FILED: August 31, 2006
IN THE SUPREME COURT OF THE STATE OF OREGON
NICHOLAS J. URHAUSEN,
JOHN McVICKAR and KIP RICE,
Respondents,
v.
CITY OF EUGENE,
Appellant.
(TC 4692; SC S53391)
En Banc
On review from the Oregon Tax Court.*
Argued and submitted June 19, 2006.
Jerome Lidz, Harrang Long Gary Rudnick PC, argued the cause
for appellant.  With him on the briefs were Karla Alderman and
Glenn Klein.
Gregory J. Howe, argued the cause and filed the brief for
respondents.
Edward H. Trompke, of Jordan Schrader PC, filed the brief on
behalf of amicus curiae Morrow County Unified Recreation
District.  Jeffrey G. Condit, Miller Nash LLP, filed the brief on
behalf of amicus curiae Portland School District No 1J, Multnomah
County (Portland Public Schools).  Beth Ann Lori, City of
Ashland, filed the brief on behalf of amicus curiae City of
Ashland.  Joe B. Richards, Luvass Cobb PC, filed the brief on
behalf of amici curiae Eugene School District and Bethel School
District.
DE MUNIZ, C. J.
The judgment of the Tax Court is affirmed.
*Appeal from General Judgment of the Oregon Tax Court. 
Henry C. Breithaupt, Judge. Urhausen v. City of Eugene, 18 OTR
395 (2006).
DE MUNIZ, C. J.
This property tax case is before the court on direct
appeal from an Oregon Tax Court judgment.  The issue presented is
whether the City of Eugene's (city) categorization of revenues
raised by a local option levy pursuant to ORS 310.155(3) was
consistent with the tax limitations set out in Article XI,
section 11b, of the Oregon Constitution (hereafter, Measure
5 (1)).  The Tax Court concluded that the city's revenue
categorization was not consistent with Measure 5 requirements. 
In so holding, the Tax Court declared ORS 310.155(3)
unconstitutional and held that Measure 5 required that revenues
be categorized according to their intended use and the purpose
for which those revenues were raised.  Urhausen v. City of
Eugene, 18 OTR 395 (2006).  For the reasons that follow, we
affirm the Tax Court judgment.
The relevant facts are undisputed.  Taxpayers Urhausen,
McVickar, and Rice (collectively, taxpayers) are resident
taxpayers of the city.  In 2002, the Eugene City Council passed a
resolution calling for a four-year local option tax levy (levy)
within the city and referred the levy to city voters for
approval.  The proposed levy was designed to institute a new
property tax of $0.86 per $1,000 of assessed real-market property
value within the area.  Over its proposed four-year duration, the
levy was expected to raise a total of $31.5 million.  Under the
levy's terms, seven percent of those proceeds, approximately $2.2
million, would be used by the city to provide services for youth. 
The remaining 93 percent, approximately $29.3 million, was slated
to go to the Eugene and Bethel school districts (school
districts) for a number of specific purposes:  school-based
instruction in music and physical education; school-based
counseling; school-based nurse services; school-based library
services; and high school or middle school athletics and student
activities.  The resolution referring the levy to voters made
clear that the amount of the levy would be proportionately
reduced if the Oregon Legislative Assembly acted to increase the
amount of funding for students within the school districts beyond
the amount anticipated for the four-year period of the
levy. (2) 
By its terms, the bulk of the levy was aimed at school
funding.  However, the city did not categorize the anticipated
levy revenues as public school funds.  Instead, it categorized
those revenues as funds for "government operations other than the
public school system."  
Measure 5 provides:

"(1) During and after the fiscal year 1991-92,
taxes 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
"For Each $1000.00 of Property's Real Market Value
"Fiscal YearSchool SystemOther than Schools
"Fiscal Year
School System
Other than Schools



