Title: Shilo Inn v. Multnomah County

State: oregon

Issuer: Oregon Supreme Court

Document:

Filed:  December 20, 2001
IN THE SUPREME COURT OF THE STATE OF OREGON

SHILO INN
	Appellant,
	v.



MULTNOMAH COUNTY,
CITY OF PORTLAND,
and PORTLAND DEVELOPMENT COMMISSION,
	Respondents,
	and
DEPARTMENT OF REVENUE,
	Intervenor Below.
(OTC 4370; SC S46816)

	On appeal from the Oregon Tax Court.*
	Carl N. Byers, Judge.
	Argued and submitted May 15, 2000.
	Gregory W. Byrne, Portland, argued the cause and filed the
briefs for appellant.
	Jeannette N. Launer, Pacific City, argued the cause for
respondent Portland Development Commission.  With her on the
brief were Sandra Duffy, Chief Assistant County Counsel,
Portland, for respondent Multnomah County; Linda Meng, Chief
Deputy City Attorney, Portland, for respondent City of Portland; 
Karen Williams, Portland, for respondent Portland Development
Commission; Douglas M. Adair, Assistant Attorney General, Salem,
and Hardy Myers, Attorney General, for intervenor Department of
Revenue.
	Glenn Klein, of Harrang, Long, Gary, Rudnick, P.C., Eugene,
filed the brief for amici curiae League of Oregon Cities and
Association of Oregon Development Agencies.
	Before Carson, Chief Justice, and Gillette, Durham, Leeson,
and Riggs, Justices.**
	GILLETTE, J.
	The decision of the Tax Court is reversed and the case is
remanded to that court for further proceedings.
	*15 OTR 36 (1999).
    **Van Hoomissen, J., retired December 31, 2000, and did not
participate in the decision of the case; Kulongoski, J., resigned
June 14, 2001, and did not participate in the decision of this
case; De Muniz and Balmer, JJ., did not participate in the
consideration or decision of this case.
		GILLETTE, J.
		In this ad valorem property tax case, the issue is
whether all taxes assessed on property located within an urban
renewal area and used to pay urban renewal indebtedness must be
characterized as taxes "raised to fund government operations
other than the public school system," as that phrase is used in
Article XI, section 11b(1), of the Oregon Constitution.  The
Oregon Tax Court held that they need not be so characterized. 
Shilo Inn Portland/205, LLC v. Multnomah County, 15 OTR 36
(1999).  That court concluded that a part of the taxes in
question that was disbursed to urban renewal agencies properly is
characterized as taxes "raised specifically to fund the public
school system," as that phrase is used in the same constitutional
provision.  Id. at 44-45.  For the reasons that follow, we
reverse the decision of the Tax Court.  
		This case comes to us on review of the Tax Court's
grant of summary judgment to the Portland Development Commission
(PDC), which was one of the respondents in the Tax Court
proceeding.  No material facts are in dispute.  Taxpayer owns two
parcels of real property within the City of Portland.  Each is
located in an urban renewal area that was established by the city
and PDC, which is an urban renewal agency, in 1986.  The real
market value of taxpayer's property for the 1998-99 tax year was
$15,297,600, and the assessed value was $11,155,970.  
		For the 1998-99 tax year, taxpayer paid $234,005.06 in
ad valorem property taxes.  Those taxes were distributed among
the various taxing districts in which taxpayer's property is
located, principally to the Parkrose School District, the City of
Portland, Multnomah County, and to PDC. (1)  Taxpayer contends, and
respondents concede, that part of the taxes reflected on
taxpayer's property tax bill as taxes for "schools" actually was
disbursed to PDC.  As taxpayer reads the constitution, however,
Article XI, section 11b(1) (hereafter called "Measure 5"), (2)
requires that all taxes ultimately disbursed by the tax collector
to the urban renewal agency for payment of urban renewal
indebtedness be treated as having been raised for a nonschool
purpose and be added to the "government operations other than
schools" amount shown on the tax statement.  By a series of
calculations, taxpayer arrives at the part of its property tax
that was characterized as for "schools" that taxpayer contends
instead was paid over to the urban renewal agency for the tax
year in question.  According to taxpayer, when that amount is
subtracted from the amount on taxpayer's tax bill that is
designated for schools, and is added to the amount on taxpayer's
tax bill that is designated for government operations other than
schools, the total amount of taxpayer's tax bill attributable to
taxes for government operations other than schools becomes
$159,099. (3)
		Taxpayer points out that, under Measure 5, the taxes
that constitutionally could be imposed on its property for the
1998-99 tax year for government operations other than the public
school system could not exceed $10 per $1,000 of the property's
real market value -- in this case, $152,976.  Because the
$159,099 that taxpayer claims is attributable to government
operations other than schools is $6,123 more than the amount that
Measure 5 permits, taxpayer claims to have been overcharged by
the taxing authority by that amount. (4)  As noted, the Tax Court
denied relief. 
		To place the present dispute in context, some
background is necessary.  In 1990, the voters approved Measure 5,
which added Article XI, section 11b, to the Oregon Constitution. 
Subsection (1) of that measure provides:  
	"[T]axes imposed upon any property shall be separated
into two categories:  One which dedicates revenues
raised specifically to fund the public school system
and one which dedicates revenues raised to fund
government operations other than the public school
system.  The taxes in each category shall be limited as
set forth in the table which follows and these limits
shall apply whether the taxes imposed on property are
calculated on the basis of the value of that property
or on some other basis:
"MAXIMUM ALLOWABLE TAXES
		"Property tax revenues are deemed to be dedicated
to funding the public school system if the revenues are
to be used exclusively for educational services,
including support services, provided by some unit of
government, at any level from pre-kindergarten through
post-graduate training."
Or Const, Art XI, § 11b(1) (emphasis added).  In addition,
Measure 5 created a third category of property taxes for, among
other things, "bonded indebtedness authorized by a specific
provision of this Constitution."  Or Const, Art XI, § 11b(3)(a). 
That last category was not subject to the foregoing limitations. 
Id.   
		To address the situation in which taxes imposed by the
various taxing districts exceed the limits for the school or
nonschool categories, or for both, Measure 5 included a procedure
for "compression" of taxes within each category.  Subsection (4)
of Article XI, section 11b, provides:
		"In the event that taxes authorized by any
provision of this Constitution to be imposed on any
property should exceed the limitation imposed on either
category of taxing units defined in subsection (1) of
this section, then, notwithstanding any other provision
of this Constitution, the taxes imposed upon such
property by the taxing units in that category shall be
reduced evenly by the percentage necessary to meet the
limitation for that category." (5)
		In 1997, the legislature proposed and the people
adopted Measure 50, which repealed, among other things, the then-existing Article XI, section 11, and replaced it with an entirely
new section 11. (6)  Measure 50 transformed the ad valorem property
tax scheme from a "levy-based" system to a "rate-based" system. 
Among its other effects, the measure reduced the assessed value
of property to 10 percent below 1995 levels, Or Const, Art XI, §
11(1)(a), limited the amount of any increase in assessed value to
three percent per year, Or Const, Art XI, § 11(1)(b), and
required each "local taxing district" (7) to certify a "permanent
limit on the rate of ad valorem property taxes imposed by the
district for tax years beginning after July 1, 1997" (the
"permanent rate"), Or Const, Art XI, § 11(3), to be applied to
each property in that district.  Simply stated, that permanent
rate is calculated, first, by determining the taxes that could
have been imposed for tax year 1997-98 under Measure 5, had
Measure 50 not been adopted (and not taking into account Measure
47), then reducing that amount by 17 percent, and, finally,
dividing those taxes by the assessed value of property in the
district.  Or Const, Art XI, §§ 11(3)(a)(A) and 11(3)(b). 
Measure 50 also includes a detailed compression formula to ensure
that no district exceeds the "$5 (public school system) and $10
(other government)" limits. (8)  Or Const, Art XI, § 11(11)(b) and
(c). 
		The foregoing constitutional provisions were
superimposed on a tax scheme that already authorized the division
of taxes to pay urban renewal indebtedness.  Since 1960, property
within an urban renewal area has been subject to "tax increment"
financing, or division, under Article IX, section 1c, of the
Oregon Constitution. (9)

