The revenge of Bill Sizemore: How a short-term housing market slide could mean a long-term funding crisis for Oregon

By Scott Johnson of Beaverton, Oregon. Scott is a software engineer (and is sometimes known as "EngineerScotty" in other forums.)

Oregon's thirty-six counties are getting ready to mail out the dreaded forms they mail out every year to homeowners and other owners of real estate -- property tax bills. Nobody likes taxes much, though some of recognize them as the dues of civilization; and property taxes are especially regressive (more so thanks to the Bill Sizemore's and Don McIntyre's of the world).

But this year's tax bills may contain something which is a pleasant surprise for beleaguered homeowners -- and a disaster about to happen for local government: A decrease in your property tax bill.

Property taxes are, of course, pegged to property values -- more or less. When property values go up, so does your tax bill; when they go down, your taxes go down. With the recent decline in property values due to the housing market crash, expect to see assessed values decrease. Also expect many, many challenges to be issued to county assessors from homeowners if the values don't go down as much as they think they should. The end result, of course, is less revenues for local governments, and cutbacks in services.

But it gets potentially worse.

Again, thanks to the "wisdom" of Sizemore and Ballot Measure 47 (1996), as well as its legislative rewrite the following year (Ballot Measure 50) -- increases in assessments are limited to 3% per year (excluding things like rezoning, major improvements, and other non-market adjustments to a parcel's value). There is, however, no corresponding limitation to decreases -- something which hasn't occurred in the Oregon housing market in the 12 years since 47 was passed, until now. Thus if the subprime crisis causes the value of my house to tank 20% (my home is recent construction, and not significantly under-assessed), I can expect a corresponding reduction in my tax bill.

But here's the kicker: Even if the housing market were to somehow stabilize and housing prices to recover to 2006 levels next year -- my reading of the statute is that assessments (and therefore, revenues) cannot return to 2006 levels for quite some time, limited by the 3% per year cap on assessment increases. Measures 47 and 50 contain no high-water-mark provisions to deal with temporary disruptions in the housing market.

Cushioning this blow is the fact that many properties (mainly older construction) are presently under-assessed due to BM47 and BM50; so the potential loss of revenue from these properties will be less, but still -- this represents a significant, long-term reduction in the tax base for local governments.

This only goes to illustrate how shortsighted Oregon voters were in the 1990s and early 2000s. Unlike the Federal Government, which can borrow and print money to get through a market crisis (ideally paying it back in good times, though Washington DC is seldom that responsible), state and local governments have to keep a balanced budget. Government will be shortest of cash when Oregon's residents need its services the most.

Comments

  • Hal (unverified)
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    This idea of yours doesn't wash. As most people know assessed values are well below real market values. Few are within reach of any economic driven pull back. So your theory that a significant portion of property owners will see a tax reduction is baseless.

    Unless you think county tax assessors will be voluntarily reducing assessed values even though the current assessments remain under the real values.

    I can't imagine what would trigger such a decision.

    The only people who would have a case for reduction will be those who see their real value dip close enough to, or below, the assessed value. Under what scenario do you see a widespread reduction in assessed value and taxes, if any?

  • John Muler (unverified)
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    I have to agree with Hal. You can get the tax rates from Mult Co online right now. My taxes are going up [again] this year. The 3% increase in TAV allowed per year under M47/M50 has been +3% per year since inception, even in the year where my RMV value went down 6%. Go figure.

    And I am sure that if Mult Co has a net decrease in property tax revenue, the specter of the county income tax will be raised again to make up the difference.

  • billy (unverified)
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    "This only goes to illustrate how shortsighted Oregon voters were in the 1990s and early 2000s."

    Not really.

    It shows how over taxed we were. And still are. People were and still forced to sell their homes because they cannot pay the property tax.

    I have never understood how Oregon's progressive community could favor a tax system that screws low income people. No tax screws low income harder than a property tax on a home that shot up in "value" due to deeply flawed government policies. These deeply flawed policies that made housing prices shoot up are now in the process of correcting. LIVE WITH IT

    If you really cared about people you would advocate the complete replacement of property tax! (But I have to yet meet a progressive that really cared about people.)