1991-1992
$15.00
$10.00
1992-1993
$12.50
$10.00
1993-1994
$10.00
$10.00
1994-1995
$ 7.50
$10.00
1995-1996
$ 5.00
$10.00
and thereafter


"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 (emphasis added).
The city based its categorization of the funds in
question on Measure 5's implementing statute, ORS 310.155;
specifically, subsection (3) of that statute.  Among other
things, ORS 310.155 defines taxes levied for public school
funding as those used "exclusively" for educational services:

"(1) For purposes of ORS 310.150, taxes are levied
or imposed to fund the public school system if the
taxes will be used exclusively for educational
services, including support services, provided by any
unit of government, at any level from pre-kindergarten
through post-graduate training.
"(2) Taxes on property levied or imposed by a unit
of government whose principal function is to provide
educational services shall be considered to be
dedicated to fund the public school system unless the
sole purpose of a particular, voter approved levy is
for other than educational services or support services
as defined in this section.
"(3) Taxes on property levied or imposed by a unit
of government whose principal function is to perform
government operations other than educational services
shall be considered to be dedicated to fund the public
school system only if the sole purpose of a particular
voter approved levy is for educational services or
support services as defined in this section."

ORS 310.155 (emphasis added).
Voters subsequently approved the levy.  Many of the tax
accounts within the school districts' boundaries, however, 
already were being assessed at the Measure 5 maximum rate of $5
per $1,000 of real market value for education-related property
taxes at the time that the levy was approved.  Taxpayers, whose
property fit the foregoing description, initiated an action
before the Tax Court seeking a determination regarding the
propriety of the levy under Measure 5.  Specifically, taxpayers
argued that the levy exceeded the limits set by Measure 5 on
property tax revenues raised to fund the public school system. 
Taxpayers conceded that the city's categorization of levy funds
was correct under the terms of ORS 310.155(3), but asserted that
the statute itself was unconstitutional because Measure 5
required that the majority of the revenues derived from the levy
be classified as public school funding.
In determining the proper classification for the
revenues generated by the levy, the Tax Court relied in part on
the definition of "educational services" provided by ORS 310.155
(4) and (6):

"(4) As included in this section, 'educational
services' includes:
"(a) Establishment and maintenance of preschools,
kindergartens, elementary schools, high schools,
community colleges and institutions of higher
education.
"(b) Establishment and maintenance of career
schools, adult education programs, evening school
programs and schools or facilities for the physically,
mentally or emotionally disabled
"* * * * *
"(6) 'Educational services' does not include
community recreation programs, civic activities, public
libraries, programs for custody or care of children or
community welfare activities if those programs or
activities are provided to the general public and not
for the benefit of students or other participants in
the programs and activities described in subsection (4)
of this section."

