Voters approved a property tax limitation, Measure 5, in 1990 that produced tax relief primarily for businesses because a strong housing market resulted in rapid increases in home values. The legislature also ended homeowner and renter property tax relief programs that had reduced household tax burdens during the 1980s. In addition, the strong economy of the 1990s boosted income tax collections. As shown in Chart 2, the personal income tax now produces more revenue than the property tax. Households and businesses pay a variety of state and local taxes as listed in Chart 3.
Property taxes are the largest source of tax revenue for cities, counties, and special districts.
Property taxes also partially fund schools. Personal income taxes are the main source of state tax revenue. This report focuses on changes in those taxes and in the corporate income tax during the last two decades. The 1979 reform package was a response to sharp increases in state population and national inflation as well as California's Proposition 13 and an Oregon property tax limitation measure that had failed in the previous election. The property tax relief portion of the package was rescinded in 1985 because state revenues declined when a recession hit Oregon in the early 1980s.