  Under that constitutional provision and
the statutory system that implemented it, urban renewal agencies,
have had no authority to levy taxes themselves.  Instead, the
taxing districts in which an urban renewal area is located, such
as cities, counties, and school districts, levy the taxes that
ultimately are used to repay the indebtedness for urban renewal
projects.  The county assessor certifies the value of property
located within an urban renewal area on the effective date of the
adoption of the urban renewal plan (the "frozen value" or "frozen
base") and segregates that amount from the (presumably higher)
assessed value of the property for the later tax year in
question.  Then, taxes derived by imposing the district's tax
rate on the frozen base are disbursed to the taxing districts
that levied the tax, while taxes derived by applying that rate to
the increase in property value over the frozen base are disbursed
to the urban renewal agency to pay indebtedness incurred for the
urban renewal project.  
		Over the last decade, with the adoption of Measures 5
and 50, the procedures for allocating funds to pay urban renewal
indebtedness have changed.  Under the former, "levy-based"
system, and before the adoption of Measure 5 in 1990, each taxing
district notified the assessor of the amount of revenue to be
raised for that district.  In an urban renewal area, the assessor
then calculated the levy rate for each taxing district by
dividing the amount to be raised by the frozen value of the
property in that district and then "extended" that rate to the
entire assessed value of the property.  Because the increase in
property value over the frozen base, or increment, was excluded
in setting the tax rate, applying the rate to the higher value
generated funds beyond the budgeted needs of the taxing
districts.  The taxes generated on the frozen base were allocated
to the budgeted requirements of the taxing districts, while the
additional, often called "excess," taxes were allocated to the
urban renewal agency.  See Dennehy v. Dept. of Rev., 305 Or 595,
598-99, 756 P2d 13 (1988) (explaining that process).  
		Measure 5, which, as noted, retained the levy-based
system, did not mention urban renewal or redevelopment funding or
otherwise provide a specific method for categorizing or dividing
taxes that were to be applied for an urban renewal purpose.  
After the adoption of Measure 5 in 1990, the legislature amended
the urban renewal statutes to reconcile the division of taxes for
urban renewal purposes with the Measure 5 limits.  See ORS
457.420 to ORS 457.450 (1991) (so providing).  Under those
statutes, urban renewal taxes were calculated in a manner similar
to the pre-Measure 5 calculation method, that is, the taxing
districts notified the assessor of the amount of taxes needed,
the assessor then calculated a levy rate based on the frozen
value and extended that rate to the increment to raise "excess"
funds, which in turn were to be used to pay for urban renewal. 
However, the assessor's statutory duty to collect taxes that
would be divided for urban renewal purposes expressly was made
"subject to section 11b, Article XI of the Oregon Constitution
[Measure 5]."  ORS 457.440(6) (1991). (10)  
		In 1996, the voters approved Measure 47, which, as we
have explained, also was a constitutional amendment aimed at
reducing and limiting property taxes.  Like Measure 5, Measure 47
contained no references to urban renewal.  Then, in 1997, the
voters approved Measure 50, which replaced Measure 47.  As noted,
Measure 50 transformed the tax scheme from a levy-based system to
a rate-based system and imposed new limits on the growth of
property taxes.  Unlike Measure 5 or Measure 47, Measure 50 does
contain several provisions directly dealing with urban renewal
taxes.  
		The first references in Measure 50 to urban renewal
taxes pertain to the calculation of the permanent rate. 
Subsection (3) of Article X1, section 11, specifically excepts
from the mandatory 17 percent reduction in taxes, inter alia,
taxes to pay bonded indebtedness and "taxes described in section
1c, Article IX of this Constitution," which authorizes taxes
levied against the increase in value of directly affected
properties to fund redevelopment or urban renewal programs.  Or
Const, Art XI, § 11(3)(a)(B).  Only those reduced taxes, that is,
those taxes that would have been imposed other than for bond
repayment and urban renewal, are used to calculate the permanent
rate.  Or Const, Art XI, § 11(3)(b).  The permanent rate,
therefore, raises only the taxing districts' operating taxes; it
is not intended to generate taxes that pay the cost of urban
renewal.  That conclusion is confirmed in subsection (3)(g) of
Article 11, section 11, which provides:
	"Urban renewal levies described in this subsection
shall be imposed as provided in subsections (15) and
(16) of this section and may not be imposed under this
subsection."  
(Emphasis added.)  
A necessary result of that scheme, however, is that the
permanent rate does not generate sufficient taxes to pay both the
various taxing districts' operating taxes and the taxes needed to
pay existing urban renewal indebtedness.  That is so because,
under Measure 50, in existing urban renewal areas, the district's
operating taxes themselves must be divided to fund urban renewal
programs.  Article XI, section 11(15), mandates in those
circumstances that taxes on the increment be used "exclusively"
for urban renewal.  Or Const, Art XI, § 11(15). (11)  At the same
time, however, the new Measure 50 system does not contemplate the
existence of "excess" taxes, as were generated under the old
levy-based system, because the permanent rate is based on the
entire assessed value of the property, not just the frozen base. 
Or Const, Art XI, § 11(3)(b). 
		The remaining references in Measure 50 to urban renewal
are located in subsections (15) and (16).  Those provisions
address the funding of existing and future urban renewal
indebtedness.  We turn first to subsection (15).
		In addition to its other effects, subsection (15)
provides the mechanism for funding urban renewal programs
instituted after the adoption of Measure 50.  That section
provides:
	"If ad valorem property taxes are divided as provided
in section 1c, Article IX of this Constitution, in
order to fund a redevelopment or urban renewal project,
then notwithstanding subsection (1) of this section,
the ad valorem property taxes levied against the
increase shall be used exclusively to pay any
indebtedness incurred for the redevelopment or urban
renewal project." (12)  
As described above, a taxing district's permanent rate raises its
operating taxes.  If an urban renewal plan eventually is
instituted in a district in which there was no urban renewal area
when Measure 50 was adopted, then the assessed value of each
property in the district on the date that the permanent rate was
set necessarily would be equal to its frozen base.  The increment
would begin to accrue thereafter, as the urban renewal plan took
effect.  The urban renewal program, therefore, would be funded by
the familiar process of extending the permanent rate against the
increment and, under subsection (15) of Article XI, section 11,
the taxes raised thereby would be used "exclusively to pay any
indebtedness incurred for the redevelopment or urban renewal
project."  
		Subsection (16) of Article XI, section 11, by contrast,
provides the mechanism for funding existing urban renewal
programs.  It directs the legislature to enact laws ensuring that
indebtedness incurred to carry out existing urban renewal
projects is repaid, with the caveat that urban renewal taxes
still must not exceed the "dollar limits" set out elsewhere in
Measure 50.  That subsection provides:  
		"The Legislative Assembly shall enact laws that
allow collection of ad valorem property taxes
sufficient to pay, when due, indebtedness incurred to
carry out urban renewal plans existing on December 5,
1996.  These collections shall cease when the
indebtedness is paid.  Unless excepted from limitation
under section 11b of this Article, as modified by
subsection (11) of this section, nothing in this
subsection shall be construed to remove ad valorem
property taxes levied against the increase from the
dollar limits in paragraph (b) of subsection (11) of
this section." (13) 
Or Const, Art XI, § 11(16).
		Paragraph (b) of subsection (11) of Article XI, section
11, provides, in turn, as follows:
	"The $5 (public school system) and $10 (other
government) limits on property taxes per $1000 of real
market value described in subsection (1) of section 11b
of this Article shall be determined on the basis of
property taxes imposed in each geographic area taxed by
the same local taxing districts."	
		Pursuant to the foregoing delegation of authority, the
legislature that referred Measure 50 to the voters enacted
legislation that, among other things, effectively grants urban
renewal agencies limited taxing authority.  Those agencies are
permitted to impose a "special levy" to fund urban renewal
programs existing before December 6, 1996.  ORS 457.010(5)(a)
(defining "existing urban renewal plan" as one that existed on
December 6, 1996, the effective date of Measure 47); ORS
457.435(1) (authorizing special levies to pay indebtedness
incurred for existing urban renewal plans).  The special levy
authority allows an urban renewal agency to make up for the
shortfall caused by the Measure 50 reductions in assessed value
and taxes.  For purposes of Measure 5 and applicable statutes,
special levies are treated as taxes for "government operations
other than the public school system."  OAR 150-457.440(9)(4)(d)(D); OAR 150-457.440(9)(5)(c)(F); OAR 150-457.440(9)(6)(e)(D).  
		Second, the statutory scheme provides taxing districts
in which existing urban renewal areas are located with an
alternative to the permanent rate provided for in Article XI,
section 11(3)(b).  As discussed above, a district's
constitutional permanent rate does not generate sufficient funds
to pay existing urban renewal indebtedness.  The legislature
therefore created a substitute, "statutory rate limit" for tax
years after 1997-98, for taxing districts in which urban renewal
areas exist.  ORS 310.236(4)(a)-(b).  Simply stated, that
statutory rate is calculated in a manner similar to the
constitutional permanent rate, but taxes are divided by the
frozen base, rather than by the entire assessed value of the
property, as required by Article XI, section 11(3)(b).  ORS
310.236(4)(b); ORS 310.232.  As in the pre-Measure 50 scheme,
excluding the increment in calculating the statutory tax rate and
then imposing that rate on the assessed value of property in the
district again results in the generation of "excess" funds (that
is, funds in excess of the district's operating taxes), which are
used to pay existing urban renewal indebtedness. 
		In addition to the foregoing, the 1997 Legislature
