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'Let's get property tax relief done right': Idaho governor vetoes property tax, school facilities fund bill

Gov. Brad Little called House Bill 292 a "hodgepodge of policy items intermingled with property tax relief."

BOISE, Idaho — For the second time in the 2023 session, Gov. Brad Little has vetoed a bill sent to his desk after approval from the Idaho Legislature. This time, it's legislation that supporters said would provide immediate and long-term property tax relief.

House Bill 292, which Gov. Little vetoed Monday, called for between $205 million and $355 million in property tax relief in Fiscal Year 2024, which begins July 1, then about $110 million in the second and third years of implementation, according to the statement of purpose written by its proponents. The bill also proposed taking 4.5% of annual sales tax revenue from the state to create a tax credit for primary residences — the homes covered under a property taxpayer's homeowner's exemption.

The bill also called for distributing additional funds totaling approximately $100 million to school districts on an average daily attendance basis to be used for the following priorities: to pay down existing bonds and levies; save for future school facility construction needs; and pay down new bonds. The bill also would have eliminated the March date that school districts may now use for elections.

The bill was introduced March 13 as a compromise between two other proposals brought forward earlier in the session.

In his veto letter, Gov. Little notes that the bill, which is 20 pages long, is not simple.

"House Bill 292 is a hodgepodge of policy items intermingled with property tax relief," Little wrote, adding that the bill "presents significant impacts on election dates, public defense spending, online sales tax collections, local government sales tax distributions, and funding for transportation, and it jeopardizes bonding for critical infrastructure projects."

On the issue of road projects, the governor writes that by re-ordering the priority of claims on sales taxes prior to the payment of transportation expansion and congestion mitigation bonds (TECM bonds) and removing "minimum guarantees for TECM debt service," the bill would have forced a "pause of the TECM bonds that were scheduled for sale this week due to consternation in the bond market."

The governor attached a letter that the Idaho Housing and Finance Association sent to the governor's office summarizing House Bill 292's impact on the transportation financing program. Proceeds from the bonds scheduled for sale this week are expected to total nearly $400 million, and be used for all or a portion of these projects:

  • Interstate 90, Washington state line to Coeur d'Alene
  • US 95 and US 12 bridges over the Clearwater River
  • I-84 in Ada and Canyon counties
  • US 20/26, I-84 to State Highway 16
  • State Highway 55, Sunnyslope to Nampa
  • State Highway 75, Timmerman to Ketchum
  • I-84, Jerome to Twin Falls
  • I-84, Burley and Heyburn interchanges
  • I-15, Pocatello to Idaho Falls
  • US 20, Idaho Falls to Montana state line

Gov. Little took issue with the provision that would have eliminated the March election date for school bonds and levies many school districts pursue to "keep up with record growth and maintain schools for Idaho families." He said House Bill 292 would have removed local control by removing that date from the election calendar. School districts also have the option of putting bond or levy measures on the ballot in May, August or November.

Eliminating the March election would have had a "major adverse impact on our ability to serve Idaho families with quality public schools because the sales tax earmarked for public schools did not include an inflator like there is for property tax relief in this bill," the governor wrote.

"Let's get property tax relief done right this session. The simplest solutions are usually the best solutions, and I believe we can extract the property tax portions of House Bill 292 and deliver a true property tax relief bill this session," the governor wrote in the conclusion of his letter. "A property tax relief bill this session needs to be simple and carried out in a way that does not harm public schools, does not hold up needed transportation projects, and does not reveal more unintended consequences."

The Idaho Education Association issued a statement of support for the governor's veto, specifically because House Bill 292 would have eliminated the March school election dates. The statement, released by IEA President Layne McInelly, includes the following:

"The State of Idaho's refusal to properly fund public schools from state coffers makes bond and levy elections critical for public school districts across the state. By eliminating the March school election date, the most important on the calendar for the passing of school bonds and levies, this legislation risks destabilizing public school finances and puts children's learning at risk.

"Property tax relief is incredibly important to IEA members and their communities. It is imperative that the Legislature pass a property tax relief for Idahoans without creating even more uncertainty for public school financing in the process. Additionally, lawmakers' lack of political will to tackle a backlog of more than $1 billion in school facilities needs this legislative session forces school districts and taxpayers to continue muddling through with an ad hoc mix of funding that creates uncertainty and inequity. This bill cripples school districts and their ability deliver an education to students even more. Providing property tax relief and maintaining — or even expanding — school district funding tools are not mutually exclusive concepts. Lawmakers should not treat them as such. 

"IEA members will not support concepts that undermine the principle that every Idaho student deserves a safe, secure and resilient school. Governor Little's veto of House Bill 292 shows his support for Idaho's students and public schools is unwavering and consistent. IEA members encourage the Idaho Legislature to pass property tax relief that does not undermine the ability of local communities to support their public schools."

House Bill 292 passed in the Idaho House by a vote of 63-7 and in the Idaho Senate by a vote of 32-3, enough votes in each chamber for an override attempt to be successful if lawmakers decide to take it up.

Again, this is the second veto of the 2023 session. Gov. Little on March 21 vetoed a bill that would have allowed parents to teach their children to drive, rather than pay fees and travel for public or private instruction outside the home.

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