Ultimately, the Tax Court granted summary judgment in 
taxpayers' favor, holding that subsections (2) and (3) of ORS
310.155 were unconstitutional because those provisions did not
categorize the revenues of a mixed-use levy according to the
purpose and intended use of those revenues. (3)  The Tax Court
concluded that Measure 5 required that the bulk of the levy
revenues in question be categorized as taxes raised specifically
to fund the public school system because those revenues were
dedicated to school-based educational services that were not
intended to benefit the public generally.  Urhausen, 18 OTR at
407-08 (2006).  The Tax Court ordered the city to refund to
taxpayers the amount of property taxes paid during fiscal years
2004-05 and 2005-06 that taxpayers would not have paid had the
93-percent portion of the levy been certified under Measure 5's
cap on funds raised for the public school system.  The city
appeals from that judgment.
On review, the issues are (1) whether ORS 310.155(3) is
consistent with Measure 5; and (2) if ORS 310.155(3) is not
consistent with Measure 5 and therefore is unconstitutional,
whether the revenues from the levy in question should be 
categorized as funding for the "public school system" and 
subject to the $5 property tax limitation, or as funding for
government operations "other than schools" and subject to the $10
tax limitation. 
As noted, ORS 310.155(3) provides that, if a
governmental unit imposing a levy is not a school unit, then the
revenue that the levy raises qualifies as school revenue only if
the sole purpose of the levy is for educational services.  Here,
because the governmental unit in question is not a school unit,
ORS 310.155(3) requires that the levy be categorized as funding
for "other government" services unless its sole purpose was to
fund educational services.  Both parties concede, however, that
the levy in question had two purposes:  funding educational
services and funding other government services using funds
retained by the city. 
The city's principal argument supporting the
constitutionality of ORS 310.155(3) focuses on the requirements
of Measure 5.  The city contends that Measure 5 requires tax
levies themselves -- rather than the revenues raised therefrom --
to be separated into categories.  The city refers to this as
categorization at the "levy level."  The city contends that,
because the purpose of the levy in question was not "exclusively"
for educational purposes, all the revenues are properly
categorized as being for "other government" services.  That
result, the city argues, is mandated by the text of Measure 5
itself -- specifically, the "exclusivity" clause of subsection
(1).  We turn now to that question. 
Measure 5 was an initiative measure.  When interpreting
an initiated constitutional provision, this court attempts to
discern the intent of the voters, 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."  Stranahan v. Fred Meyer, Inc., 331 Or
38, 57, 11 P3d 228 (2000).  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, then our inquiry is concluded. 
Ecumenical Ministries, 318 Or at 559.  However, if the intent is
not clear from the provision's text and context, then we proceed
to examine the history of the provision, which may include
materials set out in the voters pamphlet.  Id. at 560 n 8.
Consistent with the foregoing methodology, we begin
with the wording of the constitutional provision itself. 
Subsection (1) of Measure 5 requires that

"[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." 

(Emphasis added.)  
We observe initially that Measure 5 refers to only
"revenues" and "taxes"; it does not mention the levies under
which those taxes are imposed.  Nevertheless, the city contends
that the "exclusivity" clause set out in subsection (1) mandates
the result for which it argues.  However, the text of that
provision refers directly back to the revenues that a levy
raises, rather than the levy itself:

"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."

Or Const, Art XI, § 11b(1) (emphasis added).
In short, from a textual standpoint, it is the revenues
themselves that are the focus of Measure 5.  Specifically,
Measure 5 emphasizes the purposes for raising the revenues and
the use to which the revenues are to be put.  It does not follow,
then, that a levy must be categorized as funding for "public
schools" under Measure 5 only if all the revenues under the levy
are used exclusively for educational services.  Measure 5
requires only that the portion of funds that are to be used
exclusively for educational services be categorized as funding
for "public schools."
The city argues, however, that that interpretation
fails to give any effect to the "exclusivity" clause set out in
subsection (1) of Measure 5.  We disagree.  As the Tax Court
noted, the "exclusivity" clause retains importance, because the
intended use of any portion of revenues from a levy could serve
both general government and school purposes.  When the same funds
are used for a facility serving both educational and nonschool
purposes, for example, the funds would not be used "exclusively"
for school purposes.  That situation, however, is not at issue
here. 
Our analysis of the text is supported by this court's
decision in Shilo Inn v. Multnomah County, 333 Or 101, 36 P3d 954
(2001).  That case dealt with a taxpayer who owned two properties
in Multnomah County.  A portion of the taxes assessed against
those properties was levied by extending the school taxing
districts' rates, but was disbursed to an urban renewal agency. 
Although that portion was not used "to fund the public school
system," it was nonetheless categorized as funding for "public
schools."  The taxpayer sought review from the Tax Court, arguing
that the portion of taxes provided to the urban renewal agency
should be categorized as funding government operations "other
than schools."  The issue before the Tax Court was whether taxes
must be categorized according to the intended use of those taxes
or according to the nature of the taxing district imposing the
levy.  
This court held that Measure 5 requires categorization
of taxes according to the uses to which the taxes are dedicated. 
Shilo Inn, 333 Or at 131.  Specifically, the court stated:

"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." 

