5 (quick and easy) ways Idaho legislators could reduce your property tax bill — today

You can’t blame Idaho state Rep. Jim Rice, R-Caldwell, and Sen. C. Scott Grow, R-Eagle, for trying.

But goodness, they’ve come up with yet another complicated scheme that is so fraught with complexities and insurmountable challenges it should never see the light of day.

The latest proposal would eliminate property taxes for owner-occupied residential properties, except those associated with voter-approved bonds and school levies. It would remove city and county levies, along with other taxing districts, such as highway, cemetery and mosquito abatement districts, and replace those collections with an increase in the sales tax rate from 6% to 7.85%, which would be the highest in the country.

Why legislators continue to make property tax reduction so complicated is hard to understand.

Here are five very simple steps legislators could take — today — to reduce property taxes in Idaho, and none of them require a massive, complicated overhaul of our tax system:

Increase the homeowners exemption and index it. The value of today’s homeowners exemption, if the house price index were continuously used to index the exemption, would be $174,229, according to the Idaho State Tax Commission. The Legislature last year raised it to $125,000 (after unfairly capping it at $100,000 for years), but that clearly was not enough.

Some legislators complain that raising the homeowners exemption would shift property taxes to commercial and agricultural land. But when legislators capped the homeowners exemption instead of indexing it, the property tax burden shifted from commercial and ag to residential. So when Grow complains about shifting the tax burden to commercial and ag, he’s being disingenuous. Indexing the exemption for homeowners would reduce residential property taxes and bring the burden back into a fair balance.

Add two words — “school districts” — to the existing state law that allows certain government entities to collect impact fees. This would reduce or even eliminate the need for school bonds, which are borne by property taxes. Building new schools that are necessitated by new people moving into Idaho fits the very definition of why we have impact fees. It would take about 30 seconds to write this legislation.

Create a new-school building fund. This idea, too, would help get the construction costs of new schools off property tax bills. Democratic legislators pitched this idea this session as an alternative to a $350 million income tax rebate, but the rebate went ahead anyway, primarily benefiting wealthier Idahoans. Gov. Brad Little recognizes the benefits of paying off state building debt. Doing the same for school building debt would reduce property taxes for years to come.

Expand the circuit breaker program, which offers a tax cut of up to $1,500 to senior citizens, people with disabilities, veterans and people who are blind. Only about half of eligible Idahoans take advantage of this program. Just getting everyone who is eligible on the program would reduce property taxes for those we as a society want most to protect. Legislators could also increase the amount, make it automatic, increase eligibility and allow cities and counties to create their own localized versions of circuit breaker programs.

Increase public education funding. Instead of prioritizing tax cuts (which benefited mostly the wealthy, while people making less than $66,000 received $30-$92 in benefit), if the Legislature had increased K-12 education funding by an additional $250 million, we might be able to eliminate most if not all of the property tax-supported supplemental levies we have on the books.

Idaho’s property tax system is a good one. It works. It’s asset-based and it’s wealth-based. It also treats like properties equally, which is a mandate in the Idaho Constitution.

Switching a major part of city and county budgets over to sales tax exposes those budgets to the vagaries of the sales tax – and a one-size-fits-all statewide distribution formula. It’s regressive and would create a bureaucratic nightmare.

Idaho legislators should use the tools they have to tweak the system in place, not throw the baby out with the bathwater.