While City of Portland's debt rises, its tax levy falls
Over the past couple of weeks, we've been examining the City of Portland's long-term debt -- not a pretty picture at $4.4 billion and climbing steeply. But hey, as long as there's enough tax revenue to pay off that huge pile of IOU's over time, who cares, right?
That's where one more piece of the puzzle needs to be revealed. The city's tax levy actually declined last year below what it was the year before. According to the city's own bond sales document, recently released (the "preliminary official statement," or POS, for last week's bond issue), here are the tax collections over the last 10 years:
Look at the last two lines in the "Total Levy" column. From 2005-06 to 2006-07, the city's tax levy decreased. It was $363,683,000 in 2005-06, and slightly less, $363,073,000, the next year. That's negative growth in the tax levy, people -- not a good sign when, as noted here yesterday, Portland's long-term debt is growing at a rate well north of 6 percent a year.
How can tax levies be going down, when property values increased during that last year? According to the POS, assessed values in town went up, from $35.2 billion to $38.6 billion, and yet the tax levy declined. The best guess I can muster is "Measure 5," which causes non-school tax levies to be "compressed" when they exceed a flat rate of $10 per $1,000 of real market value. Perhaps other taxing authorities that get a piece of Portland's real property owners picked up a bigger share of the constitutionally limited property taxes, leaving the City of Portland with less tax levy to collect.
I'm not the world's greatest Measure 5 expert, and maybe I've got that screwed up. But something decreased the City of Portland tax levy last year, and whatever it may be, the crucial point here is that the levy is not growing at anywhere near the rate of the burgeoning municipal debt. If anything, the levy appears to be drifting in the opposite direction, at least in the short term.
Taking a somewhat longer view, tax levies over the past seven years grew at a compound rate of 5.01 percent a year. Meanwhile, the city's long-term debt increased at a compound rate of 6.66 percent a year. We're borrowing and spending faster than we're making money. Our standard of living is decreasing while we continue to pay for past years' excesses.
And the spending orgy's just beginning, with Sam the Tram and Citizen Smith about to take power. Streetcars everywhere! It's hard to see how Portland is going to fake its way out of the deep hole it's digging. How the city can pay off all its debts, preserve what livability it has left, and build shiny new condo marketing toys, all while its tax levy declines, is a mystery to me. Maybe that's why it's hard for me to put the POS down and get back to other important topics -- like illegal sidewalk newsracks.