Id. (emphasis added).  The court further noted:

"[I]n adopting [Measure 5], the voters limited taxes
according to their intended use, not according to the
principal function of the taxing district whose rate
generated those taxes."

Id. at 121-22. 
The city argues, however, that the holding in Shilo Inn
is not applicable to this case because Shilo Inn dealt with only
urban renewal taxation.  Specifically, the city asserts that
Shilo Inn addressed only the narrow issue whether taxes are to be
categorized according to the nature of the taxing district whose
rate generated the taxes.  Because the categorization made in ORS
310.155(3) is not based on the nature of the taxing district in
question, the city argues Shilo Inn is inapplicable.  We
disagree.  The central holding in Shilo Inn is that Measure 5
requires that property taxes be categorized according to the
intended use of the revenues and the purpose for which those
revenues were raised:

"[T]he 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."

Id. at 131 (emphasis added).  The broad nature of that holding
strongly suggests that the rule expressed in Shilo Inn warrants a
more general application than the city would concede.
We recognize that the principal function of the taxing
district in Shilo Inn was indeed relevant to the analysis of the
issues in that case.  Here, although ORS 310.155(3) does not
categorize tax revenues by the principal function of the taxing
district, the statutory "sole purpose" rule presently expressed
in that statutory provision nonetheless often will dictate a
result that is, in fact, predicated on the nature of the district
levying the tax.  For example, if the governmental unit imposing
a levy is not a school unit, as is the case here, then all
revenues raised will be classified as funding for "other
government" services except in the one instance where the sole
purpose of the levy is educational services.  That result,
however, is inconsistent with Measure 5, which contemplates that
units of government other than school units may, in fact, provide
educational services.
This court has held that all revenues need not be
grouped into one, and only one, of the constitutional categories
set out in Measure 5. See Shilo Inn, 333 Or at 124 (stating
principle).  Indeed, in holding that it is the intended use and
purpose of the revenues that is determinative of their
categorization, this court's decision in Shilo Inn makes it clear
that the "either/or" approach reflected in ORS 310.155(3) is
problematic:

"Nothing in [Measure 5] suggests that taxes that are
imposed by a local taxing district for two different
purposes cannot be categorized separately."

Id. (emphasis added).
The city makes a final argument concerning the adoption
of Measure 50.  In 1997, the legislature proposed and voters
adopted Measure 50 as an additional property tax limitation. 
Measure 50 repealed, inter alia, then-existing Article XI,
section 11, and replaced it with an entirely new section
11. (4)  The city contends that, by adopting Measure 50, the
voters implicitly approved the Legislative Assembly's
interpretation of Measure 5, as expressed in ORS 310.155.  That
argument too must fail.  Measure 50 did not alter Measure 5's
requirement that revenues be categorized according to their
intended use.  This court affirmed that principle in Shilo Inn as
well:  

"[W]e 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."

333 Or at 122.  Furthermore, this court stated:

"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."

Id. at 134.
Relevant statutory authority further supports that
proposition.  ORS 310.060, a companion statute to ORS 310.155,
requires taxing districts to file annually a written notice
certifying "the ad valorem property tax rate or the estimated
amount of ad valorem property taxes to be imposed by the taxing
district[.]"  Paragraph (2)(e) of that statute requires that the 
notice state, as a separate item, the "total amount levied that
is subject to [Measure 5]."  Paragraph (3)(b) then provides:

"If an item described in subsection (2) of this
section is allocable to more than one category
described in ORS 310.150, the notice shall list
separately the portion of each item allocable to each
category." 

