Idaho penalizes cities for economic growth. This policy could help | Opinion

No one can doubt that costs are rising throughout the economy. City governments are not immune from this effect. The costs of law enforcement, health insurance, liability insurance, fire protection/ambulance, and street maintenance and repair, to name a few, have all risen faster than cities have the ability by law to cover. And our infrastructure needs are only growing.

In Idaho, to cover these increased costs, city governments can increase their property tax budgets from one year to the next by no more than 3%. New construction in a city adds some additional tax revenue, but the Idaho Legislature capped that amount in 2021 (via House Bill 389) to only 90% of the new development’s total value — which harms a city’s ability to ensure that growth pays for growth.

The same can be said of urban renewal districts. House Bill 389 also determined that when new developments are built in an urban renewal district that closes, only 80% of that district’s added value can be taxed by the city. Both of these changes shift more of the burden of city costs onto existing property owners, and make it even harder for cities to cover their needed costs each year.

Meanwhile, some Idaho cities considered “resort” locations are able to, with the approval of their residents, shift some of that property tax burden onto tourists or the shopping community in the form of a local option tax. As an example, the residents of the city of Hailey, Driggs or Sandpoint could vote to raise another $1,000,000 for, say, roads and law enforcement, largely off of sales to out-of-town visitors. These are visitors who drive on public roads, use public facilities and often require the assistance of law enforcement or an ambulance.

If Hailey has roughly 9,000 residents, but has over 100,000 shopping visitors, for example, that $1 million cost is spread out over nearly 10 times the number of people. With this local option sales tax, Hailey property owners are able to shift large portions of their city tax obligation onto a broader subsection of visitors to their town who use their property-taxpayer-supported facilities, but who pay no property taxes to maintain or pay for them.

Due to restrictions by the Idaho Legislature, residents in only 22 Idaho cities are able to do what Hailey residents can do. Residents in the remaining 177 cities must bear all of the burden of supporting public services with the property tax.

Most cities, such as my city, Ammon, or Kuna, Rexburg or Moscow, for example — all growing cities with strong commercial centers — are not so lucky. They can’t ask visiting shoppers to help contribute to road improvements or law enforcement costs by way of a local option sales tax. In almost every city in Idaho, residents who need more revenues for their roads or law enforcement costs have to vote to tax themselves — often having to hurdle a required two-thirds supermajority vote — while visiting shoppers using these services or facilities are not required to contribute.

Ammon has many hundreds of thousands of shopping visitors every year. We could cover the cost of law enforcement and road maintenance — two items heavily affected by visitors — if the residents had the ability to vote to add a 1 cent local option sales tax. Much of that tax would be paid for not by residents, but by the visitors who drive on Ammon roads, shop in our stores, use our public facilities, and, on occasion, have to be stopped by our law enforcement. As long as Ammon is not able to use a local option tax and as Ammon continues to attract businesses and visitors, property taxes will continue to increase to pay for the impacts from those visitors.

Access to this tool isn’t a silver bullet. Yet, in the midst of rising costs across all industries, there is no existing logical justification for the legislature to allow the residents of 22 Idaho cities to shift a portion of their tax burden to visiting shoppers, yet not allow the residents of the other 177 cities to do the same if they chose to do so.

This real, tangible property tax relief option should be available to all Idaho residents, not just a select few.

Sean Coletti is the mayor of Ammon, a city of 20,000 people in Bonneville County.