amended the procedures for assessing compliance with applicable
constitutional limits and for collecting taxes to pay urban
renewal indebtedness.  The procedure that was in place during the
tax year at issue in this case, and that remains in place today,
generally is as follows:  Each taxing district files a written
notice with the assessor certifying, among other things, its ad
valorem property tax rate to be imposed on properties within the
district, which must be within either the constitutional or
statutory permanent rate limit.  ORS 310.060(2)(a).  That notice
must be accompanied by a validly adopted ordinance or
resolution (14) designating the taxes as either subject to or not
subject to the Measure 5 limits and "identified by the categories
set forth in ORS 310.150."  ORS 310.060(1).  In addition, the
notice itself must list which rates are subject to the Measure 5
limits, identified by the categories of taxes set out in ORS
310.150.  ORS 310.060(3)(a).  
		ORS 310.150, in turn, generally restates the Measure 5
categories of taxes, viz., school, other government, and exempt
bonded indebtedness.  ORS 310.150(1)(a) to (c).  Notably,
however, ORS 310.150(7) expressly directs each taxing district to
characterize its tax rates without regard to the fact that part
of the taxes raised as a result of application of that rate to
the entire assessed value, including the increment, will be used
to fund urban renewal:
	"The determination of the appropriate category for an
item of tax is based on the tax as certified by the
taxing district under ORS 310.060 and not based on the
tax imposed on the urban renewal increment as described
in ORS chapter 457."  
In addition, if a taxing district incorrectly categorizes the
taxes as subject to or not subject to the Measure 5 limits, ORS
310.070 directs the Department of Revenue to so notify the taxing
district and the assessor, and then requires the assessor to
extend the taxes on the rolls in a manner that is consistent with
the constitution.  ORS 310.070(1).  That statute provides,
further, that taxes are categorized incorrectly only if the
taxing district does not have statutory authority to impose a tax
in a particular category or if the Oregon Tax Court or this court
has determined that the correct manner for categorizing the tax
is different.  ORS 310.070(2).  
		The assessor synthesizes the notices filed by all the
taxing districts in the county into "code areas," which represent
"all of the various combinations of taxing districts * * * in
which a piece of property was located in the county * * *."  ORS
310.147(1).  For each code area, the assessor computes a
tentative consolidated ad valorem property tax rate, which is the
sum of all the rates identified on the notices as being within
each category set out in ORS 310.150.  ORS 310.090; ORS
310.147(2).  The assessor then determines if the amount of tax
that will be imposed on the properties in each category under the
tentative consolidated ad valorem property tax rate is within the
applicable constitutional limits and, if the amount in either or
both of the categories is not within the limits, then the
assessor compresses all the rates in the affected category
proportionately to ensure compliance with those limits.  ORS
310.150(3) to (6).  The assessor thereby arrives at a
consolidated tax billing rate, which ultimately serves as the
basis for the tax statement sent out to each property owner.  ORS
310.153; ORS 311.105 to 311.115.  
	Meanwhile, the urban renewal agency notifies the
assessor of the amount of money that needs to be raised to pay
urban renewal indebtedness through the division of taxes and any
special levy.  ORS 457.440(2).  To ensure that the amount
requested through the division of taxes will be available for
distribution to the urban renewal agency, the assessor also
determines the maximum amount available for urban renewal by
extending the consolidated tax billing rate for each code area in
which an urban renewal area is located against the increment in
that code area. (15)  ORS 457.440(5).  The assessor certifies that
amount to the tax collector.  ORS 457.440(6)(a).  Once the taxes
have been collected, the county treasurer distributes the taxes
derived from the increment to the urban renewal agency and
distributes the remaining funds to the taxing units that levied
the taxes.  Id.; ORS 310.390; ORS 310.395(5) to .395(6).  
		Under the foregoing statutory procedures, for the tax
year in question, the "school" taxing districts in taxpayer's tax
code area notified the assessor of their rates.  The assessor
then used the total amount of taxes generated by imposing those
rates on the assessed value of the properties in the area to
evaluate compliance with the Measure 5 limits for "school" taxes,
and compressed, if necessary.  Later, that total amount of
collected taxes was divided, and the part of those taxes
attributable to the urban renewal increment was disbursed to PDC. 
Thus, a part of the taxes that were levied by extending the
school taxing districts' rates to the assessed value of
taxpayer's property for the 1998-99 tax year ultimately was not
used "to fund the public school system," at least as Measure 5
defines that phrase.  However, that part was not placed in the
"other than schools" category on taxpayer's property tax
statement or treated as falling in that category for purposes of
assessing compliance with the Measure 5 ad valorem property tax
limits.  The issue in this case is whether Measure 5, Measure 50,
or both, required the assessor to treat that part as "revenue
[dedicated] to fund government operations other than the public
school system."  
		Measure 5 was an initiative measure, while Measure 50
was referred to the voters by the legislature.  When we interpret
either initiated or referred constitutional provisions, we
attempt to discern the intent of the voters.  Stranahan v. Fred
Meyer, Inc., 331 Or 38, 56-57, 11 P3d 228 (2000).  That is so
because, "with respect to [such] provisions, it is the people's
understanding and intended meaning of the provision in question * * * that are critical to [this court's] analysis."  Id. at 57. 
The best evidence of the voters' intent is the text of the
provision itself.  Ecumenical Ministries v. Oregon State Lottery
Comm., 318 Or 551, 559, 871 P2d 106 (1994); Roseburg School Dist.
v. City of Roseburg, 316 Or 374, 378, 851 P2d 595 (1993).  If the
voters' intent is clear after consideration of text and context,
then the court's inquiry is over.  Ecumenical Ministries, 318 Or
at 559.  The court, however, will not lightly conclude that the
text is so clear that further inquiry in unnecessary.  If any
doubt remains, the court will consider the history of an
initiated or referred constitutional provision in an effort to
resolve the matter.  Id.
		As noted, taxpayer's principal argument focuses on the
wording of Article XI, section 11b(1).  We, too, start with that
section.  The first sentence of section 11b(1) requires the
"separat[ion]" of "taxes" into categories.  It provides: 
	"[T]axes imposed upon any property shall be separated
into two categories:  One which dedicates revenues
raised specifically to fund the public school system
and one which dedicates revenues raised to fund
government operations other than the public school
system." 
Taxpayer contends that that wording unambiguously requires the
assessor to evaluate compliance with the Measure 5 limits by
considering the ultimate use to which the tax revenues will be
put, regardless of the character of the taxing district whose
rate was extended to generate those revenues. 
		We agree with taxpayer that the plain wording of the
first sentence of subsection (1) indicates that it is the taxes
imposed, and not particular taxing districts, that are to be
separated into categories and, accordingly, that it is the rates
derived by reference to those taxes, and not the rates of
particular taxing districts generally, that are to be limited. 
The last sentence of subsection (1) confirms that interpretation
by setting out, effectively, a definition of property tax
revenues "raised specifically to fund the public school system." 
That sentence provides:  
		"Property tax revenues are deemed to be dedicated
to funding the public school system if the revenues are
to be used exclusively for educational services,
including support services, provided by some unit of
government, at any level from pre-kindergarten through
graduate training."
(Emphasis added.)
		The emphasis in the first and last sentences is on the
taxes themselves, the purpose to which those taxes are dedicated,
and the use to which those taxes are to be put.  It also is
noteworthy that subsection (1) does not refer to the taxing
districts that impose those taxes, except to the extent that it
refers indirectly to those districts that use the taxes dedicated
to educational services.
  		In spite of the foregoing, the Tax Court concluded,
essentially, that other text in Article XI, section 11b, dictates
a different conclusion.  That court pointed to subsection (4) of
Article XI, section 11b, which provides that, in the event that
property taxes "exceed the limitation imposed on either category
of taxing units defined in subsection (1) * * *  the taxes
imposed upon such property by the taxing units in that category
shall be reduced evenly by the percentage necessary to meet the
limitation for that category."  (Emphasis added.)  Relying in
part on its earlier opinion in Glenn v. Morrow Cty. Unified
Recreation Dist., 14 OTR 344 (1998), the Tax Court concluded that
the foregoing provision demonstrates that "the constitution's
emphasis is on the governmental unit categorizing the tax and not
on the use of the tax."  Shilo Inn, 15 OTR at 42.  In a similar
vein, the court concluded that, "'[a]s enacted by the people,
section 11b evidences an intent to limit the taxes imposed by
each category based upon the function of the unit of government
imposing the tax.'"  Id. (quoting Glenn, 14 OTR at 352). 
		The Tax Court had attempted to reconcile the different
wording (i.e., "taxes," "revenues," and "taxing units") in
subsections (1) and (4) in its earlier case, Glenn.  In that
case, the court stated that the wording of subsection (4)
suggests that every taxing district falls into one of the two
("school" and "other") Measure 5 categories and the limitation,
therefore, is on the category of taxing unit.  14 OTR at 351. 
The Tax Court in Glenn acknowledged that that interpretation was
"somewhat at variance with the language in subsection (1)" but
reasoned that, in light of the fact that Measure 5 provides no
mechanism for tracking actual expenditures of tax dollars, the
limitations on taxes in Measure 5 must be based on their intended
use.  Id.  It follows, according to the Tax Court, that the
voters must have presumed an identity between the category or
function of a taxing district and the purpose for which the taxes
are raised by that taxing district. (16)