(Emphasis added.)  ORS 310.060(3)(b) thus illustrates that the
legislature understood that revenues raised by a local option
levy can be allocated among more than one category. 
Our analysis of the text and context of Measure 5
suggests that revenues raised by a local-option levy must be
categorized according to their intended use.  Nonetheless, as
this court has stated, "caution is required in ending the
analysis before considering the history of an initiated
constitutional provision."  Ecumenical Ministries, 318 Or at 559
n 7; see also Stranahan, 331 Or at 57 (stating principle).  As
this court stated in Stranahan, "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 are
critical to our analysis."  Id. at 57.  It follows, then, that
those materials that were presented to the public help elucidate
the public's understanding of the measure and assist in our
interpretation of the disputed provision.  Id. at 64.  Those
materials include, inter alia, information included in the
voters' pamphlet, such as the ballot title and the explanatory
statement.  See Ecumenical Ministries, 318 Or at 560 n 8 (so
stating). 
In this case, the ballot title summary and explanatory
statement focused exclusively on Measure 5's role as a property
tax limitation provision.  For example, the explanatory statement
set forth the purpose of Measure 5 as limiting the total taxes
and government charges on property.  Specifically, the statement
provided: 

"[T]he measure limits total school taxes and charges to
$5.00 per $1,000 of each property's real market value,
and total nonschool taxes and charges to $10.00 per
$1,000."

Official Voter's Pamphlet, General Election, Nov 6, 1990, 33 
(emphasis added).
Similarly, this court has held, and the city concedes, that the basic directive of Measure 5 is that it
"limits the taxes that may be imposed on any property by limiting
tax rates."  Coalition for Equit. School Fund. v. State of
Oregon, 311 Or 300, 310, 811 P2d 116 (1991).  If constitutional,
however, ORS 310.155(3) would render meaningless the $5 limit on
funding for public schools in circumstances such as this, thereby
violating that directive.  That is true because Measure 5 does
not refer to a combined $15 limit.  Instead, it refers to dollar
limits according to their categories:  $5 for the public school
system, and $10 for other government purposes.  See Shilo Inn,
333 Or at 128 (so stating).  If ORS 310.155(3) is constitutional,
then it would be possible for a nonschool taxing unit to devote
virtually its entire funding under the $10 limit to public
schools, thereby ignoring the $5 limit on funding for "public
schools."
Although ORS 310.155(3) mandates the result sought by
the city, that result is not consistent with the wording of
Measure 5 or with this court's decision in Shilo Inn. 
Consequently, we conclude that Measure 5 requires revenues raised
by a mixed-use levy to be allocated among categories according to
the intended use of the revenues and the purposes for which those
revenues were raised.  To the extent that ORS 310.155(3) limits
the categorization of revenues from mixed-use levies to only one
category in circumstances such as this, that provision is
inconsistent with Measure 5 and therefore is unconstitutional.
Having determined that Measure 5 requires the levy's
proceeds to be categorized according to their intended use, we
turn now to the question of ascertaining the intended uses for
the revenues raised by the levy in question.
Taxpayers concede that seven percent of the levy's
revenues were dedicated to funding government services "other
than schools."  Taxpayers contend, however, that the remaining
portion of the revenues provided to the school districts should
be categorized as funding for the "school system."  The city
contends that the proper categorization of that portion of the
levy's revenues is under the "other than schools" category
because the levy serves legitimate municipal goals that are not
exclusively educational in nature.  
In determining whether the bulk of the levy properly
fits within the statutory definition of educational services, we
turn first to ORS 280.080.  That statute requires that, whenever
a proposed local-option levy is submitted to the voters, the
ordinance pursuant to which the election is called must set forth
the purpose for the levy. (5)  In this instance, the ordinance
stated that the funds raised by the levy were:

"[F]or funding the development of school-based music
and physical education classes, school-based nurses,
counselors and librarians, school-based athletics and
student activities and city youth activities."