  • billy (unverified)
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    Just one more thing:

    Why are you crying about the lack of taxes, instead of crying for the poor people who will loose their homes because they cannot pay the current taxes on their inflated home price? Especially as un-employment shoots up.

    More evidence that you don't care about people.

  • (Show?)

    The reason why most accessed values are below real market values is because of the very same 3% limit.

    No, this 3% rule isn't going to kill local government through market fluctuations, it's still killing it the old fashioned way - by forcibly preventing real estate from keeping up with inflation.

    Over the last 20 years, the percentage of funding of State schools from State Income Tax and Property tax have reversed. It used to be that about 2/3rds of all money came from local levies. Now it comes from the State. Now, only about 30% comes from local levies, and it's declining every single year.

    In the long term under the coming cycle of stag-flation, property tax will be an ever more fractional part of local taxes, until it provides little or nothing.

  • Steve Bucknum (unverified)
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    Scott Johnson writes, "Cushioning this blow is the fact that many properties (mainly older construction) are presently under-assessed due to BM47 and BM50; so the potential loss of revenue from these properties will be less, but still -- this represents a significant, long-term reduction in the tax base for local governments."

    Scott really doesn't understand this very well. This cushion he talks about is nearly the entire real estate inventory.

    Measure 50 limited the increase in the "Maximum Assessed Valuation" (MAV) to a 3% per year increase. Problem is, that the MAV, thus limited, is far below the "Real Market Assessed value" (RMV) in most cases. Only in the case where the real property is a new house, or a newly improved house (over $15,000 of improvements) would the case be that the MAV would drop lower than the RMV, and taxes would go down.

    Depending upon area, and the amount house values have climbed and then declined - things will vary. But, let's go through this.

    Say an existing house had a value when Measure 50 started of $100,000. Measure 50 started in 1997 - 11 years ago. Compounding at 3% per year takes that $100,000 house to $138,423.39 in "Maximum Assessed Valuation". But meanwhile, the housing market went up about 8% per year until 2003, then 15 to 20% per year through 2006, and then down no more than 10% during 2007. (These numbers don't really fit the Portland area, where values went up more.) Taxes paid in 2008 are based upon the value as of Jan. 1, 2008. Just using the lower 15% for 2003 to 2006, the value of that $100,000 house would now be about $253,353.

    So, this hypothetical house would still be seeing a 3% tax increase unless its real market value hits $138,423.39 or less, and its real market value is almost double that. We'd have to see a 50% property value reduction for Scott's concern to be valid for houses existing in 1997 or earlier. -- And I used conservative numbers, generally below typical increases across Oregon.

    So, unless you own a newer house where the MAV and RMV are close, Scott is entirely incorrect.

    -- And this is another reason why Measure 47/50 was so entirely unfair. It makes multiple classes of property owners. Those with older homes are at the lowest rates. Those with homes built between 1997 and present have a higher rate. Those that put in more than $15,000 of remodeling or upgrades (not repairs) have a higher rate.

    Really, only houses built or remodeled in 2005/2006 are hit by this. What percent of the inventory is that?

    Yes, if this keeps on, the problem will get worse. If we drop housing values 10% a year for several years, then this will begin to be a problem. But this year - not so much.

  • RW (unverified)
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    So, out of curiousity, could you folks tell me just what the hell is WRONG with Sizemore? Like, what is motivating him, REALLY?

    I'm beginning to wonder if there is some mental illness there, and that's not a slander or a joke. There is this obsessional quality to his activities...

    And right now he eats up huge resource in time, money, soulforce to DEAL with his persistence in the political system.

    I know some of you are professionals -- counselors and the like. What IS the deal with Bill Sizemore?

  • pdx lawyer (unverified)
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    what is motivating him? cold hard cash.

  • Eric Parker (unverified)
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    "What IS the deal with Bill Sizemore?"

