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Rep Lauren Necochea, D-Boise, speaks during a property tax interim committee meeting at the state Capitol on Thursday, Nov. 19, 2020.

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The third legislative proposal on the agenda for the Legislature’s property tax interim committee today has been approved on a party-line vote for recommendation to the full Legislature in January. Sen. Jim Rice, R-Caldwell, who proposed the complicated local government budget-cap bill, said, “This doesn’t solve every problem. It doesn’t make it so that growth always pays for itself. … I think that we should still look at how we capture some of the other expenses, some of the capital expenses, of growth in another way, not in the budget.”

His proposal would alter the current law that caps local governments’ property-tax-funded budgets at 3% increases plus new construction and annexation each year. Instead, it would cap budgets at their highest level over the past three years plus the change in the consumer price index of up to 3%, while also limiting increases for new construction. If the total property tax budget including everything would rise by more than 4%, two-thirds approval from voters would be required. The proposal wouldn’t apply to school districts, but would apply to all other types of taxing districts, including cities and counties.

Explaining his bill, Rice said, “This one, if you have a taxing entity that has less than 1% new construction, so the new construction would be less than 1% of the budget, they can choose to take 3% rather than taking CPI plus their new construction. … This also has a 4% cap … before you have to go to the taxpayer.”

“This proposal is a way of driving down property tax and growth will pay for it,” he said. “You’ll have a bigger base for the property tax.”

He added, “This is a prudent way to structure things more in line with what will serve our citizens and give them actual property tax relief over the long haul.”

Rice moved to forward it to the full Legislature and “recommend that the Legislature consider this, understanding that it might be subject to some tweaks.” Sen. C. Scott Grow, R-Eagle, seconded the motion.

Rep. Lauren Necochea, D-Boise, spoke out against the bill. “I think this is going to steer us toward deep cuts in some vital services,” she said. “I’m worried about emergency response; I’m worried about the courts. … We’ve heard about just how stretched our local governments are across the state. … This is going to create some serious problems.”

She noted the bill’s requirement that to exceed the cap, the local government would need to get approval from a supermajority of two-thirds or more of its voters. “So we’re going to have a small minority make the decision, making the call about whether we’re going to have adequate ambulance response or not,” she said. “Rule by minority just doesn’t make sense to me.”

Necochea added, “If Idahoans are really unhappy with the budgets that their counties or cities are setting, they can vote them out by a simple majority. … I don’t know why we have to use the heavy hand of the state to drive these cuts.”

Rep. John Gannon, D-Boise, asked Rice how his proposal would affect the “unconscionable” shift in property tax burden Idaho’s seen in recent years onto residential property from all other types of property. Rice responded that there “isn’t actually a tax shift, it’s just we’re measuring the wrong thing.” He said his proposal would give property tax relief to all types of property owners, with the biggest relief in the highest-growth areas, because their tax budgets couldn’t increase with growth. “The purpose of this is to make sure that the tax relief goes to everybody,” he said.

The panel also voted to recommend to legislative leadership to extend its work for another year; Rice made that motion, and House Majority Leader Mike Moyle, R-Star, seconded it. It passed with one loud dissenting vote, from Sen. Grant Burgoyne, D-Boise.

Betsy Z. Russell is the Boise bureau chief and state capitol reporter for the Idaho Press and Adams Publishing Group. Follow her on Twitter at @BetsyZRussell.

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