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Property tax panel recommends restricting, overseeing local government spending

The Idaho Press

Lawmakers on an interim committee on property taxes on Thursday endorsed three legislative proposals aimed at restricting or overseeing local government spending, and asked for another year to continue their work.

The votes came amid testy exchanges about tax-relief proposals that weren’t considered Thursday, during the panel’s final meeting for the year, despite having been extensively discussed earlier.

The three proposals the panel endorsed would:

  • Cap local government property tax budget increases, including those due to new construction, at 4% unless more than two-thirds of voters sign off. This complex proposal also would further limit budgets by tying growth to the consumer price index.
  • Sharply restrict local governments, including cities, counties and other taxing districts, from building up budget reserves or rainy day funds, even if they’re saving up for a looming major cost.
  • Launch a new state program to collect and publish local government budget and spending numbers through the state controller’s “Transparent Idaho” website, at a cost of $1.7 million the first year and $1.3 million a year thereafter, to be operated by four new state employees.

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

Legislators debate

As the panel debated the transparency program, Sen. Grant Burgoyne, D-Boise, said, “I’m inclined to vote for the motion, but I think the way we got to this point and the things that are not on the agenda give me great cause for concern.”

“We have three pieces of legislation in front of us for this committee,” Burgoyne said. “What happened to the other pieces of legislation that were submitted to this committee? They’re not on the agenda, and they were property tax bills.” Those included proposals to address the homeowner’s exemption, the circuit breaker property tax relief program, impact fees and more.

Said Burgoyne, “You wonder if you’re just being played for a chump here.”

Sen. Jim Rice speaks during a legislative hearing last week.

Sen. Jim Rice, R-Caldwell, retorted, “This is a misrepresentation of both this bill and the other bills on the agenda. All of them address property tax. This one clearly directly goes to studying property tax and its expenditure.”

Burgoyne responded, “The problem is what’s not on the agenda at all. We have heard serious questions, serious proposals referred to by a member of this committee in one of our meetings as being ‘stupid.’ We are not on track.”

[Some Boise homeowners pay hefty extra tax while neighbors don’t: How Idaho’s largest CID works]

That comment, at an earlier meeting, came from House Majority Leader Mike Moyle, R-Star.

Rep. Jim Addis, R-Coeur d’Alene, who was presiding over Thursday’s meeting as co-chairman, said, “Sen. Burgoyne, with respect, let me interrupt. I appreciate that. I would hope that this committee proceeding doesn’t get to that level and I appreciate your concerns, and I understand where you’re coming from. We may have a disagreement with that, but we’re also going to be trying to focus, and we will be focusing on the agenda.”

Burgoyne said, “If I vote for this legislation, I want my concerns about that vote to be clear.”

More data wanted

Rice, the joint committee’s other co-chairman, said he heard from a constituent who wanted to compare spending in the Caldwell city budget to other local government budgets, but couldn’t, because “the data that’s currently available is so opaque that you can’t tell.” He said, “It really is something that will benefit the people that we serve.”

Rep. John Vander Woude, R-Nampa, a non-voting member of the panel, said, “It’s not the end-all.” But, he said, “I think this is a good step forward.”

Jason Monks, R-Nampa, said when it comes to property taxes, “We need more information, and that’s what this transparency bill is all about. … We can only tackle so many things at one time, and I think these were good starts for us to look at.”

The panel then approved the proposal on a unanimous voice vote.

Changes to forgone, reserves

The proposal cutting local governments’ reserve funds came from Sen. Jim Guthrie, R-McCammon. It also would place new limits their ability to take “forgone” tax increases in later years that they’ve passed up in past years, under budget caps.

Under Guthrie’s proposed bill, local governments or other taxing districts would only be allowed to save up three months of their ordinary operating expenses as an unassigned cash reserve, plus another one month’s worth as a “rainy day fund.” Any amounts above that would have to be used for property tax relief.

Rep. Lauren Necochea, D-Boise, voted against recommending the bill to the full Legislature, and Burgoyne noted that the state Legislature itself has rolled up a huge state budget surplus exceeding $500 million, and squirreled away another $100 million in online sales taxes revenues, aside from hundreds of millions in state reserve funds.

[Boise homeowners feel the pinch of rising property tax burden]

“When our property taxpayers don’t have money in their pocket because the state government is holding onto it, it makes it harder to pay their property taxes,” Burgoyne said. “I think this kind of legislation, if considered for next session for local government, should be joined this next session at the state level on the same principles.”

He said the state could provide a huge amount of one-time property tax relief with the $600 million or so it’s “just sitting on. … So it’s kind of what’s good for the goose is good for the gander. If it’s good for local government, it ought to be good for state government as well, not to be accruing these vast sums of money.”

Guthrie said, “I think you’re spot on, I agree. … I think the state needs to do something similar.”

Questioning local spending

Moyle said he didn’t buy the explanation from local governments that they’re saving up for big, anticipated expenses like a new fire station without the need to issue bonds and incur interest costs. “Let’s talk about Ada County,” he said. He said that county saved up and spent $11 million in property tax funds for a new 911 building, without bonding, which requires voter approval. “What happened to that $11 million the next year?” he asked, asking if taxes then went down. “Heck no,” he said. “It just rolled into their budget.”

“I like this bill,” Moyle said, calling it “actual property tax relief. … And I think it sends a message that … we’re watching you.”

The third proposal, calling for local government budget caps, was developed by Rice. It was approved on a party-line vote, with the panel’s Republicans supporting it and Democrats opposed. Rice said the bill “might be subject to some tweaks.”

“This proposal is a way of driving down property tax and growth will pay for it,” Rice said. “You’ll have a bigger base for the property tax.”

Necochea spoke out against the bill. “I think this is going to steer us toward deep cuts in some vital services,” she said. “I’m worried about emergency response; I’m worried about the courts.”

She said, “If Idahoans are really unhappy with the budgets that their counties or cities are setting, they can vote them out by a simple majority. … I don’t know why we have to use the heavy hand of the state to drive these cuts.”

The panel’s decisions will go into a report providing recommendations to the full Legislature. It also approved a motion asking to continue its work for another year, with Burgoyne loudly dissenting.

Betsy Russell - Idaho Presshttps://www.idahopress.com/eyeonboise/
Betsy Z. Russell is the Boise bureau chief and state capitol reporter for the Idaho Press and Adams Publishing Group. Follow her on Twitter at @BetsyZRussell.

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