Mayors, fire officials, and others representing local governments and districts across the state are speaking out this afternoon against SB 1108, the latest version of Sen. Jim Rice’s complex proposal to limit local government budgets in an effort to stem property taxes, saying it would hamstring fast-growing communities and prevent growth from paying for itself. The bill is up for a hearing in the Senate Local Government & Taxation Committee, which Rice chairs.
Rice insisted that his bill would fix the problem of rising property taxes by changing the levy rate used to calculate the new construction roll from the previous year’s rate to the projection for the next year’s. Some of the local officials welcomed that change, but not the other parts of the bill: Placing limits on the amount local government budgets could grow as a result of new construction or annexation, which testifier after testifier said would prevent new growth from paying for itself; and other aspects of the bill, including limiting total increases, including new construction and annexation, to 4% a year if the local government takes any foregone tax increase, a limit that could only be exceeded with two-thirds voter approval; and changes regarding expiration of urban renewal districts.
The bill limits local government budgets to recognizing 50% of new construction in their property tax budgets each year and 75% of annexation, rather than 100% of both, as under current law.
Rice said of his bill, “It’s a small haircut on budgets, it’s not the scalping that the citizens are getting right now.” He also said he doesn’t believe rising property values have anything to do with rising taxes.
Nampa Mayor Debbie Kling said she had to “respectfully disagree.” She said, “I think we all agree we need to get taxes down, but the assessed values have gone up incredibly.” She noted the impact on homeowners as home values have risen since the Legislature capped the homeowner’s exemption in 2016. “I have property that’s increased 45%, and I’m shocked at that,” she said. “The city budget is really not affecting it that much. The city of Nampa did not take a 3% increase.”
Mark Minton, Burley city administrator, said, “The City Council has great concerns about this bill. Our property taxes normally do not grow much over 4%, and when it does, we need that funding to support our police and fire functions, our public safety functions.”
Meridian Mayor Robert Simison said, "We are seeing a shift. You can't argue there's a shift. ... It’s a transfer, that’s what your taxpayers are complaining about, is a transfer of taxes. … In the end, this does not address the underlying issues, this bill.”
Sen. Ali Rabe, D-Boise, said in her district, residential property is now bearing three-quarters of the property tax burden because home values have grown so much faster than values for other types of property. “I’m still not seeing how this bill will actually address the shift and provide the amount of residential tax relief that we need,” she said. She said she is concerned that the bill would disincentivize growth and “exacerbate our existing housing crisis.”
Sen. Mary Souza, R-Coeur d’Alene, said, “I’ve been hearing that new growth needs to pay for itself, that’s the mantra that everyone says. This bill, we are talking about new growth and 75% to the budgets and 25% to tax relief. But there’s still an impact. There’s still roads and parks and schools and fire stations when you get massive new growth going in.” She asked Rice about impact fees, and how they’d “dovetail” with the bill.
Rice said, “One of the problems we’ve had with impact fees with the current statutes is that they’re clunky, they’re hard to use, they’re difficult to apply and it has been an issue for local units of government in applying those. So some have been successful and some have not.”
Of the more than 18 people who have testified so far, the only support for the bill has come from Fred Birnbaum of the Idaho Freedom Foundation and Russ Hendricks, lobbyist for the Idaho Farm Bureau Federation.
Seth Grigg of the Idaho Association of Counties said his legislative committee is still reviewing the bill and doesn’t yet have a position on it. He called it “a far more fair bill than a couple of the others” that preceded it; this is the third version introduced this session. But he also noted problems with the bill, including one for which Rice said he planned to run a "trailer" bill if SB 1108 passes.
Kelly Packer, executive director of the Association of Idaho Cities, said AIC supports residential property tax relief, and opposes SB 1108. She called for removing the 2016 cap from the homeowner's exemption and re-indexing it, and said she was sorry she voted for that change in 2016 when she was in the Legislature. "In fact, it's one thing I would like to publicly apologize for," she said. She also called for increasing the circuit breaker tax break for low-income seniors and taking other steps to relieve Idaho property taxpayers, rather than passing SB 1108.
Miguel Legarreta of the Associated Taxpayers of Idaho didn't take a position on the bill, but shared calculations estimating that in Ada County, between all the different taxing districts, the bill would lower property tax collections next year by about 2%.
Doug Racine, finance director for the city of Nampa, estimated that if SB 1108 had been on the books since 2015, his city would have lost $1.68 million of its budget and "nearly 21 public safety staff we would not have been able to employ, had this been in place from 2015 to the present."