Micron Technology is one of Idaho’s largest employers, but it only pays property taxes on a fraction of its taxable value. The reason? An unsuccessful attempt to lure a nuclear company to East Idaho during the Great Recession.
The company paid $4.75 million in property taxes in 2019, only 23% of what it would owe if the semiconductor company’s property was taxed at its full value, according to records from Ada County. In 2011, The State of Idaho capped the taxable value of Micron’s property at $400 million – forever. But over time, the actual value of its property rose to $1.86 billion last year.
While Micron has been enjoying one of the largest tax breaks in the state, Idahoans are struggling with the burden of skyrocketing property values compounding with years of tax increases. In Ada County, Boise officials voted this summer not take any base increase to property tax collections in 2020 after sixteen straight years of voting to increase taxes the maximum allowed under the law. The Ada County Commission, which is contending with a laundry list of capital needs to keep up with regional growth, took foregone taxes in 2019 toward a new coroner’s office, a jail expansion and a second driver’s license location. And at the statehouse, the debate on how to reform the property tax system continues to rage without much progress.
This hefty tax break for Micron wasn’t part of the plan.
In 2008, the Idaho State Legislature passed a set of tax breaks meant to lure French nuclear company Areva Inc. to build a uranium enrichment facility near Idaho Falls. The law said if any company invests at least $1 billion into Idaho within seven years, the state would cap its property tax value at $400 million permanently.
But, Areva never came and the U.S. Nuclear Regulatory Commission terminated the company’s license to build in 2018.
Meanwhile, Micron invested in the necessary improvements to qualify for the tax exemption and claimed the $400 million taxable property cap in 2011. This is the second time the tech giant claimed a tax break from the Idaho State Legislature. In 2005, Idaho awarded the company a tax valuation cap of $800 million, half of what Idaho offered to lure Areva.
If Micron’s property tax cap stayed at $800 million, the company would have paid $9.5 million in 2020. Without any cap at all, the company would have paid $20.32 million. This is millions higher than the $4.749 they paid this year with the current exemption.
Micron claiming the exemption is fully within the bounds of the law. A company spokeswoman did not comment on it in an email to BoiseDev.
Cap questioned by some legislators
At the Senate’s Local Government and Taxation Committee hearing on the bill in 2008, some legislators opposed the tax break saying it was unfair tax policy. Sen. Joe Stegner, R-Lewiston, said passing the lower cap for Areva would be unfair to Micron.
“This company has been in Idaho 20 years and has provided jobs and paid taxes and then a new company comes in and gets a $400 million cap,” Stegner said, according to the minutes from the March 12, 2008 meeting. “What happens when Micron comes in next year and requests a $400 million cap?”
When Micron got the lower cap on its property tax value in 2011, its property’s market value was roughly $755 million. It increased nearly every year to the 2019 market value of $1.86 billion. But at the same time, the taxes Micron paid decreased due to a 2016 change pushed through the Idaho legislature that shifted the property tax burden from commercial to residential property. The company paid $7.316 million in taxes in 2011 and only $6.073 million in 2018.
The exemption on two parcels owned by Micron is Ada County’s single largest deduction. Its value is behind only the 125,770 parcels with a homeowner’s exemption and the nearly 4,000 parcels classified as agricultural.
Put another way, a taxpayer with a $350,000 home in the City of Boise paid $1,880.85 in property taxes to the city in 2020. If Micron paid the taxes on its entire property value, the same homeowner would have paid $54.18 less.
A shrinking workforce
At the same time, while Micron has its taxable value restricted to $400 million in perpetuity, the company has been downsizing employees. The Idaho Press reported in 2019 past and present Micron employees said the company had been shedding an unknown number of employees under the radar with layoffs and an employee ranking system on a bell curve that systematically removed those who scored low.
The Idaho Statesman reported the company employed between 6,000 and 6,999 in Boise in October 2018. By October 2020, Micron told BoiseDev they have approximately 5,500 employees in Ada County.
Micron has been investing in its facilities across the United States, including Boise. The economic powerhouse filed a $36 million building permit with the City of Boise in August to renovate one of the largest buildings on Micron’s campus. This follows the $32 million construction of a 265,000 square foot building with a sky bridge and roughly $15 million in remodels on two existing buildings filed with the City of Boise since 2017.
The company also announced 200 workers in its design engineering department will move into a new office building in a suburb of Dallas in October. Micron also launched a $3 billion expansion of its manufacturing facility in Manassas, Virginia in 2018, which is expected to add an additional 1,100 permanent jobs.
As Idaho sees a rapid influx of population, residential property values are rising faster than commercial property. This is causing a shift in property tax burden to residential property owners over commercial, stressing the bottom lines of residents across the state.
Legislators on both sides of the aisle floated solutions to relieve property tax burden in the 2020 legislative session, but none passed. Democrats favored indexing the homeowner’s exemption to inflation instead of capping it at $100,000 and increasing tax relief for low-income seniors. House Majority Leader Rep. Mike Moyle, R-Star, pushed for a freeze on the amount localities are permitted to increase their base property tax rates for one year to force negotiations.
Moyle, who has been active on the issue of property tax increases, did not respond to requests for comment about the Micron exemption. He voted to approve the tax break in 2008.
Rep. John Gannon, D-Boise, has also been pushing for property tax reform on the other side of the aisle. When asked about the Micron exemption, he pointed out many of Ada County’s major economic drivers have tax exemptions, like the Boise Airport and the state owned HP Campus.
He said it was up to the taxpayers to decide if they wanted to continue subsidizing Micron.
“Right now the unpaid property taxes (from Micron) shift to homeowners…,” he said. “There will be a shift, period. I’d like to get feedback from the community about what people think.”