From the Executive Director: Week of February 1

1 Feb 2021, by Seth Grigg Share :

By now most of you are aware of Senate Bill 1021 that would impose additional caps on annual local government property tax budget increases. Depending on the level of growth measured by new construction, a county would be able to increase its annual property tax budget by between 3-4%. The new budget caps could be exceeded only by voter approval. The IAC Legislative Committee has thoughtfully reviewed Senate Bill 1021 and its impact on counties and has directed IAC staff to oppose. Recognizing that the Legislature is unlikely to adjourn this session without instituting additional caps on annual property tax budget increases, the IAC Legislative Committee met twice last week to discuss potential alternatives. Through the discussions, the IAC Legislative Committee has directed IAC staff to pursue a potential compromise similar to what was discussed last year by the IAC membership with a few modifications.

In concept, the working framework proposes the following:

  • Local governments could increase the property tax portion of their budget in of two ways:
    • A 6% cap inclusive of the allowed 3% base budget increase and available new construction, or
    • A CPI based base budget increase plus all available new construction for those with new construction in excess of the 6% cap.
  • New construction accruing as a result of the termination of a revenue allocation area of an exemption granted under Section 63-602NN, Idaho Code, would be exempt from any budget caps.
  • Use of previously forgone property taxes could continue, but would be capped at 3% a year.
  • County current expense, justice, and charity levies would be consolidated into a single general fund levy with a cap of .005.
  • Language requiring future legislative mandates to include a dedicated funding source.

The proposed budget cap framework is intended to provide budget flexibility for both rural counties that see some annual growth due to new construction and growing counties that need all new construction available to address the service delivery demands of a growing county. Nothing has been finalized, so please let IAC know what you think of the proposed framework as an alternative to the 3-4% cap proposed in Senate Bill 1021.

In addition to the framework outlined above, the IAC Legislative Committee continues to discuss other ideas to provide property tax relief, including language to sunset previously forgone property taxes not used within a statutorily defined time period, additional state funding for county services like district court and public defense, reindexing the homeowners exemption, broadening eligibility for the property tax reduction program (circuit breaker), using online sales tax funds for property tax relief, and expanding local option sales tax authority to counties. 

To assist IAC and its members in bringing awareness to the need for meaningful property tax relief while at the same time providing funding for essential county services, IAC has initiated a messaging campaign using the #keepitlocalidaho hashtag. IAC has created a Keep It Local Idaho YouTube channel and will be adding media content to highlight Idaho’s property tax structure, the importance of new construction property taxes, essential local government services, and ways to provide meaningful property tax relief. You can visit the YouTube page here. In the coming weeks, IAC and our partners at the Association of Idaho Cities, Idaho Association of Highway Districts, and Idaho School Board Association will be highlighting the digital messaging materials on our social media pages. We encourage county officials to do the same.