New law promised to cap property taxes. A Meridian leader says it just forced them up
Meridian residents, prepare for higher city property tax bills come December. The just-approved city budget guarantees them for most property owners.
One reason is an array of costly but necessary spending items: a new police station, two new fire stations, upgrades to Discovery Park and employee pay increases.
Another is a new state law whose goal, ironically, is to reduce property taxes.
The Meridian City Council passed what Councilman Luke Cavener deemed an “ambitious” $185 million city budget for next fiscal year, a 38% increase over this year’s. To pay for it, the city will raise property taxes by 2.4%.
The increase will cost Meridian residents just 57 cents per month per $100,000 of home value, said Todd Lavoie, the city’s chief financial officer.
But one councilman said it would be zero if the Legislature this year had rejected a bill by Rep. Mike Moyle of Star, the House majority leader.
The Moyle law caps local governments’ property tax increases in two ways. First, it limits any annual increases in property tax budgets to 8%. That includes a maximum annual 3% increase previously authorized by state law, plus any increase in revenue from new construction, annexation and expiring urban renewal districts.
Second, the law allows cities to take only 90% of the tax revenue from new construction projects and annexation they would otherwise receive in the year the construction is added to the tax rolls.
For a fast-growing city like Meridian, that money adds up, and it helps growth pay for itself. With new construction capped, the city had to find revenue elsewhere to pay for the budget. The 2.4% increase in property taxes is a result.
“We need to talk about why we are here and why we are having to do the tax increase,” said Councilman Brad Hoaglun at Tuesday’s council meeting, when the budget passed. “It is because of the legislative action last session, (which) took away the ability of new growth to pay the city of Meridian $1.3 million.
“This is why we have to come back and say: How do we fund our city and the growth we are experiencing? And now this is what the debate is about now, where do we get that? From our savings account, or increase property taxes to pay for that?
“Elections have consequences,” Hoaglun continued. “That is why we are here, because growth was unable to pay for the growing needs we have in this community.”
By phone on Friday, Hoaglun said the property tax revenue from the increase would be just over $900,000. That’s about two-thirds as much as the additional $1.3 million from new construction would have brought in, which means the council could have avoided a property tax increase altogether, Hoaglun said.
The new law prevents cities from taking double-digit increases in their property tax budgets, Moyle said by phone on Friday.
“I want people to know, the Legislature doesn’t collect or spend property tax dollars, the Legislature gets no property taxes,” Moyle said. “If (Mayor) Robert Simison and the City Council decide to raise the property taxes, that is their doing.”
The property tax increase was a “deal breaker” for Cavener.
After the public hearing on the budget, Cavener made a motion to dip into the city’s nearly $1 million fund balance to cover the costs, instead of raising property taxes.
“I think we can have an ambitious budget that invests in our community without taking a property tax increase,” Cavener said.
The fund balance is money the council budgeted for that the city has not spent. The City Council can use its discretion to decide when and where to use the balance, Cavener said.
“Folks that have lived in Meridian have seen an increase in our property taxes,” Cavener said by phone on Friday. “The city is (the reason) for some of that (increase), and the other taxing districts are, too. I just felt that this was not a year that we should subject them to a property tax increase.”
Cavener’s fellow council members were not supportive of his idea. Hoaglun said he did not support it because there was no prior discussion about it before that evening.
“It needed more vetting in terms of what the long-term impact would be,” he said.
Councilman Joe Borton seconded the motion for discussion purposes. When Cavener realized it had no support, he withdrew his motion, and the budget passed 5-1.
Borton, who had unsuccessfully opposed adding the police and fire stations to the budget, said the council had no choice but to increase property taxes because of those projects.
Moyle and fellow Republicans in the Legislature previously told the Statesman that the new law would slow rising property taxes.
“What we were doing with the cap was trying to say, ‘Hey guys, you can’t keep (raising) your budgets at these exorbitant rates and shifting it to existing property taxpayers and driving up the taxes,’ ” Moyle said.
Rachel Spacek covers western Ada and eastern Canyon counties. Have a story suggestion or a question? Email Spacek at rspacek@idahostatesman.com.
