Property tax reform is a top-line item for Idaho House GOP leaders.
“This is absolute madness. There is no reason why we should have a 10% increase in (Ada County) property taxes. Absolute madness,” said Rep. James Holtzclaw, R-Meridian, who is a real estate broker.
“I can’t tell you how many people I have talked to who have been in the same house for 20 years telling me they can’t afford it because their taxes have just increased and increased and increased,” Holtzclaw said.
Holtzclaw was among nine GOP lawmakers who participated in a public forum Tuesday evening at Meridian City Center. Citizens had to submit written questions in advance. No questions or comments were taken from the audience, which numbered about 100.
The forum’s topics ranged from transportation (need more money for roads) to redistricting (need more legislative districts) to hemp (Idaho farmers will be growing it next year), but the conversation kept returning to rising property taxes.
Property taxes are difficult to understand, and since many property owners pay them through their mortgages, they are not aware of the issues or severe increases, several lawmakers noted.
“This property tax thing, we are at critical mass here,” House Speaker Scott Bedke, R-Oakley, told the Statesman. “If everybody was writing the check instead of having it baked into their mortgage, they would be rabid.”
On Monday, Gov. Brad Little forewarned agency heads that state tax revenue collections were down in July and that if the trend continues, they need to prepare to cut spending and lower budget requests.
This action shows the difference between how the state budgets and how local governments budget, said House Majority Leader Mike Moyle, R-Star.
During the recession a few years ago, the state cut almost 30% of its spending, Moyle said, “At the same time that happened, though, the local government budgets were growing at almost 30%,” he said.
Moyle explained that this happened because when setting annual budgets, the state first projects tax revenues and then builds a budget based on what it expects to receive. Counties, cities and other local taxing districts do the opposite. They build their budgets first and then decide how much to levy in property taxes to collect the revenue they need. So the state has to constantly monitor monthly tax receipts and adjust accordingly, but local governments don’t have to do this because they already have billed taxpayers for the money they need to meet the budget.
Cities and counties “set their budget ... and then they look at all the property out there and they say, ‘Oh, now we can adjust our mill levy rates to meet our budget,” said Assistant Majority Leader Jason Monks, R-Nampa. “That is a problem and that is what we are trying to fix.”
The panel said it is already starting to do its property tax reform homework in advance of the next legislative session, which starts in January.
Rep. John Vander Woude, R-Nampa, said he met on Tuesday with Boise State professors and asked them to do a survey “of what the causes are of increased property taxes on homeowners and what the solutions might be.”
Bedke said he and Senate Pro Tem Brent Hill, R-Rexburg, have called for a working group to examine the problem and possible solutions. Bedke said the group should be assembled by next month.
Some things that seem like simple solutions, such as raising the homeowners exemption or capping property taxes, aren’t really that simple, Moyle said.
Property owners need a cut, not a tax shift, which is what happens with exemptions, Moyle explained. When tax exemptions are raised or implemented, it does not mean less property tax is collected. It just means other other property owners will pay more to make up the difference.
“If we just increase the homeowners exemption, then what we have done is reshift the taxes, we did not save anybody a dime, we just shifted from where we are collecting it,” Moyle said.
Moyle said he would support something like California’s Proposition 13, which caps the property tax rate, and property value reassessment occurs only with ownership change or new construction.
“But we have a problem,” Moyle explained. “The (Idaho) Constitution says you cannot treat like property differently from others,” which means the state’s constitution would have to be amended to enact something that would put limitations on property values for owners.
“The only way you are ever going to get the problem solved is to prevent the locals from increasing their budgets,” Moyle said.
“Somehow you have to rein in these local governments. There are ways to do it, but it is going to cause the locals to have to give up a little of their taxing authority.”