For years, ACHD clamored for more road money. Now it’s saying no to new property taxes
The Ada County Highway District Commission has clamored for years for new revenue to avoid falling behind on road maintenance and improvements. In November 2018, commissioners begged voters to pay higher vehicle-registration fees. Voters said no.
Now commissioners are preparing to refuse an important source of new cash. The commission is expected to approve a $135.7 million budget Wednesday that will not take any of its legally permitted increases in property taxes revenues for the year beginning Oct. 1, including from new construction.
The commission also plans to waive its right to draw upon that forgone tax in the future.
Local agencies are allowed to increase their property tax revenue up to 3% each year — which for ACHD, would provide an additional $1.3 million for the coming year. They can also add to their property tax budget by factoring in new construction on the tax roll — which would provide an additional $1.6 million.
Property taxes make up 31% of ACHD’s revenues, with the rest coming mostly from impact fees, vehicle registration fees and the fuel tax.
It the commission does waive its right to collect those forgone taxes, ACHD would lose out on at least $13 million in revenue over the next decade — or the equivalent of the cost of the design, right-of-way and construction for three intersections.
“What it will impact, sooner or later — and it’s going to be sooner — is our ability to do new projects,” said Commissioner Kent Goldthorpe, a second-term Republican who represents Meridian and Kuna in a phone interview.
Taking the 3% increase would have cost most taxpayers just a few dollars more per year, Goldthorpe said. He said — albeit a bit begrudgingly — that he will support the budget.
Nearly all commissioners said that the economic fallout of the coronavirus pandemic has made them hesitant to increase property taxes.
“This has been a difficult year for a lot of people,” said Commissioner Sara Baker, who also supports the budget.
Commission President Mary May and Commissioner Rebecca Arnold, both Republicans, told the Statesman that they would have voted to keep property taxes flat in any year. Both voted no on last year’s budget because it included an increase in property tax revenues.
“One of the first things I did when I became president of the commission is I let the director know that my preference is always to see a flat budget as our starting point and then let our needs dictate any sort of increase,” May said in a phone interview. In light of COVID-19, she said, “it became obvious ... that if there’s any way we can help lessen some of those burdens by moving forward with a flat budget, we should do it.”
The measure on the 2018 ballot would have raised registration fees an average of $18 per vehicle and generated $7.5 million per year. Voters rejected the measure by a 57%-43% margin.
“Nothing has changed — we still need the money,” said ACHD spokeswoman Nicole DuBois. “But in these times, it’s just the right thing to do.”
Goldthorpe worries, though, that ACHD is just setting itself up to pay more down the line if it doesn’t have the money to fund construction projects today.
“ACHD faces declining revenues in the face of astronomical increases in the cost of doing business,” he said.
The cost to build a mile of road increases each year, he said. According to ACHD, the cost to build a five-lane arterial with curb, gutter and sidewalk was $4.4 million per mile as of June. As taxes lag behind, the highway district can afford to build less and less every year, let alone maintain it.
The district will still focus first on maintaining the roads it already has, Goldthorpe said. “But there won’t be projects to reduce congestion — at least not as fast as people would like — because we don’t have the money.”
Opposition to property tax increases
Arnold said she doesn’t oppose additional revenues, but does want to limit property taxes.
“There are more appropriate ways to fund transportation improvements,” wrote Arnold via text. She has served on the commission since 2004 representing parts of Garden City, West Boise and Meridian north of Interstate 84.
She supported the 2018 ballot measure. She also supports higher impact fees, which are paid by developers on new construction to mitigate the strains new growth places on public infrastructure.
In the Republicans’ fight to keep property taxes flat, they may have an unlikely ally: Democrat Jim Hansen, who represents Boise’s Bench, as well as neighborhoods in the south and east.
He opposes property tax increases for another reason entirely: He sees most of ACHD’s money going toward new roads at the edge of the county.
“That just encourages sprawl, and it takes on a massive maintenance obligation that we can’t afford,” Hansen said by phone.