  Id. at 352. 
		As a starting point, we agree with the Tax Court that,
in employing different phraseology in subsections (1) and (4),
the voters well may have assumed an identity between the function
of the taxing district imposing a tax and the use to which that
tax will be put.  However, in the case of taxes raised for urban
renewal by extending a school taxing district's rate to the
increment, there is no such identity in fact.  
		In light of the statutory scheme that was in effect
when Measure 5 was adopted, and in light of the present
constitutional and statutory scheme, we cannot conclude that
taxes levied on the increment to fund urban renewal were, or are,
"dedicated to funding the public school system" or "used
exclusively for educational services," regardless of the function
of the taxing district whose rate was used to generate the tax. 
The tax rates of school taxing districts, together with the rates
of all the other taxing districts in an urban renewal area, have
always been used to calculate the amount of taxes to be paid for
urban renewal purposes.  Former ORS 457.440(4) (1989), in place
when Measure 5 was adopted, directed that the taxes so generated
"shall be used to pay the principal and interest or indebtedness
incurred by the [urban renewal] agency to finance or refinance
the carrying out of the urban renewal plan."  Moreover, Measure
50 placed a similar mandate in the constitution.  Under Article
XI, section 11(15), taxes on the increment expressly are
dedicated "exclusively to pay any indebtedness incurred for the
redevelopment or urban renewal project."  Put differently, those
directives affirmatively establish that taxes on the increment
that are based on the extension of a school taxing district's
rate have not been, and are not, "dedicated to funding the public
school system," as Measure 5 defines that latter phrase.
		Measure 5 itself contains no reference to urban
renewal.  It may be that, in adopting that measure, the voters
did not anticipate a situation in which, as we have shown, there
is a lack of identity between the function of the taxing district
and the use to which at least part of the tax derived from
extending that taxing district's rate is put.  Indeed, we may
assume that the disparate wording of subsections (1) and (4)
arose out of an expectation that the principal function of a
taxing district always would be identical to the use made of a
tax generated by extending that district's rate.  But it does not
follow that, in a case in which there is no such identity, the
voters intended the function of the taxing district imposing the
tax, rather than the intended use of the tax, to determine the
appropriate category for evaluating compliance with the Measure 5
limits.  
		This court has stated that the "basic directive" of
Measure 5 is to "limit[] the taxes that may be imposed on any
property by limiting the tax rates."  Coalition for Equit. School
Fund. v. State of Oregon, 311 Or 300, 310, 811 P2d 116 (1991). 
Thus, the limits themselves are featured prominently -- they are
set out at the beginning of the measure, in subsection (1) of
Article XI, section 11b, and provide its foundation.  Essential
to the implementation of those limits are the categories to which
they apply.  In keeping with that position of prominence,
subsection (1) is drafted in specific terms, even to the point
that it contains an explanation of the categories and a
definition of one of them, viz., property tax revenues "dedicated
to funding the public school system."  
		Subsection (4), by contrast, merely provides a
procedural mechanism -- compression -- for ensuring that the
limits on rates of taxation set out in subsection (1) are not
exceeded.  The subsection refers to and is dependent on "the
limitation imposed on either category of taxing units defined in
subsection (1)."  (Emphasis added.)  Subsection (1) does not
"define" categories of taxing units.  Thus, in spite of its use
of the words "taxing units" rather than "taxes," that reference
to "either category * * * in subsection (1)" only can be read to
refer to the two categories that actually are labeled as such in
subsection (1), viz., the category of taxes dedicated to funding
the public school system, and the category of taxes dedicated to
funding the rest of government.  The cross-reference in
subsection (4) shows that we must turn to subsection (1) for
insight concerning the parameters of the pertinent categories,
and not vice versa.  As we have explained, when the inquiry is
made in that way, it is clear that taxes devoted to urban renewal
do not fall within the description of use for the public school
system found in subsection (1).
		We recognize that the description of the compression
scheme in subsection (4) is not a perfect analytical fit. 
Specifically, that subsection requires the even reduction of "the
taxes imposed upon * * * property [on which the taxes exceed the
Measure 5 limits] by the taxing units in that category * * * by
the percentage necessary to meet the limitation for that
category."  Further, it provides that the "percentage used to
reduce the taxes imposed shall be calculated separately for each
category and may vary from property to property within the same
taxing unit."  That wording appears to assume that the taxing
district's rate would be reduced as a whole and then applied to
the entire assessed value.  The wording does not address
different reduction percentages for the frozen base and for the
increment, or the reduction of one but not the other, either of
which might become necessary in the event that the school and
other-government limits within an urban renewal area are exceeded
to varying degrees, or in the event that one limit is exceeded
but the other is not. 
		Having noted that seeming anomaly in subsection (4),
however, we nevertheless conclude that the wording of that
subsection provides no basis for overriding the clear import of
the wording of subsection (1), nor does it otherwise justify a
contrary interpretation of Measure 5's categories.
		Based on the foregoing, we conclude that, in a case in
which there is an arguable inconsistency between the purpose for
which a tax is raised and the function of the taxing district
whose rate is the source of the tax, subsection (1), which
describes the categories in terms of the purpose of the tax,
controls.  That is, in adopting section 11b, the voters limited
taxes according to their intended use, not according to the
principal function of the taxing district whose rate generated
those taxes. (17)  
		Having concluded that Measure 5, standing alone,
requires the categorization of urban renewal taxes according to
their intended use, we examine whether any provision in Measure
50 signals the voters' intent to alter that scheme. 
  		Measure 50 contains three references to categories of
taxing districts, all of which are found in subsection (11)(c)(B)
of Article XI, section 11.  That subsection provides:  
		"If property taxes exceed the limitations imposed
under either category of local taxing district under
paragraph (b) of this subsection:
		"(i) Any local option ad valorem property taxes
imposed under this subsection shall be proportionally
reduced by those local taxing districts within the
category that is imposing the local option ad valorem
property taxes; and 
		"(ii) After local option ad valorem property taxes
have been eliminated, all other ad valorem property
taxes shall be proportionally reduced by those taxing
districts within the category, until the limits are no 
longer exceeded."  
(Emphasis added.)  As is evident from the foregoing, all three
references in Measure 50 to categories of taxing districts are
contained in the part of that constitutional amendment dealing
with compression of property taxes in the event that those taxes
exceed the Measure 5 limits.  The Measure 50 compression
provisions do not modify the compression procedure set out in
Measure 5, except to the extent that they ensure that local
option taxes that are authorized separately by Measure 50 also
are included in the procedure.  Under the circumstances, we
conclude that the fact that subsection (11) of Measure 50 is
consistent with subsection (4) of Measure 5 is no evidence of the
voters' intent to change the directive in subsection (1) of
Measure 5 to limit taxes according to their intended purpose.  
		The Tax Court found support for its contrary conclusion
in another paragraph of Article XI, section 11(11), as well as in 
Article XI, section 11(15), and Article XI, section 11(16).  For
the reasons that follow, we conclude that, in each case, the Tax
Court's reliance was misplaced.
		Article XI, section 11(11)(b), provides: 
		"The $5 (public school system) and $10 (other
government) limits on property taxes per $1,000 of real
market value described in subsection (1) of section 11b
of this Article shall be determined on the basis of
property taxes imposed in each geographic area taxed by
the same local taxing districts." 
With regard to that provision, the Tax Court stated:
	"[Section 11(11)(b)] uses terms indicating that the
limits of 11b are based on the taxes imposed, not the
taxes expended.  Specifically, section 11(11)(b) states
that the limits 'shall be determined on the basis of
property tax imposed in each geographic area taxed by
the same local taxing districts.' * * * Although
section 11b obviously contemplated that taxes would be
used for the purposes as categorized, it contains no
mechanism for ascertaining or verifying the actual
expenditure of taxes.  It provides only for the 
categorization at the time of imposition. 
Consequently, if taxes are properly categorized and the
rate imposed in each category is within the limits of
section 11b, that is the end of the 11b inquiry."  
Shilo Inn, 15 OTR at 44 (emphasis added by Tax Court). 
		We find the Tax Court's reliance on the fact that
neither Measure 5 nor Measure 50 provides a "mechanism for
ascertaining or verifying the actual expenditure of taxes" to be
something of a non-sequitur.  Both measures are tax limitation
provisions.  Certainly, one need not trace every dollar spent by
a taxing district to see that taxes on the increment (no matter
which taxing district's tax rate was extended to raise them) that
are distributed to an urban renewal agency to pay for urban
renewal projects are not "raised specifically to fund the public
school system."   
		Turning to the essence of the Tax Court's analysis of
subsection (11)(b), we observe that, in the material quoted
above, the court focused on the reference in subsection (11)(b)
to "taxes imposed" when describing how compliance with the
Measure 5 limits should be evaluated.  Based on that wording, the
court determined that each taxing district must categorize its
tax rate as either "school" or "other government" at the time
that it is imposed.  In the Tax Court's view, the inquiry is over
at that point:  A statutory scheme that allows some urban renewal
taxes to be treated as "dedicated to funding the public school
system" does not violate the constitution.  The unspoken premise
on which that ultimate conclusion is based is that a taxing
district cannot "impose" taxes for more than one purpose. 
Therefore, the Tax Court seems to have reasoned, taxes "imposed"
on a property by application of a school taxing district's tax
rate to a property must be categorized as being dedicated to the
public school system, even if the part that is imposed on the
increment is dedicated to urban renewal. 
		The problem with the foregoing reasoning is that it
