Busy Legislative Week Ahead

The Legislature is barreling towards adjournment later this week, with Friday, March 25th as the targeted day of adjournment. As the session winds down, there are a number of bills to be on the lookout for, including additional transportation funding. The biggest issue outstanding for counties is House Bill 735. House Bill 735 is set to be heard this afternoon in the Senate Local Government and Taxation Committee which plans on sending the bill to the Senate’s 14th Order for potential amendments. As a refresher, the bill does the following:

1.        House Bill 735 is a property tax relief bill that solves two important issues: addressing public defense funding needs and eliminating the county medically indigent program.

2.        House Bill 735 establishes a dedicated funding stream for public defender services. Beginning July 1, 2025, $36 million from online sales tax money will be dedicated through the revenue sharing formula for public defense funding. The $36 million will increase each year for five years to a maximum of $41.7 million in 2030. After 2030, the amount of revenue sharing distributed to the Public Defense Fund will be capped at $41.7 million, with additional expenses funded from the state general fund.

3.        House Bill 735 will bring public defense stakeholders together to propose an alternative public defense delivery system which will need to be in place by July 1, 2024. House Bill 735 does not prescribe what the new model will be, rather it encourages stakeholders to come together to find a solution.

4.        House Bill 735 provides $33 million in property tax relief beginning in the 2023 county budget year. This will result in needed property tax relief to Idahoans.

5.        House Bill 735 repeals the county charity property tax levy, repeals the county medically indigent program, and phases out the CAT program. Eligibility for the county medically indigent and state CAT programs was significantly limited in 2021 with the passage of House Bill 316. House Bill 735 will remove any liability from counties and the state resulting in an ongoing savings to the state general fund and county taxpayers.

The proposed amendments correct several errors in the bill related to the repeal of the county medically indigent program, including allowing for applications for services received prior to March 31, 2022, including suspended applications, to be processed through July 1, 2023, according to the law as it currently exists. The amendments also alter how new public defense funds will be diverted from revenue sharing, with $20 million diverted from county revenue sharing and $16 million diverted from city revenue sharing.

As it stands, House Bill 735 is the only property tax reduction bill under consideration by the legislature. The bill has broad support in both the House and Senate as well as in the Governor’s Office. House Bill 735 is the culmination of years of advocacy by counties and addresses two important issues: full repeal of the county medically indigent program and dedicating no property tax dollars to public defense while capping county public defense expenditures to ensure the state funds increased public defender costs beyond 2030. While the bill does not currently address IAC’s third priority of establishing an alternative public defense model, it does set the stage for negotiations over the summer between the state, counties, and public defenders to determine what the future of public defense looks like in Idaho.