From the Executive Director: Week of February 20, 2023

Halfway into the Session, Still No Consensus on Property Tax Relief

As the Legislature approaches the halfway mark of the 2023 Legislative Session, there still isn’t consensus on property tax relief legislation. Both the House and Senate have been working seemingly nonstop since the session began to find a fix to rising residential property taxes. As of two weeks ago, it appeared a path forward was emerging. Unfortunately, there is still plenty of daylight between the House and Senate on a solution.

The House continues exploring a broad property tax relief package that hinges on the state leveraging sales tax collections to pay down school bonds and levies. House members are exploring a package that could provide a minimum of $150 million in ongoing property tax relief. In addition to the $150 million in ongoing property tax relief, the House is also exploring an increase in eligibility for the circuit breaker program, a small increase in the homeowners exemption, as well as elimination of the August school election date.

The Senate, meanwhile, continues to focus on more direct property tax relief for homeowners eligible for the homestead exemption. Under the Senate proposal, $150 million in ongoing property tax relief would be directed to those qualifying for the homestead exemption, with property tax replacement funds coming from a dedicated share of state sales tax collections. The Senate proposal also includes a provision raising the threshold to qualify for the circuit breaker program from 150% of county median assessed value to 250% of county median assessed value.

What appears to be lost in the deliberations is a sizable increase in the homestead exemption. While Representative Skaug and Representative McCann have advocated for raising the homestead exemption to $225,000, a modest $25,000 increase is all that is currently on the table.

Three other property tax bills of note to counties are:

House Bill 101 (sponsored by Representative Mitchell): Amends the homestead exemption to expressly prohibit counties from prorating the homestead exemption. If passed, the legislation would invalidate the recent Latah County v State Tax Commission decision out of the Second Judicial District which clarifies that counties may prorate the homestead exemption. Please contact your legislator and encourage them to oppose House Bill 101 which overturns Latah County v State Tax Commission. House Bill 101 has been assigned to the House Revenue & Taxation Committee. A hearing on the bill is forthcoming, but a date has not been set.

House Bill 150 (sponsored by Representative Cheatum): Proposes requiring county treasurers to remit penalties and interest on delinquent taxes to taxing districts. Three counties have done a legal analysis of the county’s obligation to remit penalties and interest on late payments to local taxing districts. In each case, the counties have determined that there is no statutory requirement to remit penalties and interest on delinquent taxes to local taxing districts. Language requiring counties to remit such payments was removed from Idaho Code in 1989. Cities in Kootenai County have brought forward a suit against Kootenai County. The matter will be before a district judge in Kootenai County later this spring. Many counties are awaiting the decision for additional guidance on how to proceed with future remittances. If House Bill 150 becomes law, it would preempt any judicial action.

House Bill 109 (sponsored by Ada County): Proposes requiring hospitals to submit an annual application to the board of county commissioners prior to receiving a property tax exemption. In order to qualify for an exemption, a hospital must meet statutory criteria to receive the exemption. Administrative and medical facilities not meeting the definition of a hospital would not qualify for the exemption.

There will be much more activity to come on property taxes in the coming weeks. Stay tuned to the IAC Legislative Bulletin, bill tracker, legislative alerts, and weekly Friday Zoom legislative briefings to stay up to date on the latest information regarding property taxes and other legislation of interest to counties. Please note, the weekly Friday Zoom legislative briefings are for Idaho county elected officials only.