The Legislature’s property tax interim committee has now approved another legislative proposal, this one limiting local governments’ ability to have budget reserves or to save up for big capital projects, and also placing new limits on their ability to take “forgone” tax increases in later years that they’ve passed up in past years, under budget caps. Rep. Lauren Necochea, D-Boise, voted against recommending the bill to the full Legislature, and Sen. Grant Burgoyne, D-Boise, noted that the state Legislature itself has rolled up a huge state budget surplus exceeding $500 million, and squirreled away another $100 million in online sales taxes revenues, aside from hundreds of millions in state reserve funds.
“When our property taxpayers don’t have money in their pocket because the state government is holding onto it, it makes it harder to pay their property taxes,” Burgoyne said. “I think this kind of legislation, if considered for next session for local government, should be joined this next session at the state level on the same principles.”
He said the state could provide a huge amount of one-time property tax relief with the $600 million or so it’s “just sitting on. … So it’s kind of what’s good for the goose is good for the gander. If it’s good for local government, it ought to be good for state government as well, not to be accruing these vast sums of money.”
Sen. Jim Guthrie, R-McCammon, who made the proposal, said, “I think you’re spot on, I agree. … I think the state needs to do something similar.”
House Majority Leader Mike Moyle, R-Star, said he didn’t buy the explanation from local governments that they’re saving up for big, anticipated expenses like a new fire station without the need to issue bonds and incur interest costs, and that accounts for fund balances. “Let’s talk about Ada County,” he said. He said that county saved up and spent $11 million in property tax funds for a new 911 building, without bonding, which requires voter approval. “What happened to that $11 million the next year?” he asked, asking if taxes then went down. “Heck no,” he said. “It just rolled into their budget.”
“I like this bill,” Moyle said, calling it “actual property tax relief. … And I think it sends a message that … we’re watching you.”
Rep. Jason Monks, R-Nampa, said he initially thought it was a reasonable idea for local governments to save up for “a known expense” like a new fire station. But he said he’s changed his mind, because if the savings occur for many years, newly arrived residents don’t help pay for the project. “So maybe it’s appropriate that we get ‘em to do bonding,” he said. “Are we making our old residents pay for that over a 5- or 10-year period of time ... that new fire station or a new sewer system or whatever else?”
Under Guthrie’s proposed bill, local governments or other taxing districts would only be allowed to save up three months of their ordinary operating expenses as an unassigned cash reserve, plus another one month’s worth as a “rainy day fund.” Any amounts above that would have to be used for property tax relief.
Guthrie said his proposal still needs some modifications. “This is a draft,” he said. “There are going to have to be some additional sideboards put into it.”
Sen. Jim Rice, R-Caldwell, said, “I like this concept. I like that it says if you have these excessive balances, that goes back to the taxpayers for property tax relief.”