The Idaho State Capitol reflected in the Joe R. Williams building on March 21, 2021. (Otto Kitsinger for Idaho Capital Sun)
As the Idaho Legislature gavels back into session today after a two-week recess following a COVID-19 outbreak, a viable property tax relief bill is still one of the top priorities for many. And while Senate Bill 1108 was narrowly defeated March 18, legislators and local city officials expect to see a similar bill introduced in the House as soon as this week.
Senate Bill 1108 made it to the Senate floor but was staunchly opposed by city officials across the Treasure Valley who said it would be detrimental to city budgets. If the bill had become law, cities and counties would only be able to claim 80% of new construction and annexation in property tax budgets instead of the full 100% they can claim now. Rep. Jim Rice, R-Caldwell, sponsored the bill that was ultimately rejected by a vote of 18-17 in the Senate.
Officials in several local cities, including Nampa, Garden City and Kuna, said the bill would have limited their ability to provide basic city services and led to the potential shutdown of firehouses. Meridian City Council President Treg Bernt said the council made the decision to pause annexations of 5 acres or more into the city until the issue is settled, because he’s expecting the bill to return.
“It’s definitely not dead,” Bernt said.
The city needs clarity on what action the Legislature will take before unpausing those annexations, he said.
“In our opinion at the city, we’re prudent managers of the people’s money, and citizens of Meridian expect a certain level of service,” Bernt said. “If the state Legislature is going to cap what that service looks like because of a cap on growth, then it’s difficult for us to be able to grow at that same rate. We’ll be on pause until we have greater clarity.”
How would Senate Bill 1108 affect city budgets?
Under Idaho statute, each taxing district is allowed to increase their property tax budget by 3% in a given year on top of a budget amount for new construction and annexation. In addition to the already existing property value for a county, new construction is added to factor in the support that will be needed from city services and infrastructure for new growth.
For example, if a city’s base budget was $100 million, but $3 million was added in the past year in new growth, the city would be allowed to increase their budget by 3% starting from $103 million rather than $100 million. Under Senate Bill 1108’s rules, instead of $3 million, the city would only be able to claim $2.4 million.
Consensus on solutions to rising property taxes remains elusive
Several bills have been introduced in the Legislature that aim to provide relief to homeowners who continue to see rising property tax bills and a greater share of tax burdens compared to commercial counterparts. Some have been introduced and never heard, including a House bill from Rep. Bruce Skaug, R-Nampa, that would have removed the $100,000 cap on the homeowner’s exemption and indexed it to 50% of the median sales price.
Rep. Greg Chaney, R-Caldwell, said there is an effort to put together a package that will address concerns with Senate Bill 1108 and take a more comprehensive approach to property tax relief, but he doesn’t have details yet. Chaney said there is debate over whether to include changes to the homeowner’s exemption and remove the cap, but said he strongly prefers a bill that includes that change. Chaney voted in favor of the 2016 bill that capped the exemption at $100,000, and said he has “buyer’s remorse” and regrets that vote.
“I’ve expressed strongly that I’m not likely to support anything that doesn’t include that, because we need to undo it,” he said.
Prior to the 2016 legislation, the homeowner’s exemption was indexed to home values, not capped at $100,000. Now that there are few, if any, homes left for sale in Boise and around other parts of the Treasure Valley for less than $200,000, the exemption does not provide as much tax relief as it used to.
Rep. Lauren Necochea, D-Boise, also introduced a homeowner’s exemption bill in February that would have increased the exemption to local home prices by county. Chaney co-sponsored that bill, but it also never received a hearing.
“It is a huge disappointment; the Legislature has failed completely on the property tax front,” Necochea said. “There is broad consensus on two quick, easy solutions, and we couldn’t even get bills heard.”
The second solution, according to Necochea, is to increase the so-called “circuit breaker” property tax assistance program for low-income seniors and Idahoans with disabilities. Necochea said the income threshold and level of assistance have not been updated since 2006.
City of Meridian Chief Financial Officer Todd Lavoie said there are a thousand opinions about what is causing property taxes in the Treasure Valley to rise for homeowners and how to slow it down, but legislators are skirting around what he believes are the root issues.
“They’re looking to fix symptoms, not problems, because that’s easier to do,” Lavoie said. “The root cause is not being addressed at the legislative level.”
Those root causes, in his opinion, are school funding issues that lead to more supplemental levies, and the methods of assessing commercial properties that lead to disparities between commercial and residential property taxes.
“When we look at the data, the (commercial) property is growing at a much, much slower rate than residential,” he said. “I believe the assessments are flawed in some form or fashion.”
Follow legislative developments as they happen
The Idaho Legislature is back in session today for at least two more weeks. All the links you need to be able to follow live meetings in every committee and on the chamber floors can be found here.
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