The Idaho Legislature has formed a working group with the intention of looking at city and county property taxes, which could include lowering the amount of city and county budgets as well as reducing the amount that individuals pay.
“That’s the goal of the working group: To start with a fresh perspective on how assessments are established and also how the budgets for municipalities are established,” said working group member Rep. Robert Anderst, R-Nampa.
The 10 members of the bipartisan, bicameral working group include co-chair Rep. Gary Collins, R-Nampa, and Rep. Mat Erpelding, D-Boise.
How high are Idaho property taxes?
In a press release sent out by the Idaho House Republican Caucus, Collins said the working group was necessary because Idaho’s property taxes are “some of the highest in the nation.”
According to the 2018 Idaho State Tax Commission State and Local Tax Burden Analysis for fiscal year 2016, the most recent year for which the analysis was made, Idaho ranks 42nd in the country, and its property taxes are 39.3% below the national average. A new version is expected in December, according to Renee Eymann, public information officer for the Boise-based office. She would not comment on the statement in the press release.
“I have a hard time believing we’ve managed to become the highest when we were 40% below the national average three years ago,” said Stephanie Witt, a professor in the School of Public Service at Boise State University.
According to the Tax Foundation, a Washington, D.C., independent tax policy nonprofit, Idaho property taxes amount to 26.9% of total state and local tax collections, using fiscal year 2016 data. That ranks Idaho 32nd in the nation. And according to a study published by GoBankingRates, Idaho ranked 38th in the nation.
Tax rates range from a high of 1.851% in Nez Perce County to a low of 0.566% in Custer County, according to a report on the Idaho Tax Commission website.
What’s caused the increase?
One issue: while cities and counties are limited to raising their existing budgets by 3% annually, that limitation doesn’t apply to new construction and annexation, which means that city and county budgets are actually increasing by 10% annually or more, said Miguel Legarreta, president of the Associated Taxpayers of Idaho, a Boise-based nonprofit.
City and county budgets are also more difficult to monitor than state budgets, Legarreta said.
“If they’re collecting more or less than they need, it’s tough for a taxpayer or a tax organization to know,” he said.
Aside from increases in property values, a number of factors have also increased property taxes, including the rising number of school districts that depend on supplemental levies – all but 22 districts are in this category – a $100,000 cap on the homeowners exemption enacted in 2016 and the 2013 business property tax exemption, said Sasha O’Connell, senior policy analyst for the Idaho Center for Fiscal Policy, a Boise-based nonprofit, nonpartisan organization for Idaho budget and tax policy.
What the working group could do
Anderst didn’t want to provide specifics on what might be considered, saying he didn’t want to get out ahead of the working group, which is scheduled to meet on Oct. 21 in the Idaho Statehouse, in Boise. But he agreed that all of these were options the working group could look at.
“If you’re looking at it from the budgeting side, there are things to potentially slow the growth of those municipal budgets,” Anderst said. “On the collection side, there are things you can do to spread the collections in a different way or provide different funding mechanisms.”
Another option that’s come up for discussion is a freeze on property tax increases similar to that of California’s Proposition 13, and an update to the “circuit breaker” property tax exemption for senior citizens, which O’Connell said hadn’t been changed since 2006.
Erpelding said in an email message that because the circuit breaker hasn’t been updated, “many seniors are priced out of their homes.”