lacks a textual predicate.  Nothing in the text of subsection
(11)(b) suggests that taxes that are imposed by a local taxing
district for two different purposes cannot be categorized
separately.  That paragraph merely provides that the applicable
limits are to be "determined on the basis of property taxes
imposed in each geographic area taxed by the same local taxing
districts."  Consistent with that approach, in a geographic area
that includes an urban renewal district, compliance with the "$5
(public school system)" limit is to be determined on the basis of
taxes imposed on the frozen base by the same school taxing
districts.  Similarly, compliance with the "$10 (other
government)" limit is to be determined on the basis of taxes
imposed on the increment by the same local taxing districts, some
of which also are schools.  
		We also observe that the wording of subsection (11)(b)
of Measure 50 is virtually identical to that used in subsection
(1) of Measure 5.  Measure 5 requires that "taxes imposed upon
any property shall be separated into two categories * * *" 
according to the purpose for which they are raised.  Or Const,
Art XI, § 11b(1).  Under Measure 50, it still is the taxes
themselves, and not the rates of particular taxing districts,
that are subject to the school and other government limits:  The
"limits * * * shall be determined on the basis of property taxes
imposed * * *."  Or Const, Art XI, § 11(11)(b) (emphasis added). 
In addition, Measure 50 does not purport to redefine the Measure
5 categories; instead, it refers to the "limits * * * described
in subsection (1) of section 11b of this Article," i.e., the
Measure 5 limits.  Id.  Because subsection (11)(b) of Measure 50
is not inconsistent with subsection (1) of Measure 5, it follows
that the reference in subsection (11)(b) to "taxes imposed" does
not reflect the voters' intent to change the way in which urban
renewal taxes are categorized for purposes of assessing
compliance with the Measure 5 limits. 
		The Tax Court also concluded that Article XI, section
11(15), of the Oregon Constitution, suggests that property taxes
are to be categorized according to the function of the taxing
district.  That subsection provides:  
  	"If ad valorem property taxes are divided as provided in
section 1c, Article IX of this Constitution, in order to
fund a redevelopment or urban renewal project, then
notwithstanding subsection (1) of this section, the ad
valorem property taxes levied against the increase shall be
used exclusively to pay any indebtedness incurred for the
redevelopment or urban renewal project."
With regard to that provision, the Tax Court stated:
	"When read in light of the issue before the court, this
provision clearly affirms that taxes will continue to
be divided as permitted by section 1c, Article IX of
the Oregon Constitution to fund urban renewal projects.
To avoid this result, section 11b or section 11 would
have to indicate that a school's tax rate is only to be
applied to the frozen value.  There is no such language
anywhere in the constitution.2
	____________
	"2	It is important to note that because urban renewal
agencies do not levy taxes, such a result would leave
urban renewal districts without funds to meet their
obligations."
Shilo Inn, 15 OTR at 43.  
		It is, of course, beyond dispute that subsection (15)
affirms that property taxes may continue to be divided as
provided in Article IX, section 1c.  As we understand taxpayer's
arguments, however, taxpayer never has contended that either
Measure 5 or Measure 50 changed the way that taxes are to be
divided for urban renewal.  Moreover, the Tax Court's statement
concerning the failure of either Measure 5 or Measure 50 to
specify that schools' tax rates apply only to the frozen base is
another non-sequitur.  The categorization of property taxes for
Measure 5 purposes is a process entirely separate from the
division of taxes for urban renewal funding.  In sum, Article XI,
section 11(15), does not support the Tax Court's analysis.  
		Finally, the Tax Court turned to subsection (16) of
Article XI, section 11, which expressly authorizes the
legislature to enact laws ensuring that existing urban renewal
obligations are paid.  That section concludes:  
	"Unless excepted from limitation under section 11b of
the Article, as modified by subsection (11) of this
section, nothing in this subsection shall be construed
to remove ad valorem property taxes levied against the
increase from the dollar limits in paragraph(b) of
subsection (11) of this section."  
The Tax Court stated that the foregoing 
	"indicates that any * * * taxes imposed [to pay urban
renewal debts], 'unless excepted from limitation under
section 11b,' remain subject to the limits of section
11b.  Hence, taxes imposed 'against the increase' are
not exempted from 'the dollar limits' of section 11b. 
Section 11b does not refer to just the limit on taxes
for government operations other than schools.  Use of
the plural 'limits' refers both to the $5 per $1,000
limit for public schools and to the $10 per $1,000
limit for governmental operations other than schools. 
This evidences an intent that such limits are applied
to the categories as made by the taxing districts when
the taxes are imposed."
Shilo Inn, 15 OTR at 44.  
		Respondents make the same point.  They contend that the
reference to the plural "limits" in subsection (16), rather than
the singular "limit," clearly means that the voters intended that
urban renewal taxes could be subject both to the school and to
the "other government" limits.  According to respondents, had the
voters intended urban renewal taxes to be treated exclusively as
"other government" for purposes of the Measure 5 limits (as
modified by Measure 50), Measure 50 would have referred only to
the single other-government limit, either specifically or by
using the singular word "limit."  
		Amici elaborate on the foregoing argument by contending
that the history of the House Joint Resolution that eventually
was referred to the voters as Measure 50 shows that the
legislature made a deliberate choice to include the plural word
"limits," rather than the singular "limit," in subsection (16)
and that that choice reflects the legislature's intent to subject
urban renewal taxes to both the school and other government
limits.  
		Along the same lines as the foregoing arguments of the
parties, there is one other aspect of the "dollar limits" phrase
in subsection (16) that warrants closer inspection.  The last
sentence of that subsection provides that, unless excepted from
limitation under "section 11b of this Article, as modified by
subsection 11 of this section" (that is, under Measure 5, as
modified), urban renewal taxes remain subject to "the dollar
limits in paragraph (b) of subsection (11) of this section," that
is, Measure 50.  As discussed above, "paragraph (b) of subsection
(11)" includes a shorthand reference to the Measure 5 limits: 
"The $5 (public school system) and $10 (other government) limits
* * *."  
		Under ordinary rules of construction, the use of two
different phrases in the same subsection to refer to the limits
is presumed to be intentional and suggests that the phrases refer
to different kinds of limits.  One plausible interpretation of
the reference at the end of subsection (16) to "paragraph (b) of
subsection (11) of this section" is that the Measure 50 limits
are combined dollar limits, as respondents and amici contend and
the Tax Court held, and the parenthetical notation of categories
is included in subsection (11)(b) only for the purpose of
identifying the source of each dollar cap. 
		To determine whether, in subjecting urban renewal taxes
to the "dollar limits of paragraph (b) of subsection 11 of this
section" rather than to the "other government" limit alone or to
the Measure 5 limits, the voters intended to alter the way in
which urban renewal taxes were treated under Measure 5, we turn
to the methodology that this court set out in Ecumenical
Ministries, 318 Or at 559.  That is, we first consider the text
of the initiated or referred constitutional provision and its
context.  Id.  If the voters' intent remains unclear after
consideration of the text and context of the provision, then the
court turns to its history.  Id.  
		We first observe that neither subsection (11) nor any
other provision of Measure 50 directly refers to a combined $15
limit.  Instead, paragraph (b) of subsection (11) continues to
refer to the dollar limits according to their categories:  "The
$5 (public school system) and $10 (other government) limits on
property taxes per $1000 of real market value described in
subsection (1) of section 11b of this Article * * *."  Or Const,
Art XI, § 11(11)(b).  Moreover, that paragraph provides that
those limits are "described in subsection (1) of section 11b of
this Article."  That suggests that Measure 50 imports the Measure
5 limits in their entirety and that the category references in
subsection (11)(b) are not merely parenthetical explanations
intended only to identify the source of each dollar cap but,
rather, are a shorthand reaffirmance of the Measure 5 limits.  
		Context also provides an indication that the use of the
phrase "dollar limits" in subsection (16) does not represent a
manifestation of the voters' intent to change the way urban
renewal taxes are treated.  Subsection (6) of Article XI, section
11, is similar to subsection (16), inasmuch as it uses the plural
word "limitations" when limiting taxes covered by that
subsection.  Subsection (6) specifies that "[a]d valorem property
taxes described in this subsection shall be subject to the
limitations imposed under section 11b of this Article, as
modified by subsection (11) of this section."  Or Const, Art XI,
§ 11(6)(b) (emphasis added).  The phrase "taxes described in this
subsection" in subsection (6) refers to the "ad valorem property
tax of a local taxing district, other than a * * * school
district, that is used to support a hospital facility."  Or
Const, Art XI, § (6)(a) (emphasis added).  
		It is incontrovertible, under any reading of the
pertinent provisions of Measure 5 and Measure 50, that a tax
imposed by a taxing district other than a school district, used
to support a hospital facility (clearly a nonschool purpose), is
a tax "raised to fund government operations other than the public
school system."  It cannot be seen as a tax "raised specifically
to fund the public school system."  Under that circumstance, it
is apparent that the provision in Article XI, section 11(6)(b),
subjecting that tax to the "limitations" (plural) of Measure 5,
as modified, merely reflects a general intent not to exclude that
tax from the Measure 5 limits, and does not reflect a conscious
decision on the part of the voters to broaden those categories
beyond their defined parameters.  
		Similarly, nothing in subsection (16) of Article XI,
section 11, suggests that the last sentence of that subsection is
anything more than a limitation on the legislature's authority to
enact laws protecting existing urban renewal programs.  That is
to say, it is more likely that the voters intended, by that
sentence, to preclude the legislature from exempting urban
renewal taxes from the Measure 5 limits as a means to ensure that
existing urban renewal indebtedness is paid.
    		As is clear from the foregoing, our analysis of the
text and context of the last section of subsection (16) suggests
that the reference to the "dollar limits" does not manifest the
voters' intent to subject urban renewal taxes generated by
