SALEM — As legislators set to work on balancing the state’s budget, some lawmakers and lobbyists are considering property tax reform to benefit local government budgets.

In particular, supporters want to change how property taxes are calculated, and remove limits on tax rates.

Two ballot measures approved by voters in the 1990s, Measure 5 and Measure 50, limited the amount of property taxes Oregonians pay, and annual tax increases.

Measure 5, passed in 1990, limited the total tax rates levied by all local taxing bodies to no more than $15 per $1,000 of assessed property value — up to $5 for education, and $10 for other local taxing bodies.

Measure 50, passed in 1997, decoupled a property’s assessed valuation, the amount on which it is taxed, from real market value, according to the Oregon Department of Revenue, and put limits on how much a property’s assessed value could increase from year to year.

The state’s cities advocate a “transition” back to real market value-based calculations and for permitting local voters to approve rates exceeding the limits established by Measure 5.

Without a reduction in tax rates, the proposal would lead to higher property taxes. According to the League of Oregon Cities, there is a state average of a 25 percent difference between the real market value of property and its assessed value.

The Legislature is also looking at a homestead exemption, which could cushion homeowners from sudden tax leaps on their primary residences.

Cities contend Measures 5 and 50 have meant that owners of similarly priced properties can pay significantly disparate amounts in taxes, and that cities have to compete with other local jurisdictions, such as counties and fire protection districts, for key funding.

Even if residents of a city support measures to pay for local libraries or to build a new police station, for example, the total tax rate per $1,000 of assessed valuation can’t exceed the state limits.

The proposal could also lead to greater increases in assessments. Assessed valuations — due to the requirements of Measure 50 — typically grow at a slower rate than real market value. On the other hand, when the real estate market dips, so do real market values.

A senate resolution, Senate Joint Resolution 3, proposes repealing Measure 50 and replacing it with a real market value-based system. That resolution is scheduled for a public hearing before the Senate Finance and Revenue Committee Tuesday.

“We would support that in theory,” said Wendy Johnson, an intergovernmental relations associate for the League of Oregon Cities, noting that the details have not been ironed out.

That resolution is the first placeholder bill in what cities expect to be a broader property tax reform package, Johnson said.