So long as ACHD’s model is to build its roads based on the needs of drivers, and not those using more sustainable modes of transportation, Hansen is skeptical of property tax increases. He argues that more should be spent on existing roads to make them safer for pedestrians and bikers.
“It’s like, ‘Well we don’t have the money to currently fix those issues — instead we’ll build more roads!’” he said.
Ada Commissioners: Increase your budget
ACHD’s budget will have major implications for other local leaders, who still face complaints about roads from constituents even though they lack the power to build them.
This week, the Ada County commissioners directed staffers to draft a letter to the ACHD commissioners: Please, they wrote, take the new construction revenue, at the very least.
At a meeting Monday, the commissioners said they worried that ACHD’s existing backlog of projects could grow longer if the highway district does not take new-construction revenue.
“As we’re growing ... that gap will just continue to grow and grow really quickly,” said Ada County Commissioner Kendra Kenyon.
Even with Ada County’s opposition, the commissioners aren’t likely to change the budget so late in the game. The budget is due to the Ada County Clerk by Sept. 10 so the clerk can certify the levy rate. ACHD is one of the last local agencies to complete its budget. Boise and Meridian completed theirs in July.
Meridian Mayor Robert Simison said he understands ACHD’s decision not to take a property tax increase, but hopes budgetary constraints won’t lead to delays in long-promised projects.
“While property tax concerns and challenges with COVID are impacting budgets, it is imperative that strategies are identified to build needed infrastructure like the Linder Road overpass and other priority projects in Meridian,” he said in an statement provided to the Statesman.
Eagle Mayor Jason Pierce said he supports the commissioners’ plan.
“Lessening people’s property tax burden during this time is the right call,” he said in a statement provided to the Statesman. “Road improvements are important, but people’s financial security is the greater good right now.”
Boise Mayor Lauren McLean declined to comment.
Impact fees increase
In fact, the highway commissioners are seeking to draw more revenue from development impact fees.
At its Aug. 19 meeting, the commission voted to increase impact fees by 9% in the coming year. A developer will now pay $3,433 to ACHD for a single-family house in Ada County.
Although impact fees are billed as a way to make “growth pay for growth,” ACHD can use the fees only on certain projects in its 20-year capital improvement plan that it demonstrates are needed as a result of growth. The district cannot, for example, use impact fees on curbs, sidewalk, gutters or bike lanes.
State law also requires that ACHD match any impact fees with general fund dollars — those from property taxes, fuel taxes and registration fees. State law requires the funds to be returned to the developer if they are not used immediately for infrastructure improvements.
In recent years, ACHD officials say, they haven’t had enough general fund dollars to fund the full local match on impact fee project and get around to all of the non-impact fee illegible projects in their 20-year capital improvement plan.
In some cases, Goldthorpe said, the crunch to use the fees before they expire has forced ACHD to prioritize using general fund dollars on impact fee-eligible projects — mostly road-widening projects in high-growth areas like Meridian, Star and Kuna. That has prevented ACHD from pursuing projects in older parts of the county that are “possibly more important to the taxpayers.”
All projects — including impact-fee eligible ones — would have to be built at some point, though, Baker said: “They’re not in the plan unless they’re necessary.”
In last week’s meeting, Goldthorpe made a request of ACHD’s staff: Work with the Legislature to get the impact fee statute changed. He suggested that the district be allowed to provide a 25% match instead of 50%, so that growth would pay more of a share.
Hansen has also long advocated for changes to the law. He wants to see the Legislature change the statute so impact fees can help pay for curb, gutter, sidewalk and bike lanes.
Steve Price, ACHD’s general counsel, said he would work with the Legislature on those changes during the 2021 session, which begins in January.
This article has been corrected. ACHD Commissioner Rebecca Arnold says she would vote to keep property-tax revenue flat in any year, not to keep ACHD’s budget flat. An earlier version misstated her position.
This story was originally published August 25, 2020 at 4:52 PM.
