Filed: September 19, 2002

FLAVORLAND FOODS,
now doing business as
New Season Foods, Inc.,

Respondent,

v.

WASHINGTON COUNTY ASSESSOR,
a political subdivision of the
State of Oregon,
and DEPARTMENT OF REVENUE,
State of Oregon

Appellants.

En Banc

On appeal from the Oregon Tax Court.*

Carl N. Byers, Judge.

Argued and submitted January 10, 2002.

Robert B. Rocklin, Assistant Attorney General, Salem, argued the cause and filed the brief for appellant Department of Revenue. With him on the brief were Hardy Myers, Attorney General, and Michael D. Reynolds, Solicitor General.

Elmer M. Dickens, Assistant County Counsel, Hillsboro, filed the brief for appellant Washington County.

David L. Canary, of Garvey, Schubert & Barer, Portland, argued the cause and filed the brief for respondent. With him on the brief was Richard Baroway.

LEESON, J.

The decision of the Tax Court is reversed, and the case is remanded to that court for further proceedings.

*15 OTR 182 (2000).

LEESON, J.

The Department of Revenue and Washington County Assessor (taxing authorities) appeal from a judgment of the Oregon Tax Court granting summary judgment in favor of Flavorland Foods (taxpayer). Flavorland Foods v. Washington County Assessor, 15 OTR 182 (2000). For the reasons that follow, we reverse the decision of the Tax Court and remand the case for further proceedings.

At issue is the meaning of the phrase "each unit of property in this state" in Ballot Measure 50 (1997). Measure 50 amended Article XI, section 11, of the Oregon Constitution. (1) The legislature referred Measure 50 to the voters to replace a property tax limitation measure that the voters had approved in 1996, which had been known popularly as Ballot Measure 47. As this court recently explained,

"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 [an amendment to the Oregon Constitution adopted in 1990]. 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."

Shilo Inn v. Multnomah County, 333 Or 101, 107 n 6, 36 P3d 954 (2001), modified on recons, 334 Or 11, 45 P3d 107 (2002) (citations omitted).

Measure 50 was superimposed on an ad valorem real-property tax system in the State of Oregon in which taxes were levied on a property's real market value. See ORS 308.232 (1995) ("All real or personal property within each county shall be valued and assessed at 100 percent of its real market value."). The assessment rolls set out separate values for the land and the improvements. ORS 308.215(1)(e), (f) (1995). However, real property generally was taxed as a whole. See Shields v. Dept. of Rev., 266 Or 461, 470, 513 P2d 784 (1973) (with some exceptions, real property taxed as whole); ORS 307.010 (1995) (real property includes land itself and all buildings, improvements, machinery, equipment, or fixtures).

As amended by Measure 50, Article XI, section 11(1)(a), of the Oregon Constitution provides:

"For the tax year beginning July 1, 1997, each unit of property in this state shall have a maximum assessed value for ad valorem property tax purposes that does not exceed the property's real market value for the tax year beginning July 1, 1995, reduced by 10 percent."

(Emphasis added.) A property's maximum assessed value may increase by no more than three percent per year. Or Const, Art XI,