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Introduced just this week, complicated property tax bill passes Senate, heads to Little’s desk

A major piece of property tax legislation squeaked by on the Senate floor and is headed to Governor Brad Little’s desk.

With a 19-16 vote on Wednesday afternoon, the Idaho Senate approved a multi-part bill from House Majority Leader Mike Moyle aimed at property tax relief. The legislation boosts the homeowner’s exemption to $125,000 per year, increases the benefits to low-income seniors and veterans through the circuit breaker and institutes caps to local government budgets.

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

A compromise after weeks of talks

For supporters, like Sen. Jim Rice, R-Caldwell, the bill represents months of work and “a good first step” toward addressing the growing property tax burden on homeowners as values rise. But, Democrats and some Republicans objected to the rapid pace with which the bill was introduced and said the bill was not enough to address the problem.

In his opening debate, Rice urged senators to vote for the bill and continue to work on the issue in the 2022 session. He said the interim committee over the summer will continue to study the issue and bills related to property assessments and other aspects of the property tax system can be addressed next session.

“This is one of those bills that has a lot of pieces and parts,” Rice said. “Nobody got everything they wanted, but it is a good step in taking care of and meeting the needs of our citizens.”

What’s in the bill?

The bill’s numerous pieces include a boost to $1,500 annual benefit through the circuit breaker program and increased income thresholds to assist more Idahoans. But, beginning in 2022 anyone whose home is valued more than 125% of the median will not be eligible for the program.

Other changes include a 5% cap on the amount localities can grow their budgets due to new construction and annexation and tweaks to the taxation formula, which Moyle said will help stop new growth from increasing the taxes on existing homeowners. It will also limit the amount of foregone taxes local governments can take each year. Foregone taxes are those that local governments opted not to take in previous years, but have the authority to claw back later.

This legislation will also reduce the percentage of new construction taxes a locality can take from 100% down to 90% annually. Proponents of the bill say this will help relieve the burden on taxpayers by reducing budget increases, while local governments argue this will make it more difficult for them to cover the costs of new growth.

The bill will also increase the tax exemption for personal property purchased by businesses from $100,000 to $250,000.

Concern from both parties

There was bipartisan opposition to the legislation on the floor, with the majority of the debate against the bill coming from Democrats. Sen. Janie Ward-Engelking, D-Boise, debated twice, arguing that if the session could drag into May, they have time to put together a package that will help more people than this one.

“This does very little to help the constituents in my district,” she said. “My biggest fear is if we pass this bill, people are going to expect it’s really going to help them and what they’re going to find out is it didn’t. I also am afraid we’re going to think as a body that we solved the problem when we didn’t.”

Sen. Jim Gurthie, R-McCammon, also voted no, objecting mostly to the quick process for complex legislation.

“This is a tough vote,” he said. “…For me, it’s too many moving parts coming too fast too late in the session. The good news is it provides a template for the interim committee to look at in the future, but the senator votes no.”

Margaret Carmel - BoiseDev senior reporter
Margaret Carmel is a BoiseDev reporter focused on the City of Boise, housing, homelessness and growth. Contact her at [email protected] or by phone at (757)705-8066.

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