    Either he's Bored and needs something to do with is life, or he is 'getting back' at someone who has po'ed him so much he is acting like a spoiled and revengeful 6-year-old. Unfortuneatly, in both cases, he does it to the point of abuse. I would like to challenge him to post here in BO to tell us who is he really angry at and why he is acting out his revenge using the initiative process.

  • rural resident (unverified)
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    Steve Maurer ...

    Over the last 20 years, the percentage of funding of State schools from State Income Tax and Property tax have reversed. It used to be that about 2/3rds of all money came from local levies. Now it comes from the State. Now, only about 30% comes from local levies, and it's declining every single year.

    You're in the ballpark, but a little high. If you include districts with enrollments of about 1,000 and up, it's around 25 percent. When you throw in the very small districts in the central and eastern parts of the state that have relatively little property tax revenue, that percentage drops.

  • (Show?)

    Here's a story that The Gresham Outlook did on how taxes will go up this year. That's because there is such a huge difference between actual value and taxable value - often times the taxable value is half the home's real value.

    http://theoutlookonline.com/news/story.php?story_id=122368078930120800

  • YoungOregonMoonbat (unverified)
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    What is motivating Bill Sizemore?

    Besides the obvious cash reasons, he is quite simply trying to bankrupt the main political powerhouse of the Left, the Unions.

    By churning measure after measure each election cycle, Sizemore is forcing the unions, the OEAm in particular to spend union dues to defeat them.

    Hell, if OJ Simpson got away never paying a cent to the Goldman's, then best believe that Sizemore will never shell out a single cent to the OEA unless the OEA brings in the National Guard with the assault rifles and Blackhawk helicopters.

    Bankrupting the main political tool of the Left, this is what I believe Sizemore is ultimately envisioning. Whether specific measures pass or fail does not matter. The only thing that matters are the unions shelling out thousands if not hundreds of thousands and millions in union dues to defeat Sizemore's measures each election cycle.

  • mp97303 (unverified)
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    Has Sizemore run any ads in favor of his measure? The ONLY things I see on TV are the groups opposed to the measures.

  • RW (unverified)
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    Hey Moonbat, would you please explain your name? I've a fondness for eccentric monikers. Make it good, now!

  • joel dan walls (unverified)
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    It doesn't matter whatever anyone may say about Sizemore's greed and schemes, because he's a god-fearing Christian, therefore by definition A Good Person.

  • RW/rebecca (unverified)
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    "As usual"? Shoot, Kari, in my acculturation and past hx as a performance artist, one's telling of the story IS the thing! Ask anyone who knows me, I'm an inveterate storyteller who'll fall in love or go delightedly breathless in a heartbeat if you can tell me in your OWN damned words and NOT use jingles, mottos or any popular culture slogans. Your own words from your own mind: shows me the shape of the you of you.

    I'm dying to hear the 'Bat tell me in his/her own words. That's half the fun!

    C'mon Batty - I'll peek per Kari's suggestion, I suppose, but I want to hear it from you!

  • rw (unverified)
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    Heh. And here I thought it was a clever moniker that came from some artistic moment.

    Sigh.

    So what does that make me if I do qualify as a ontrarian?

    A Moonbat Wingnut?

    My heart is officially dashed. Heh.

  • LT (unverified)
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    Eric, could it be that he has failed at everything else?

    He doesn't realize how many people who have to look for work in the real world don't trust him. When he started, he had some popular support from Republican legislators. But now?

  • (Show?)

    Scott Johnson raises some great points. Had this conversation Saturday night with some friends who actually understand Oregon's wacky system. It is all explained, as far as I can tell, by James Mayer in Monday morning Oregonian. (Mayer's great with this stuff.) Bottom line is that the system may be wacky but gone are the days when we'd open the October-surprise property tax bill with hands shaking as we wondered how high they would go. Now we know. Not too high. Not too low.

  • Sid Leader (unverified)
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    Bill, the wife and his 17 kids are spending hard-earned teacher money on a time share in Mexico?

    Aye chihuahua!

    But what else you gonna do when the last 11 businesses you opened -- failed.