extending the school taxing districts' tax rate to the increment
to the five dollar "school system" limit on property taxes. 
Nonetheless, as we have stated in the past, "caution is required
in ending the analysis before considering the history of an
initiated [or referred] constitutional provision."  Ecumenical
Ministries, 318 Or at 559 n 7; see also Stranahan, 331 Or at 57
(stating principle).  We therefore choose to exercise our
discretion by examining the history of Measure 50. 
		Contrary to amici's suggestion, however, the history
that we consider does not include early drafts of the legislative
bill that later was referred to the people, nor does it include
statements made by legislators in hearings on that matter.  Those
materials may be indicative of the legislature's intent in
crafting Measure 50 but, as we stated most recently in Stranahan,
331 Or at 57, "it is the people's understanding and intended
meaning of the provision in question -- as to which the text and
context are the most important clue -- that is critical to our
analysis."  (Emphasis added.)  It follows that only those
materials that were presented to the public at large help to
elucidate the public's understanding of the measure and assist in
our interpretation of the disputed provision.  Id. at 64-65. 
Those materials include, inter alia, materials that are included
in the Voters' Pamphlet, such as the ballot title, the
explanatory statement, and the legislative argument in support. 
See Ecumenical Ministries, 318 Or at 559 n 8 (so stating).  We
turn to a review of those materials.  
		First, neither the ballot title summary of Measure 50,
the explanatory statement, nor the Legislative Argument in
Support mention urban renewal.  Moreover, the ballot title
summary and the explanatory statement imply that, under Measure
50, the Measure 5 limits remain unchanged.  For example, the
ballot title summary states that: 
	"The measure retains the existing total property tax
rate for all property taxes, including local option
taxes but excluding taxes for bonds, at $5 per $1000 of
value for schools and $10 per $1000 of value for
nonschool government."  
Official Voters' Pamphlet, Special Election, May 20, 1997, 5
(emphasis added).  The Explanatory Statement contains a similar
statement but includes a direct reference to Measure 5:  
	"Retains existing property tax rate limitation of $5
per $1000 of value for schools and $10 per $1000 of
value for nonschool government (1990 Measure 5)."  
Id. at 7 (emphasis added).
		Second, those materials prominently inform the voters
that Measure 50 was intended to repeal and replace Measure 47,
which, according to the Legislative Argument in Support, had
"unintended consequences."  Id.  Measure 47, however, did not
address urban renewal in any respect.  Thus, the voters would not
have had a reason even to suspect that Measure 50 would change
the way in which urban renewal taxes would be treated.  In short,
nothing in the history establishes that, in adopting Measure 50
and, in subsection (16) of that measure, subjecting urban renewal
taxes to the "dollar limits of paragraph (b) of subsection (11),"
the voters intended to change the way that urban renewal taxes
are to be categorized for purposes of assessing compliance with
the Measure 5 limits. 
		In summary, the text of subsection (1) of Measure 5
provides that the limits set out in that subsection apply to
taxes that are to be separated into categories according to the
uses to which those taxes are dedicated.  Nothing in the context
of other provisions of Measure 5 alters that conclusion. 
Moreover, nothing in the later-enacted Measure 50 changes that
method of categorization to a system in which the function of the
taxing district imposing the tax, rather than the use to which
the tax is dedicated, is the determinative factor in evaluating
compliance with the Measure 5 limits.   
		As noted, the problem in this case arises because
certain parts of the statutory scheme that the legislature
enacted to implement Measure 50 expressly direct the
categorization of urban renewal taxes according to the function
of the taxing district whose rate is used to generate the tax. 
Specifically, ORS 310.150(7) provides: 
	"The determination of the appropriate category for an
item of tax is based on the tax as certified by the
taxing district under ORS 310.060 and not based on the
tax imposed on the urban renewal increment as described
in ORS chapter 457."  
Thus, under that statute, the assessor treats all taxes generated
by extending a school taxing district's tax rate to the assessed
value of a property within an urban renewal area as being subject
to the school system limit for purposes of assessing compliance
with Measure 5.  The Tax Court, based on its construction of the
various provisions of Measure 5 and Measure 50, concluded that
ORS 310.150(7) is consistent with the Oregon Constitution.  
		As is evident from the foregoing discussion, however,
that conclusion was incorrect.  The Oregon Constitution requires
that the assignment of an item of tax to the "school" or "other
government" category be based on the purpose to which that item
of tax is dedicated.  In an urban renewal area, only taxes on the
frozen base specifically are dedicated to funding the public
school system.  Taxes on the increment, by contrast, regardless
of which taxing district's ad valorem property tax rate is used
to calculate their amount, are dedicated to pay indebtedness
incurred for the redevelopment or urban renewal project.  Thus,
for purposes of assessing compliance with the Measure 5 property
tax limits, taxes on the increment, including those that are
generated by extending a school taxing district's tax rate to the
increment, are taxes that belong in the category that "dedicates
revenues raised to fund government operations other than the
public school system."  Or Const, Art XI, § 11b(1).  To the
extent that ORS 310.150(7) is in conflict with that requirement,
it is unconstitutional.  
		Notwithstanding any conflict with Article XI, section
11b(1), amici suggest that the legislature was within its
authority to enact ORS 310.150(7).  They contend, first, that the
legislature's actions should be given deference because, in
subsection (16), Measure 50 specifically calls for the
legislature to adopt implementing legislation.  Article XI,
section 11(16), provides that: 
	"The Legislative Assembly shall enact laws that allow
collection of ad valorem property taxes sufficient to
pay, when due, indebtedness incurred to carry out urban
renewal plans existing on December 5, 1996."  
Amici suggest that, under that grant of authority, the
legislature "made a number of deliberate choices to ensure that
urban renewal agencies would continue to receive the tax revenues
necessary to carry out the [existing] urban renewal plans * * *
includ[ing] making certain that the taxes were spread, for
purposes of property tax limits, between both the $10 and the $5
limits."  Amici also contend that the statutory scheme allowing
urban renewal taxes to be treated in some cases as subject to the
school system limit should be construed as constitutional because
the same legislature that crafted Measure 50 also adopted its
implementing legislation, which includes the provisions
subjecting urban renewal taxes to the $5 school system tax limit
if they are raised by extending a school taxing district's rate
to the increment.  For the reasons that follow, neither of those
positions is persuasive.    
		It is true that the directive to the legislature in
subsection (16) to "enact laws" to ensure the payment of urban
renewal obligations purports to be a broad grant of authority to
protect existing urban renewal funding in any way that the
legislature sees fit.  Nevertheless, that authority expressly is 
made subject to the Measure 5 limits.  The last sentence of
subsection (16) provides: 
	"[N]othing in this subsection shall be construed to
remove ad valorem property taxes levied against the
increase from the dollar limits in paragraph (b) of
subsection (11) of this section."  
Moreover, nothing elsewhere in the text of Measure 50 suggests
that that amendment to the constitution was intended to change
the way that the categories to which the Measure 5 limits apply
are construed.  As we already have discussed at length, the
Measure 5 limits apply to categories of taxes according to the
purpose to which those taxes are dedicated.  Measure 50 neither
directs the legislature, nor grants it the power, to enact laws
that change that constitutional structure.   
		We also reject amici's argument that ORS 310.150(7) is
entitled, in effect, to a presumption of constitutionality,
simply because it was drafted by the same legislature that
crafted Measure 50 itself.  This court considered a contention
similar to amici's in State v. Kuhnhausen, 201 Or 478, 266 P2d
698, on reh'g 201 Or 478, 272 P2d 225 (1954).  In that case, the
court was asked to consider whether a statute adopted pursuant to
constitutional authority "defined" the relevant constitutional
provision, such that compliance with the statute became
equivalent to compliance with the constitutional provision.  The
court stated
	"[s]o long as the doctrine of separation of powers
remains basic in our system, the ultimate power and
duty of the courts to construe the constitution must
rest with the courts alone.  That power should not be
lightly whittled away by any rule which recognizes the
power of the legislature to authoritatively construe
the constitution. * * *  
		"It has been suggested that there is an exception
to the general rule in the case of a contemporaneous
legislative construction of the constitution. * * * 
Conceding, for the sake of argument, that the
legislature had power to bind this court as to the
construction of the constitution, it would necessarily
follow that the only constitutional provision which the
legislature could 'construe and define' would be the
constitution which was in force at the time that the
statute was enacted."  
Kuhnhausen, 201 Or at 517-18.  
		The same reasoning applies in the present case.  Even
if the legislature had the power to construe and define Measure
50 through the statute at issue in this case, it had no such
power with respect to Measure 5.  Therefore, even if the
legislature believed when it referred Measure 50 to the voters
that that measure, if adopted, would permit the categorization of
taxes according to the principal function of the taxing district
whose rate was used to generate the tax, this court is not bound
by that interpretation.  We already have concluded that Measure 5
requires the categorization of taxes according to their dedicated
purpose and that no provision of Measure 50 changes that method
of categorization.  The fact that the legislature that proposed
Measure 50 to the people and enacted its implementing legislation
might have held a different view does not inform our analysis of
Measure 5 and, therefore, cannot dictate derivatively how we
interpret Measure 50.  
		In summary, under Measure 5, for purposes of assessing
compliance with the ad valorem property tax limits, taxes must be
separated into two categories, "school system" and "other than
schools," according to the use to which those taxes are
dedicated.  Taxes on the increment to fund urban renewal projects
belong in the Measure 5 category that "dedicates revenues raised
to fund government operations other than the public school
system."   
		The decision of the Tax Court is reversed and the case
is remanded to that court for further proceedings. 



