CALDWELL, Idaho — This article originally appeared in the Idaho Press.
When Idaho legislators began work on HB 389, a property tax bill, they brought city representatives to meetings for input.
But that working relationship quickly soured, recalled Idaho Rep. Mike Moyle, author and lead sponsor of that bill.
“When the city’s representatives came in and the whole thing was, ‘No; we’re going to kill it in the Senate; we don’t care what you do; we killed it in the Senate before; we’re going to do it again’ … we left them out after that,” Moyle said.
Moyle, along with Sen. C. Scott Grow and Sen. Jim Rice, held a roundtable with mayors and county staff from across the Treasure Valley on Thursday to discuss that bill and what can be done to further provide property tax relief that works for cities. City officials from Boise, Caldwell, Eagle, Greenleaf, Nampa, Star, and others attended the roundtable at the Canyon County Public Administration Building.
Grow has been holding meetings with stakeholders such as the Idaho Farm Bureau, the Idaho Association of Cities, and the Idaho Association of Counties.
The effort is being made in an attempt to find solutions on the property tax issue. Property taxes continue to increase in Idaho and are causing a strain on homeowners throughout the state. The topic continues to be hotly debated among locals and those within the state’s political sphere.
“We’re trying to have a group that can actually move something and not get bogged down by so many ideas, so many conflicts and disagreements between the different groups that we can’t do anything,” Grow said.
House Bill 389 passed during the 2021 legislative session, despite bipartisan opposition and pushback from local government leaders. The law instigated a variety of changes, including increasing the homeowner’s exemption from $100,000 to $125,000, and increasing the “Circuit Breaker” tax, which benefits low-income seniors and veterans.
The bill also specified an 8% cap on city budget growth each year, including a 5% cap on new construction and a 3% overall increase.
Ahead of the bill’s passage, some lawmakers argued that it did not offer property tax relief in the way that indexing property taxes to home prices would. And it wouldn’t allow tax districts to keep services on pace with growth.
At Thursday’s roundtable, legislators expressed skepticism at calls to index the homeowner’s exemption. Rice said this tends to affect renters, “which is a problem.” Rice said he and legislators are looking to stakeholders and constituents for other solutions. (Rice recently lost the Republican primary race in District 9 to Abby Lee.)
Moyle said he hopes solutions on property tax will come from cities and other local stakeholders, and said the press has “done a good job of blaming the Legislature for the problem.”
“As we talk about this, it’s important that we all realize that the state doesn’t collect (property tax), the state doesn’t spend (property tax),” he said. “The only thing we can do is put constraints on it, which is what HB 389 did a little bit of.”
City leadership on Thursday expressed concerns with how the law is affecting their communities.
Greenleaf Mayor Brad Holton, who has been a vocal critic of the bill’s impact, said it has hurt his town’s ability to accommodate desperately needed new housing due to the 8% cap on budget growth.
The law is forcing the city to consider halting building, a move that would help the city avoid creating two classes of people: those funding city services and those who are not, Holton said. The latter group would be above the 8% cap.
“The 8% cap is la-la land for the city of Greenleaf,” Holton said. “It was two homes this last time. Two homes. And I will go upside-down past that point on my budget.”
Greenleaf’s situation is representative of 160 other small communities in Idaho, Holton said. The law has created a divide between large cities that get to benefit from the law and small ones that don’t, he said.
“It truly is the defund-the-police-and-fire bill of the Idaho Legislature,” he said.
Nampa Chief of Staff Rick Hogaboam questioned why legislators would not consider homeowners exemption indexing as a solution, though he acknowledged it would not solve the problem entirely. His father, a Vietnam War veteran, is paying more on his property taxes than he was five years ago, Hogaboam said. Local companies pay less in property taxes than their homeowner counterparts, he said. But indexing would allow his father to pay less and a local Walmart to pay more than they are currently, although the Walmart’s taxes would still be lower than they were five years ago, he said.
Having conversations with residents about their property taxes feels fraught, Hogaboam said.
“You’ve got some bright people who are like, ‘OK, what are the variables that are driving those various outcomes?’ And we’re saying it’s assessed values, and the rules are not established by the city, and the county is constrained to do only what it’s constitutionally mandated to do, that the rules are established in a way that’s created those outcomes ... that’s really frustrating,” he said.
Caldwell Mayor Jarom Wagoner echoed the sentiment about the stark difference between residential and commercial property taxes.
“The value of our levies is going down, but the (value) of the homeowners’ properties have gone up so much faster, that that levy, even though it’s lower, they’re paying more, and the commercial … has just steadily increased so that lower levy affects them where they pay significantly less,” Wagoner said.
Boise Mayor Lauren McLean called for looking at assessment policy to decrease the disparity between residential and commercial property tax rates. In some instances, the assessment for some big box stores has not changed in the past five years, she said.
When her office has asked the assessor to explain this, the assessor points to publicly available data on the Multiple Listing Service showing what people are selling their homes for, she said. However, there is not similar data readily available for commercial real estate, she said.
But when McLean has gone to commercial real estate conferences, the sentiment is, “’you got to have cash; things are selling in days; people are lining up; everybody wants retail,’” she said.
This information is not reflected in the valuations being made, she said.
“Many of us are talking about the need to look at assessments because somebody’s paying, and right now, it’s a homeowner, or retiree, or vet, and not a Walmart,” McLean said, suggesting that perhaps state policy on assessments could address this.
Grow said ahead of next year’s legislative session is the time for discussing policymaking with legislators. It’s when lawmakers have “some time to listen to people,” he said.
“The ideas have to be explored before we ever get there so that we have some idea of what we’re going to propose,” Grow said.
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