    MIserably.

    And your only friend is self-admitted sex fiend, Loren "The Lonely" Parks, who pegs the creepy meter at 11!

    Todd Palin is a 10.5, if you are scoring at home.

    Or even if you are all alone.

  • YoungOregonMoonbat (unverified)
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    Explain my moniker/handle/online alias?

    Well, I do have a Blogger profile under the same "handle."

    I am not particularly beholden to any point on the political spectrum. I am liberal on some issues and conservative on others.

  • Jan Demetri (unverified)
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    The sad thing about property taxes is no one can truly own property. Even if it's bought and paid for, if you fail to pay tax on the property you already own, it will be taken from you.

    But I guess that's "progressive".

  • andy (unverified)
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    This is a silly topic since even a casual observer would know that assessed values are way behind market values for most property. There might be a few new houses where the assessed value will need to drop this year but I'd think that a majority of homeowners will get another property tax increase this year.

    I'd have to pull out my statement to be sure but I think the assessed value on my house is about 1/3 of the market value. Which is a good thing since I'd have to sell the place if the property taxes tripled.

  • Bill R. (unverified)
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    OT @ Bill Gallagher

    You're not the former radio talk-show host, are you? Was it KXL?

    <hr/>

    Anyone know when we are getting our ballots in the mail?

  • Steve Bucknum (unverified)
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    Anyone know when we are getting our ballots in the mail?

    They'll be mailed Friday.

  • (Show?)

    You're not the former radio talk-show host, are you?

    Bill R... yes, that's the real Bill Gallagher, formerly of KXL and most recently KPAM.

  • jeffk (unverified)
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    Steve went into lots of good detail, and I just wanted to add a quick summary:

    Because the assessed value (MAV) is so much lower than the real value (RMV), most people's property taxes will go up 3% per year, every year, no matter how much the real estate market drops.

  • Robert G. Gourley (unverified)
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    Having spent some time phoning against Measure 64 I can say Sizemore is not very popular among voters. Often all I had to say was this was another Sizemore measure, and I didn't have to take up anymore of their time on the phone.

    But one does occasionally run into a Sizemore fan, too often for my liking.

  • Bill R. (unverified)
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    Kari: "Bill R... yes, that's the real Bill Gallagher, formerly of KXL and most recently KPAM"

    That's cool! Hey, Bill Gallagher, I loved your show on KXL. (Late 80s and early 90s)Back in the days when talk radio was civil and entertaining, and not entirely devoted to a party line. I think you rendered a great service!

  • Tom Civiletti (unverified)
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    I want government to have enough money to provide good services, but property tax limitations during a real estate bubble are not such a bad idea. The 3% growth limit is not necessarily the best limit, but there is no reason to expect the cost of government services to increase as fast as home prices driven up by speculatory frenzy.

    Local governments are under pressure because of losses in federal revenue sharing and loss of state revenue due to the corporate kicker and other tax goodies for big business, as well as Oregon's growing population. The need for revenue is real, but taxing low-income people out of their homes is not good governance.

  • MCT (unverified)
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    Are you kidding? Ask any real estate broker if they are seeing homes sell for less than assessed value. All the time! Banks are giving homes away if you have cash or clean financing, and there is private funding turning up for home loans. Wells Fargo has a "private money" branch. The irony! The banks don't even bother to foreclose these days, but try to 3rd-party negotiate with borrowers to find a 'short-sale' agreement. The minute we heard the number 700,000,000,000 I saw bank-owned properties drop asking prices drastically, because they know they can now be compensated somewhere along the line.

    And therefore you must blame the usual suspects for any decrease in revenue from property taxes. AND also blame big banking for the decrease in your own home's value. I'd be willing to bet a whole lot of Oregonians are thinking their home is worth much much more than it would possibly sell for these days. Market values have dropped drastically in the past year particularly in the past 6 mo. Some lenders refuse to accept appraisals with comps more than 3 months old. It's changing THAT fast.

