at sections 4 through 6 of Article XI of the Oregon State Constitution.  Article XI is entitled "Corporations and Internal Improvements" and deals with a variety of things such a municipalities, eminent domain, and State investment in private and public companies.

Section 4

This section refers to eminent domain.  It states that the compensation has to be given in accordance with law, but how this is balanced is in the details.  Note eminent domain was also Article I, section 18.  That section discussed "public use" of lands or services taken.  This section has no such requirement that the action has to be for public use or benefit.  This would be an interesting point to explore further to see what has been litigated on the issue.

Section 5

This section imposes that the approval of town charters by the Legislature has to ensure that the correct limits of taxation and taking on various forms of debt are in place in the town charter.

Section 6, Subsection (1)

This subsection prohibits that the State can decide to become an investor in any private or public company.  It can accept bequests and donations to fund higher education.  The idea here is that there is a firewall between the general government (including the Legislature and Governor) vs. the educational institutions.  In practice I would expect that any moneys and investments received by the State gets proportioned out to the Oregon university system almost automatically.

Section 6, Subsection (2)

This subsection provides an exception that if the state participates in a Private-Public Partnership and ends up owning stock out of that, then it is allowed.  Also, this subsection grandfathers anything owned prior to Dec 5, 2002.

Section 6, Subsection (3)

This subsection provides that subsections (1) and (2) do not apply to Public Universities, meaning the University of Oregon system.  However, to me it is not clear as to the intent here: Is it the intent that Public Universities (or really their investment trusts) are allowed to own, hold and dispose of stock, or is it that the notwithstanding parts are not applicable to public universities and as a result, they are not allowed to own, hold or dispose of stock?