Idaho Democrats are sticking to their tried and true playbook of property tax relief proposals in the 2021 legislative session. But, this year their slate also includes a proposal to roll back part of a tax exemption for a major Treasure Valley employer.
Property tax reform is shaping up to be a major focus of the 2021 legislative session kicking off later this month. Both parties agree relief is needed as residential home values continue to drive taxes higher, but they are looking to different strategies to address the issue.
Republicans have consistently advocated for legislation curbing local government spending. On the other hand, Democrats have looked to programs like the circuit breaker to help low-income homeowners make their property tax payments, the homeowner’s exemption to defray costs and more funding for schools to lessen the reliance on supplemental levies to fund education.
How much should Micron pay?
In a Tuesday press conference, Democratic leadership layed out their hopes for property tax reforms in the upcoming legislative session. Along with two familiar proposals to index the homeowner’s exemption and increase aid to low-income property taxes, Rep. John Gannon, D-Boise, also brought a proposal to increase taxes on Boise-based Micron Technology to bring relief to residential property owners.
As BoiseDev told you first in November, the State of Idaho tried to lure French nuclear company Areva Inc. to East Idaho during the Great Recession with promises of a $400 million cap on property taxes for companies investing $1 billion. But, Areva never came and Micron made the necessary investments and got its property taxes capped permanently in 2011.
Since then, the company’s value in Ada County ballooned to $1.86 billion in 2019. Because of the tax cap, Micron paid $4.749 million in taxes for 2020. Without any cap at all, the multi-national corporation would have paid $20.32 million.
Gannon’s proposal is to return the cap on Micron’s property tax value to $800 million, which was what the company’s property tax value was capped at by the Idaho Legislature in 2005. If this cap was in place, Micron would have paid $9.5 million in 2020. This would still be a hefty tax break, just not as much as the company is currently experiencing.
He also wants to include language requiring Ada County to not include the additional property value taxed at Micron on the new construction rolls. This would mean increasing Micron’s taxes would provide some relief for the whole county by shifting some of the overall burden back to the corporation.
‘Maybe one of the bad votes’
When asked if Gannon was concerned increasing these taxes on Micron could push them to leave Idaho, he said it was possible, but he said it is important to begin addressing tax exemptions to make sure more properties are paying taxes.
“The downside of not doing anything (about tax exemptions) is, don’t complain about your property taxes then,” Gannon said. “If you’re going to give an exemption to everyone, then you’re not going to have commercial taxpayers again. Our schools need their support just like they need my property tax support.”
In a meeting between several legislators and the leadership of Ada County at the end of December, Speaker of the House Scott Bedke, R-Oakley, called the vote for the $400 million cap Micron later took advantage of “maybe one of the bad votes of my career.”
“I don’t think we envisioned the $1.3 billion exemption for Micron there,” Bedke said. “I don’t think they expected that and I don’t think we did.”
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.