It’s no secret property taxes are one of the biggest concerns for many of Idaho’s homeowners. We all want a fair system for collecting the revenue that makes law enforcement, fire response, and other critical services possible. Unfortunately, state policies have shifted the tax load overwhelmingly onto residents and away from commercial properties.
New legislation being proposed in the Senate’s Local Government and Taxation Committee, on its face, claims to be a solution. Instead, this bill would force cuts in essential local services, while doing nothing to restore balance to our upside-down property tax system. And the legislation notably leaves out the obvious solutions the majority party has been blocking: lifting the cap on the homeowner’s exemption, increasing property tax assistance for seniors and veterans, and using impact fees to build needed schools so that growth pays for itself.
Sen. Ali Rabe
Prior to the ongoing COVID-19 pandemic, local governments were already operating with a limited amount of resources. After a year of upheaval and unexpected expenses, traditional avenues of revenue have declined dramatically for many Idaho counties and cities and constraints on our local governments’ budgets are tighter than ever before.
This piece of legislation will add further strain, limiting budget growth to the Consumer Price Index — a highly volatile index which has little relation to actual expenses — and capping local government budgets, even when growth far exceeds that amount. The result would be vital services provided by local governments being reduced or eliminated, whether local communities can withstand those cuts or not. This restricts our economy and already scarce housing stock.
Meanwhile, SB1021 does nothing to solve the fairness problem in our current property tax system, and will not help residential homeowners. Residential property taxes would continue to increase at a pace that surpasses commercial properties due to rising home values and the diminishing value of the capped, non-indexed homeowner’s exemption.
This is particularly true in Ada County. When you compound the annual tax bill changes for median commercial properties since 2016, growth has been almost flat, at just 1%. For residents, that growth has been 28%.
Focusing on local governments’ budgets ignores the root cause of property tax growth: an outdated homeowner’s exemption, a tax shift from commercial to residential properties and underfunded schools struggling to cope with growth. We must pass meaningful legislation that actually restores fairness to Idaho’s property tax system.
I am hopeful actual solutions will gain traction this year, because the Legislature has kicked the can down the road for too long. Other upcoming legislation includes efforts to re-index the homeowner’s exemption to housing values so that rising property values do not unfairly shift the tax load onto homeowners. There will also be a bill to catch up the circuit breaker program with rising property taxes, so more homeowners on fixed incomes such as seniors, veterans and people with disabilities can qualify for property tax forgiveness. We must allow growth to pay for itself by utilizing impact fees as well.
It’s time to set aside distracting devices, and instead, focus on actually helping our citizens, not creating additional problems. We need to enact these responsible solutions, which voters overwhelmingly support.