    There should be plenty of home-owners contesting their property taxes this time around. When their home is assessed at far more than their very comparable neighbor's home sold for.

    Speaking of taxes.... before you vote for more and more laws and programs (Measure 57 comes to mind), remember these laws and programs come with a hefty price tag....the tax dollars we're discussing here won't cover it. They'll be back asking for more and more funding. What's in your wallet? Our criminal justice system is a socially funded industry now, with a huge employment base...despite the fact that it's a dismal failure that helps foster a criminal class that won't go away no matter how much money you throw at it. Aren't you tired of paying for things that don't work?

  • EngineerScotty (unverified)
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    To address some criticisms above:

    I certainly am concerned about poor Oregonians, and their ability to pay the property tax (whether they happen to own a home and pay the bill directly, or see it reflected in their rents). Property taxes are inherently regressive, and I would just as soon see them replaced. They do have the advantage (for the taxing authority, at least) that they are more stable than income taxes (which fluctuate even more based on economic conditions), but they're still regressive. But it's what we're stuck with for now.

    A sane statewide tax policy (given that the State of Oregon is limited in its ability to borrow money) would be to keep a rainy day fund. But of course, that is presently not allowed by state law. Which is probably how Sizemore and his cohorts want it--everyone gets a big fat kicker check in good times, and government is forced to contract in bad times.

    A sane statewide tax policy would also, once the rainy day fund is established, focus more on progressive taxes. But that's beyond the scope of this article.

    Regarding the poor: The poor would probably benefit more from more robust social services (in particular, healthcare) than they would from a de minimis tax reduction. Many conservatives who prattle about the effect of taxation on the poor are often crying crocodile tears; if a tax is really hurting the poor, it's probably regressive and should be redesigned. But you won't see conservatives getting behind that--in many cases, their real concern lies elsewhere.

    It is good to hear that perhaps I'm overstating the problem; and that for most of the tax base, MAV is still lower than RMV. There's certainly a lot of new construction (post-BM50 and newer) out there. But the housing market in Portland is currently not good if you are a seller, and I do expect lots of homeowners will try and convince their taxing authorities that the RMV of their home is lower than their MAV--especially if there are properties being "dumped" by lenders in their neighborhood.

  • MCT (unverified)
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    "The poor would probably benefit more from more robust social services (in particular, healthcare) than they would from a de minimis tax reduction."

    I beg to differ....the 'poor' would benefit if we tied minimum wage to the cost of living index, as we do for so many government positions, police, fire-fighters, and teachers. Livable wage jobs are crucial to long term economic and social health....and tax coffers. Because at the bottom of all that wealth building (and now the loss of that wealth) is some poor schmuck for whom one hour of work will buy him less than three gallons of gas. ... or about the same amount of milk. Or 2 1/2 boxes of cereal. Or maybe enough meat for his family for one day. That's before taxes...so we probably should lower the amounts of necessities one hour's work will buy.

    People who have worked hard and saved in pensions and 401k's have a right to be angry, but they have NO idea how bad it is for some people out here...those "poor" being thrown under the bus. The poor have worked hard too. They're used to not getting by. Give them a livable wage and they won't complain about taxes nearly as much as the wealthy do. The other option is to see how many of the poor can fit into the abandoned mansions in formerly upscale neighborhoods. We can't have them sitting on the streets can we? We have laws against that.

    For the poor, healthcare is STILL secondary to being able to work, eat, and have warm shelter. Just ask them if they'd prefer that you help them with socialized medicine or rent, groceries and clothes for their kids. Or legislate livable wages ($8.45 ain't it!)...that would be a hit with them.

    Meanwhile, those of you who already know how to live on air....you're gonna love this one!:

    http://www.alternet.org/story/102676/

  • Brent Davis (unverified)
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    SizeMore and MacInTyre are old Anti-Tax-Paying business Fraud buddies from WAY-BACK !

    How far back depends on how old you are to know History. Don & Bob started robbing the City of Portland back in the middle to late 1970's when they somehow(and I don't now how) funded an Athletic Club downtown, of which I think they called it the Portland Athletic Club from what little I can remember of the Name.