1. Ad valorem property taxes are assessed in a combined
statement by each county, which then allocates the taxes to the
various entities, such as cities, school districts, and other
governmental units within the county to which the taxes actually
are owed.  PDC is not specifically identified on petitioner's tax
statements as a recipient of taxes.

2. Article XI, section 11b(1), of the Oregon Constitution,
is the first section of an amendment to the Oregon Constitution
that the voters adopted in 1990 and was (and still is) known as
"Measure 5."  As adopted, Measure 5 included Article XI, section
11b-11f, of the Oregon Constitution.  The voters repealed section
11f on May 20, 1997, as part of Measure 50, which is discussed at
length elsewhere in this opinion.  Throughout this opinion, we
refer at times to the constitutional provisions at issue by their
measure numbers, rather than referring to them exclusively by the
pertinent citations to the constitution, because the measure
numbers continue to be used in common parlance by the bench, bar,
and public.  

3. Although respondents assert that the process that
taxpayer used to arrive at that figure is flawed, they did not
contend either to the Tax Court or to this court that the figures
set out in the text are incorrect.  

4. Taxpayer also claimed in its complaint to the Tax Court
that it was bringing the present action for the benefit of all
similarly situated taxpayers who, it contended, collectively were
overcharged over $7.5 million for the 1998-99 tax year. 
Accordingly, taxpayer also moved for class action status and
claimed entitlement to attorney fees under ORS 305.587, which
authorizes the Tax Court to order such relief as it considers
appropriate.  Because the Tax Court granted summary judgment
against taxpayer on the merits, that court did not consider
whether to certify the class. 

