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Boise considers provision to ‘clawback’ tax freeze in future years, may provide additional tax rebate

The City of Boise signaled it will freeze tax rates this year, for the first time in at least sixteen years. But, it could get the money back in future years.

The Boise City Council will consider a resolution reserving the right to recover “forgone taxes” down the road at its meeting Tuesday night.

Idaho law allows public taxing agencies to recover so-called forgone taxes in the future, but a change in the 2020 legislature requires them to reserve that right up front.

[Explain This to Me: How 2016 legislation shifted property tax burden from commercial land to homeowners]

The language in the proposed ordinance says the city would not try to recover the taxes it doesn’t collect this year until “the economy of Idaho is no longer in recession as determined by typical economic measures, but no sooner than fiscal year 2023.” It also says the city won’t collect more than 1/3rd of the forgone tax collections in any single year.

A freeze and new priorities

The move isn’t unprecedented. Last year, the Ada County Commission voted to use the so-called “clawback” provision to collect taxes it skipped out on from 2006-2012. The move came after the commission changed from majority Republican to majority Democratic at the beginning of 2019.

Boise Mayor Lauren McLean initially signaled she would favor a 2% increase in property tax collections, but later weighed in and said the city should not collect any increase. The city budget will drop in the coming year, shrinking $34.2 million, if adopted by the Boise City Council. Boise projects it will see a 1.6% rise in collections on property taxes – fueled by newly constructed homes and commercial properties, as well as a continued rise in property values as assessed by Ada County. Sales tax and fee revenue are also expected to drop.

With a new mayor and three new council members, the city is also making a number of cuts and additions to the budget. It sliced out money set aside for a downtown Boise stadium, cut personnel expenses, and tightened other expenses across the city. As part of the reprioritization, the city will also add new budget line items for a COVID-19 contingency fund and a raft of other initiatives.

The council will hold a public hearing on the resolution to reserve the right to clawback taxes. The city encourages folks to participate virtually.

Possible tax rebate

The State of Idaho also said the City of Boise is one of many taxing agencies statewide that signaled it would participate in a program from Gov. Brad Little that would pass on federal coronavirus relief funds to cities. To take part, the cities could use the money for public safety like fire and police – but would have to pass on the savings to citizens in the form of property tax relief.

A Boise official told BoiseDev it still had concerns about the program, and is asking for further clarification from the state. If the city participates, it would work to give a one-time tax rebate to property tax payers, which could amount to about $100.

Other cities and counties that signaled interest include Garden City, Meridian, Nampa, Caldwell, Eagle, Star, Ada County, Canyon County and many others.

Don Day - BoiseDev editor
Don is the founder and publisher of BoiseDev. He is a National Edward R. Murrow Award winner and a Stanford University John S. Knight Fellow. Contact him at [email protected].

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