POLK COUNTY — Legislation helping rural cities and counties encourage industrial business expansion has cleared the Oregon Senate and is slated for a vote in the House of Representatives this week.
Senate Bill 1565 would allow local governments to exempt new capital improvements valued between $1 million to $25 million from property taxes. The incentive could be in effect for three out of the first five years after local agencies approve the exemption. Tax deferrals — paying taxes at a later date — is also an option in the bill.
Standard language in the legislation allows for a 100 percent exemption for three years, but local governments are allowed the flexibility to change the terms. That includes offering the exemption for the full five years, or lowering the rate from 100 percent in any given year.
The exemption would only go into effect if taxing districts represents 75 percent of the total combined rate of taxation approve.
Sen. Brian Boquist (R-Dallas), one of the bill’s chief sponsors, testifying under oath in a public hearing this month, said the purpose of the bill is to give local governments a flexible tool for economic development and business retention.
He said improvement in the economy hasn’t been uniform and many rural areas, such as Polk County, still are struggling.
“You have these little areas that still need to be helped and need to be able to help themselves.” Boquist said.
As originally written, the bill would have allowed the exemption to be used statewide, which Boquist said was his intent with the legislation.
An amendment added in the House Revenue Committee last week changed that. The revision limited the exemption to only those businesses located outside the urban growth boundary of cities with a population of 40,000 or less. That would exclude the Portland Metro area, Salem-Keizer, Eugene-Springfield, Albany, Corvallis and Bend.
Property tax assessors have voiced concerns that the flexibility in the bill would make administering the exemptions complicated.
Polk County Assessor Doug Schmidt, speaking on behalf of the Oregon Assessor’s Association, said he supports the underlying intent of the bill. But the number of options cities and counties have to depart from the standard language in the bill would make administering the exemptions a time-consuming manual process, he said. Tax deferrals, if businesses were to choose that option, would also be difficult to implement for short-staffed assessor’s offices throughout the state.
“Assessors, we look at how easy is something to administer, because, again, like everybody else with reduced budgets, we have reduced staff,” he said.
To answer those concerns, the bill was amended requiring county assessors to testify about the administrative impact an exemption proposal that deviates from the standard 100 percent over three of five years. Offices would receive a fee for their work, too.
Schmidt said Boquist’s willingness to create the standard exemption alleviated many of the assessors’ issues with the bill.
“We still have concerns, but we can administer this bill with a minimal amount of manual processing if jurisdictions abide by the standard exemption,” Schmidt said.
The bill passed the Senate on Feb. 19 and a public hearing and work session was held Friday in the House Committee on Revenue, after which, the committee approved the bill. It is slated for a House floor vote on Wednesday (today).