From the Executive Director: Week of January 23, 2023

Property Taxes, Property Taxes, Property Taxes

Everyone in the Capitol is talking about property taxes, leading to a sense of urgency to finally address rising property taxes. While in previous years budget caps have been the primary means of attempting to control rising property taxes, legislators this year appear to be focusing on more targeted means of bringing down property taxes. Last week I mentioned potential legislation to expand the circuit breaker program to all owner-occupied property by leveraging sales taxes to buy down property taxes on owner-occupied properties, as well as efforts to increase and index the homeowner’s exemption. There now is a third proposal being floated: buy down school supplemental levies and bonds.

A group of house members, including Speaker Mike Moyle and Revenue and Taxation Committee Chairman Jason Monks, have convened a group of stakeholders, including the Idaho Association of Counties (IAC), to develop a framework to leverage 4.5% of annual sales tax collections, as well as other potential ongoing revenue sources to provide up to $200 million in annual funding to school districts. The funding would be applied to school bonds and levies. Under the concept, funds would be allocated to school districts, regardless of whether they have bonds or supplemental levies, based on each district’s average daily attendance (ADA). School districts would first apply the revenues to make annual bond payments, reducing the amount levied by the newly provided state funds. If state funds exceed the amount levied for bonds, or the district does not have bonds, the funds would next be applied to supplemental levies. If there are funds left after buying down a district’s bonds and levies, or if the district does not have bonds or levies, the district would be required to set the funds aside to make school facility improvements.

In addition to buying down school bonds and levies, the concept would also increase the limitations on the circuit breaker imposed by House Bill 389 (2020), raise the homeowner’s exemption to an amount yet to be determined, and eliminate the March and August election dates. If advanced, and if the legislature can identify $200 million in ongoing state funds to buy down school bonds and levies, statewide property tax collections would decrease by up to 10%. Buying down school bonds and levies would also relieve pressure on other local governments, like counties and cities, that rely on property taxes to fund essential local government services.

While nothing has been drafted, IAC is at the table and will be relied upon to provide a fiscal analysis of the impact of the proposed bill on taxpayers. We have also been assured that there will be no push to further restrict or cap county property tax budget growth. As part of the discussions, we hope to also try to find a fix to the vexing problem of using a preliminary levy rate to determine new construction budget capacity. We hope to share more information with the membership at next week’s IAC Midwinter Legislative Conference. I hope to see everyone there. Online registration for the conference is open until midnight on Wednesday, January 25. After that, registration will only be available on site. Reserve your spot at the conference here.