Bill to limit local government tax growth hits Senate floor

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A bill restricting local government budgets is heading to the Senate amid opposition from local officials in almost every corner of the state.

On Thursday, a proposal by Senator Jim Rice, R-Caldwell, to cut local government budgets to provide property tax relief to Idahoans had its first public hearing in the local government and tax committee. During the more than two-hour hearing, local officials from cities, counties and several fire districts testified to fiercely oppose the legislation. They said the measure will not provide substantial relief and will only cripple the ability of localities to provide services as Gem State is booming.

[Idaho tried to lure a nuclear company in 2008. Instead, Micron got millions in property tax breaks]

Officials, from Idaho’s largest towns in the Treasure Valley and small towns like Rathdrum and Burley, all noted the need for taxpayer dollars to meet the demand for services like police, firefighters and maintenance of new roads. The majority recognized the need to tackle the growing burden of property tax on residents, but said solutions such as indexing the homeowner’s exemption, exploring a cap on l Increasing property values ​​and helping low-income homeowners would be more effective.

“Pointing out local jurisdictions makes it very difficult to provide the services we need,” Nampa Mayor Debbie Kling told the committee.

What is the proposal?

The rapid rise in property taxes and their impact on long-time residents who bought their homes in very different markets has been the subject of heated debate in recent years. The state legislature has largely focused its efforts on solving the problem by limiting spending by local governments, instead of a comprehensive restructuring of the property tax system or increasing support for low-income homeowners. .

Currently, local governments can increase their property tax collections by up to 3% each year. They may also experience increases based on the number of new construction and annexations, which may be a higher percentage in booming areas like Treasure Valley. Taking into account new construction and annexations applies the levy rate of the previous year to new growth in the county to account for any additional services required.

The Rice Bill authorizes the 3% increase, but it would limit localities to 75% of new construction and annexation taxes. It would also allow only 50% of taxes on new construction in late urban renewal neighborhoods to be reintegrated into local budgets.

Lost taxes, or taxes that localities did not collect in a previous year and recovered later, would still be allowed, but the maximum increase in property tax revenue would be capped at 4%. Localities could also increase property tax collection beyond 3% if they got voter approval.

Kill the goose

After the hearing, Rice compared how local governments treat taxpayers to “the goose that lays the golden egg” because they pay for all their services. Except, he said, in Idaho, local governments are poisoning the goose with increasing taxes instead of trying to deal with it properly by cutting costs.

“When taxes rise faster than people’s incomes, what happens is you consume an increasing percentage of their household budget with taxes and the uniform response that I tend to get to that question is “but we need the money”, “he said. said, referring to conversations he had with local officials. “The problem is, so do the taxpayers. They need the money.

[Explain this to me: Inside Idaho’s complicated property tax system]

Only three committee members voted against the bill: Senator Ali Rabe, D-Boise, Senator Mark Nye, D-Pocatello and Senator Todd Lakey, R-Nampa. Ahead of his vote, Lakey said he decided to oppose the bill instead of voting alongside his fellow Republican colleagues because there needs to be a fuller picture of possible solutions.

“I heard today that we have common goals and concerns,” Lakey said. “The people who testified have recognized that we have a property tax problem and they want to be part of the solution. They don’t say ‘don’t touch it, leave us alone’, so I think we need to fix it. “

Other Republicans on the committee were much more supportive, although several said they recognized the bill was not a perfect answer.

“I think this is an important question and a good first step,” said Senator Mary Souza, R-Coeur d’Alene. “We can work together as we move forward and it may be closer to the right solution than we thought. Let’s try this because there are a lot of things here that mean a lot to me.


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