5. Part of the basis for the present dispute stems from
the fact that subsection (4) of Article XI, section 11b, refers
to categories of taxing units, rather than to categories of
taxes, and suggests that categories of taxing units were
"defined" in subsection (1).  Subsection (1), however, does not
provide such a definition.  For the moment, we need note only
that the contrasting wording in the two sections is inartful, at
the least. 

6. The new section 11 did not repeal section 11b, which,
as we have explained, is the official label for Measure 5. 
Former section (11), which Measure 50 repealed, provided for tax
base limitations.  Importantly, Measure 50 also repealed another
property-tax-limiting initiative measure, Measure 47, which the
voters had approved a year earlier, in 1996.  Measure 47 was a
short-lived constitutional amendment aimed at closing what its
supporters considered to be a significant loophole in the
property tax limitation goal of Measure 5.  Former Or Const, Art
XI, 11g, 11h, 11i and 11j.  Certain practical and technical
difficulties in the application of Measure 47 led the legislature
to propose, and the people to adopt, Measure 50 as its effective
replacement.  

7. We note that Measure 50 employs the phrase "local
taxing district," while Measure 5 and Article IX, section 1(c),
use the phrases "taxing units" and "governmental units."  In
addition, the statutes implementing Measures 5 and 50 employ
still different phraseology in various sections.  Neither party
has suggested that we ascribe a difference in meaning based on
the difference in phraseology, and we perceive no reason to do
so.  Accordingly, we assume for purposes of this opinion that the
foregoing terms, viz., "local taxing district," "taxing units,"
and "governmental units," are interchangeable.  For the sake of
consistency, we use the phrase "taxing district" throughout this
opinion.

8. That formula, similar to the one contained in Measure 5
(Or Const, Art XI, § 11b(4)), refers numerous times to
"categories" of "local taxing districts" that are subject to the
Measure 5 limits.  See, e.g., Or Const, Art XI, § 11(c)(B) ("If
property taxes exceed the limitations imposed under either
category of local taxing district * * *"); Or Const, Art XI, §
11(c)(B)(i) ("[a]ny local option * * * taxes * * * shall be
proportionally reduced by those local taxing districts within the
category * * *); Or Const, Art XI, § 11(c)(B)(ii) ("* * * all
other ad valorem property taxes shall be proportionally reduced
by those taxing districts within the category * * *").  

9. That section, as amended in 1997 by Measure 50,
provides as follows:
		"The Legislative Assembly may provide that the ad
valorem taxes levied by any taxing unit, in which is
located all or part of an area included in a
redevelopment or urban renewal project, may be divided
so that the taxes levied against any increase in the
assessed value, as defined by law, of property in such
area obtaining after the effective date of the
ordinance or resolution approving the redevelopment or
urban renewal plan for such area, shall be used to pay
any indebtedness incurred for the redevelopment or
urban renewal project."  
10. Although the statutes implementing Measure 5 themselves
did not specify how taxes used to pay urban renewal indebtedness
were to be treated, the Attorney General had issued an opinion in
1990, before the election at which the people adopted Measure 5,
concluding that, 
	"[e]xcept for revenue used to pay bonded indebtedness,
revenue generated by tax increment financing that funds
the activities of an urban renewal agency, is subject
to the 'other than schools' limit under the proposed
measure."  
46 Op Atty Gen 388, 429 (1990).  In addition, the Attorney
General specifically addressed urban renewal revenues derived
from school district levies:  
	"All urban renewal tax increment revenues are subject
to the nonschool limit, whether or not the amount of
those revenues is determined in part by the rate
applicable to a school district levy, because those
revenues are not dedicated to be used 'exclusively for
educational purposes.'"  
Id. at 431-32.  The Department of Revenue also promulgated a
regulation codifying that conclusion.  Former OAR 150-457.440(7)(h) (1990, amended 1991).  

11. Subsection (15) is quoted at page 13.

12. We observe in passing that the reference in the above-quoted passage to "subsection (1) of this section" makes no sense
in context.  Subsection (1) of section 11 sets new maximum
assessed values of properties for ad valorem tax purposes.  

13. Subsection (16)) effectively adopts this court's
holding in City of Portland v. Smith, 314 Or 178, 192, 838 P2d
568 (1992).  In Smith, the City of Portland brought an action,
soon after the adoption of Measure 5, challenging the application
of the Measure 5 limits to urban renewal taxes.  The city
contended that taxes imposed under Article IX, section 1c, to pay
urban renewal indebtedness were, in the words of Measure 5, Or
Const, Art XI, § 11B(3)(a), "taxes imposed to pay the principal
and interest on bonded indebtedness authorized by a specific
provision of this Constitution" and, therefore, exempt from the
Measure 5 limits.  This court held to the contrary, on the ground
that Article IX, section 1c, does not specifically authorize
urban renewal agencies to incur bonded indebtedness.

14. ORS 310.145 authorizes units of local government to
adopt such ordinances and resolutions.

15. As noted, at the time when an urban renewal plan is
approved, the county assessor for the area in which the urban
renewal area is located prepares a certified statement of the
total assessed value of all the taxable real property contained
in the urban renewal area in the county.  ORS 457.430(1).  That
certified statement, as adjusted to account for changes in
assessed value under Measure 50, ORS 457.430(6)(b), then provides
the base from which the increment is calculated.  ORS 457.440(4). 

16.  On that basis, the court upheld the constitutionality
of ORS 310.355, which permits the categorization of a particular,
voter-approved levy as either dedicated to funding the public
school system or not, depending on the principal function of the
governmental unit imposing the tax, unless the sole purpose of
the levy is for a use in the other category.  Glenn, 14 OTR at
352.  
17. As noted above, at n 10, the Attorney General
effectively came to the same conclusion at the time that Measure
5 was adopted, as did the Department of Revenue in thereafter
adopting implementing regulations, when designating that urban
renewal taxes were to be treated as "other government" for
purposes of the Measure 5 limits.