Idaho Considers Assessment-Model Revamp to Lessen Residential Property Tax

Over the past two years, the Idaho Legislature has been struggling to determine how to alleviate the massive tax shift toward residential property owners. In 2021, the Legislature passed House Bill 389, a comprehensive property tax bill that further capped local government budgets, increased the homeowner’s exemption by $25,000 and adjusted property-tax relief programs such as property-tax deferral and the circuit breaker. However, for most residential property owners, those adjustments will only amount to a drop in the bucket in terms of true property-tax relief.

With the current Idaho assessment law, residential property values are increasing at a much faster rate than commercial property, causing the aforementioned inequity in the tax burden. Senator Jim Rice of Canyon County is considering is a revamp of Idaho assessment methods to level the playing field between residential and commercial property.

On July 26, Assessors Justin Baldwin (Gooding County) and Josh Dison (Elmore County) accompanied the 2021 property-tax study committee co-chairs Sen. Rice and Rep. Jim Addis on a fact-finding mission to Carson City, Nevada, to evaluate their assessment methods. Idaho Association of Counties (IAC) executive director Seth Grigg and policy analyst Tim Hibbard also made the trip.

The Idaho delegation learned that Nevada uses a replacement-cost model to determine the fair market value of each parcel in the county. Idaho currently uses a sales-comparison model to determine the fair market value of residential property.

The replacement-cost approach is more stable and predictable than the sales-comparison model, and it could level out Idaho’s shifting market, which would help alleviate the residential property tax burden.

Implementing the replacement-cost model could be a viable option, as Idaho would not need to completely overhaul its tax law to institute a change in assessment methodology. 

Stay tuned for the upcoming August meeting of the 2021 Property Taxes and Revenue Expenditures study committee where Sen. Rice intends to make a full report of the trip.