BOISE — More details emerged June 11 on Gov. Brad Little’s proposal to leverage $200 million in federal coronavirus aid under the CARES Act to provide local property tax relief, and local city and county leaders expressed curiosity and interest.
Cities or counties would have the option to participate; if they did, the federal money would reimburse their public safety personnel costs for a 10-month period related to COVID-19, on the condition that the savings go to local property taxpayers through a credit on their 2021 tax bill.
Cities and counties also would have to agree not to take the 3% increase in their property tax budgets next year that’s allowed by law, and not to use any “forgone” balance from past years in which the full 3% increase wasn’t taken. They’d still, however, be allowed to collect more property taxes from new construction or annexation.
That’s a significant difference between this proposal and a controversial property tax freeze bill that passed the Idaho House this year at the behest of Majority Leader Mike Moyle, R-Star, but was panned by local governments and killed in the Senate.
“It’s not a complete budget freeze,” said Seth Grigg, executive director of the Idaho Association of Counties. “It really allows them to receive additional funding through property taxes if they’ve had new growth.”
Another key difference, Grigg said, is that the program is voluntary for cities or counties. “This concept that the governor has put forth, really it leaves that decision making to the local officials, whether they be the city council or the board of county commissioners,” he said. That allows them to take into account what’s actually happening in their community, he said.
Many local officials already were looking at setting flat budgets for next year, fiscal year 2021, Grigg said, because of the economic chaos caused by the coronavirus pandemic and resulting soaring unemployment rates.
“They’ll be asking themselves those difficult questions,” he said. “How do we maintain the level of services that we’re providing while at the same time providing property tax relief?”
Little’s Coronavirus Financial Advisory Committee, which recommended the $200 million tax relief plan as part of its oversight of the state’s $1.25 billion in federal coronavirus aid under the CARES Act, met June 11 to go over details of the plan.
The panel, on which local government representatives including Grigg and Garden City Mayor John Evans serve, along with state officials, legislators, and tribal and business representatives, approved the expenditure unanimously after reviewing a four-page detailed plan for the program, including deadlines for participating and guidelines for how to calculate each city or county’s share. If the qualified public safety personnel costs for the period from all participating local governments exceed the $200 million allocated, each will receive a proportionate share.
“This is one-time savings,” said Alex Adams, CFAC chairman and the governor’s budget director. “This is not an ongoing property tax solution.”
Evans, who represents the Association of Idaho Cities, noted that local governments also separately have their share of CARES Act funds for other direct COVID-19-related expenses.
“I think maintaining the tax base was an important issue that makes this very doable for most cities,” he said.
Latah County Commissioner Tom Lamar, during a public comment period, questioned whether the proposal is even legal, and noted that it crosses two county fiscal years. Adams said that’s the time period that the CARES Act covers.
Grigg said he appreciated Adams’ request that he and Evans continue to consult with the state on the “nitty-gritty” details of the program, including definitions.
Adams said, “By my rough math, if every city and county in the state participated, this would be about a 20% reduction of the property tax at the city and county level.” The savings would go to all types of property taxpayers, he said, including both residential and commercial property owners.
Ada County Commissioners were waiting on more details from Little’s office to come out, although Commissioners Kendra Kenyon, Diana Lachiondo and Patrick Malloy offered some thoughts on the decision.
“At Ada County, all our departments and offices are taking a hard look at our expenditures as we work through our budget process, while maintaining a focus on meeting our state-mandated statutory obligations. Next week we begin our budget deliberations as a board and will be incorporating the opportunity laid out by the governor into our deliberative process,” Lachiondo said.
Commissioner Kenyon said she and Lachiondo had asked Ada County officials and department heads to keep their budgets flat for 2021.
“As we move through budget deliberations next week, we will analyze the governor’s program to better understand the impact and implications to our services and to our taxpayers,” Kenyon said.
Malloy said the use of CARES Act funds to provide property tax relief was a welcome one.
“I have never supported the ability for the county to automatically increase the previous year’s budget by 3%,” Malloy said. “As a fiscal conservative I would prefer a zero-based budgeting process. I am pleased that Gov. Little is providing the counties an opportunity to provide much needed tax relief by means of the CARES Act funds.”
Meridian Mayor Robert Simison said he is open to Meridian opting into the program, but he is awaiting more details.
“When I first heard the proposal … I thought it sounded like a good thing for us to look at and consider,” Simison said. “We’ve been waiting to get a little bit more details about it, but overall, if that’s how the state would like to use the CARES funding, to help with property tax relief for people, I’m for it.”
Simison said he was already proposing to the city council a fiscal year 2021 budget without a 3% property tax increase.
About $31 million of Meridian’s $67 million 2020 budget went toward police and fire personnel. Police received $19.1 million and fire $11.8 million.