    The Don & Bob show, perhaps launched this Portland Athletic Club(call it PAC for short)anyway this PAC place was either a get ritch quick scheme first,...or because it was downtown they used it to fester their Political aspirations and connections to local Politicians to the No-Good they've both been up to for some time now,....call it about 30 plus years.

    The problem with Don & Bob however, is that when they somehow opened up this Athletic Club, they ended up owing back taxes on this business that were NEVER PAID,...because I happen to know a husband and wife team that had to pay those BACK Business and Occupation taxes to the City of Portland, before they could start repairing that place as a business they purchased from Bill and Donny-Boy!

    How much money you ask ? Only a paltry Ten Grand, but that's grand theft and a Federal Crime I believe, for anyone who's counting and I can't remember if any of these two Yak-Birds ever got any Prison Time ?

    The sale of that business was nearly cut short and only went through because the New Owners decided to pay off all the back taxes that Billy and Donny refused to pay ! How they got away with it is still probably not known to many !

    Maybe you see a trend here ? ? If you don't then maybe you want to ask Bill and Donny-Boy what the hell they were trying to pull back in that early 1982ish period of time, because my Memory is fused upon that little scandal that got very little play in the Oregonian. Actually,...I think there may have been a few article's about it,...but probably not in the Oregonian but rather in one of Salem's local papers at the time,...as that is from where the New Owners sourced from.

    It happened that their Mother was working for the state back then,....in Salem and indeed she was working in what was a part of the Oregon State of Automotive Insurance Bonding group.

    I had a 25 minute chat with her over the phone, as I was wondering what it would take in terms of Money to actually start an Automotive Insurance Company of my own. Well,...it took a cool Million of Cash bonding back then, and I certainly didn't have those kinds of funds just lying about either, although we should ask if Billy or Donny did ? Too,....it turned out back then that over 80% of all attempted NEW Automotive Ins. businesses were usually bankrupt in less than nine months to a year as well ! (History, it's what Conservatives pray that you forget)

    Again, a little history, that very few are privy too,...but I'm sure there is a heap-load left to tell where that came from, if anyone out there ever wanted to do some cold research on just this one mentioned nugget of FRAUD, that both the Don and Billy Show pulled off, from the business quarter of Downtown Portland years back !

    Don and Billy have been fraudsters and Shuckstering Hucksters from day one,....and all to avoid paying their Taxes or WORSE. So if they got away with it in the middle of Downtown Portland, then why wouldn't they want to sustain their Treasons for Theft into infecting the entire State of Oregon's populace ? Into a group of idiots that don't want to pay their taxes as well, just like Billy boy and Donny McIntyre ? ?

    These are the same that still demand Police, Fire, Military and Mail delivery services from our Governments, yet want to create an air of FRAUD around every Government Service that is supported by Taxes. Fraud around everything,...so they can steal something else from all of us, before their fog is lifted, and we're left holding their TAX BAG ! !

    IF the Donny Boys and Billaries of Oregon don't have any Property to protect from Fraud, Theft, Fire and Demolition,...or Children to have educated, then I suggest that we all make sure that Fire Crews can't make it to their homes, when trained Condors drop lighted railroad flares upon their CedarShaked homes, in one of those now gaited communities.

    It's well past time that real human beings, that live here in Oregon, who do pay their TAXES, have to put up with the crippled remains of two very SICK human beings called to FRAUD as the Billy and Donny show that are funded by I WONDER WHO ? ?

  • Marian Drake (unverified)
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    I forwarded this article to my brother in Grants Pass, Oregon (Josephine County). He says the basic premise is wrong:

    Hi, Sis,

    Just saw this on google, re Josephine county. I’m sure it applies to the other counties in oregon:

    "Although real market values have decreased generally across the county, individual tax bills do not decrease due to limitations imposed in Measure 50 which separated the taxable value of a property from real market value."

    <h2>So the taxes do not go down when the assessed value goes down, like I was saying re the article you sent me from blueoregon</h2>
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