Urhausen, 18 OTR at 405.
A look to the voters' pamphlet is also informative. 
Arguments in favor of the levy that appeared in the voters'
pamphlet stated specifically that the majority of the levy's
revenues would be dedicated to the school districts for
educational programs.  Moreover, it stated that the levy would be
reduced in proportion to any increase in state funding for
students.  Official Voters' Pamphlet, Ballot Measure 20-67
(2002).
As noted above, ORS 310.155(4) to (6) provide a
definition of educational services that helps guide our inquiry. 
Subsection (6) exempts from the definition of "educational
services" programs or activities that are provided to the general
public and not only for the benefit of students.  The city
contends that the levy in question falls within that exception
because the revenues will be used to provide general public
programs consistent with its authority to provide those general
services to its citizens.  We disagree.
To qualify for the exception from the definition of
educational services stated in ORS 310.155(6), a program must
benefit the general public.  Nothing in the levy, however,
indicated that funds would be provided for the public generally. 
Rather, all programs funded by the bulk of the levy were
expressly school based.  Furthermore, the funds allocated to the
school districts are tied directly to state funding for students,
viz., if the state increases student funding, then the levy would
be proportionately reduced.  Upon review of the record, there is
little support for the proposition that the programs funded by
the levy falls within the statutory exception to "educational
services."
While it may be true, as the city contends, that the
services to be funded by the majority of the levy have a strong
"social, cultural, health or recreational component," the same
could be said for any educational purpose.  That logic would
render meaningless any distinction between funding for
educational services and that for general government operations. 
As the Tax Court noted:

"Few would doubt that educational improvement generally
results in civic improvement, as a majority of those
who voted on the levy appear to have agreed.  However,
the voters who adopted Measure 5 imposed separate and
strict constitutional limits on the actions of
majorities, whether acting directly or through a
legislative body.  Those limits prevent such an
equation of civic and educational benefit from
operating here to permit educational purposes to be
characterized as being those of government generally."

Urhausen, 18 OTR at 408.  Here, virtually any plausible
interpretation of the levy's purpose and intended use leads to
the conclusion that the majority of the revenues were raised
specifically to fund the public school system.  As a result,
those revenues must be categorized accordingly.
In summary, Measure 5 requires that property taxes be
separated into two categories, "school system" and "other than
schools," according to the use to which the revenues are to be
put.  To the extent that ORS 310.155(3) limits categorization of
the proceeds of a mixed-use levy to only one category in certain
circumstances, that statutory provision is unconstitutional. 
Here, 93 percent of the revenue raised by the levy in question is
allocated to the school districts and funds the public school
system; it therefore is subject to the $5 per $1,000 limitation. 
The remaining seven percent of the revenue generated by the levy
is properly categorized as for government services "other than
schools."
The judgment of the Tax Court is affirmed.


1. The voters adopted Measure 5 as an amendment to the Oregon
Constitution in 1990.
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2. Specifically, Resolution No. 4737 provided, in part:

"It is the Council's intent that if the
Legislature increases the amount of funding for
students within the Eugene and Bethel school districts
beyond the amount anticipated as of June 2002 for the
four-year period, the amount of the levy should be
proportionately reduced.  Therefore, should the
Legislature increase that funding, the City, as part of
the annual budget process, shall levy less than $0.86
per $1,000 of assessed value."

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3. The Tax Court noted that, although this case directly
implicated only ORS 310.155(3), it was nevertheless appropriate
to discuss ORS 310.155(2) as well because it was a corollary of
subsection (3) and was driven by the same construction of the
constitutional text.  Urhausen v. City of Eugene, 18 OTR 395, 404
n 3 (2006).  Because it is not at issue in this case, we do not
address the validity of subsection (2) in this opinion.
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4. The new section 11 did not repeal section 11b, which
contains the primary provisions set out in Measure 5.
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5. ORS 280.080 provides, in part:

"The order, resolution or ordinance, as the case
may be, pursuant to which the election required by ORS
280.060 is called and held, shall set forth:
"(1) The purpose for which the funds to be
provided by the tax levies are to be expended."

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