A committee Thursday sent a proposal for a one-year property tax freeze to the Idaho House with a recommendation for approval.
In a 13-3 decision, the Idaho House Revenue and Taxation Committee sent House Bill 409 to the floor for a full vote. The bill would freeze property tax revenue for a year from most taxing districts.
Only school taxing districts would be immune. HB 409 authors estimate the bill could save property owners as much as $132 million. The bill would limit taxing district budget requests and levies from collecting more in property tax collection than what the same district collected in 2019.
The bill was introduced Feb. 4 and handed over to Revenue and Taxation the following day, prompting four calendar days of public hearings that debated the merits of the bill serving as an actual solution to rising property taxes.
Ada County Clerk Phil McGrane opposed the bill.
“We have a case of two Idahos,” McGrane said. “In some areas we’re seeing these enormous shifts in taxes, where we have people’s property tax bills going up 40-plus percent, which I think all of us agree is unreasonable.”
McGrane said the bill is not a long-term solution to curbing a rise in property taxes.
“I think one of the concerns is, we’ve all heard the phrase, ‘If you build it, they will come,’ right?” he said. “Sometimes people like to think, ‘If you don’t build it, they won’t come.’ And all the evidence says: That’s not true. If we don’t build it, people are still coming ... There are people moving in who are willing to pay a whole lot for the property they’re sitting on, and are putting pressure to force them out, and that’s also impacting their taxes, because our [property] taxes are based on market value.”
Rep. Mike Moyle, who authored the bill and sits on the Revenue and Taxation Committee, then challenged McGrane’s 2019 budget as a symbol of private homeowners funding what Moyle considers unchecked budgets.
“Do you think you can live on that $24 million for just one year while the citizens of Idaho and you and the cities and the counties and the Legislature sit down and try to find a solution to these expanding, growing concerns?” he asked.
McGrane said the bill, if passed, would send taxpayers and voters a false promise of tax relief.
“I think this sends a message to our taxpayers that they’re going to see significant relief, but I think you and I both know that what will happen when tax bills go out is that relief won’t be seen the way it is intended.”
Moyle didn’t buy the clerk’s answer.
“What do you tell the young family with a child on an income that’s not growing?” Moyle asked. “What do you tell the middle-aged family trying to send a child to college? What do you tell the elderly couple on a fixed income that doesn’t have the opportunity you have to move money around, when you say, ‘We’re going to raise your property taxes, and it’s OK, you can just pay more. You can just find it in your budget. But me with a $24 million budget? I can’t hold the line one year?’ How do I answer that question to grandma?”
Coeur d’Alene Mayor Steve Widmyer said he and other local leaders have been closely following the HB 409 debate. He said its passage would remove one of the most effective fiscal tools in the city’s arsenal: using taxation on construction to pay for growth.
“I think the Legislature is looking for a solution,” Widmyer said, “but they are looking at this the wrong way. First, they have little to no knowledge of existing budgets in cities and counties. So they are making budget decisions for the city of Coeur d’Alene without knowing the budget. Second, they are removing a big part of local control.”
Widmyer estimated a property tax freeze could cost the city $500,000 to $1 million.
“In six years, the city of Coeur d’Alene had seen a 5.5 percent tax increase,” he said. “That’s less than 1 percent a year, less than inflation which is over 9 percent over that six-year period. During that time, we’ve added 19 patrol or police personnel and nine firefighters to respond to our growth. We have been very fiscally responsible. This bill is an attempt to slash high spending in parts of Idaho while penalizing the cities such as Coeur d’Alene that have been financially responsible.”
Jim Addis, the lone representative on the committee from North Idaho, voted to send HB 409 to the floor with a “do pass” recommendation, saying his experience grappling with growth in Coeur d’Alene has led him to the conclusion that tax relief is the single-biggest concern on the minds of his constituents.
“I come from a higher-growth area,” Addis informed the committee, “but probably one of the smaller high-growth areas in Kootenai County. In all the town halls I’ve done, I’ve pointed out that — with all the contentious issues that are facing us the last year or two, from Medicaid expansion to horse-racing to everything — the No. 1 issues I’ve gotten are, ‘Our taxes are too high.’”
He added that he aligned with committee members in his concern for squeezing city and county budgets with the proposed legislation, but that something must be done.
“I, too, do not want to hurt the locals,” he said. “I do not want to hurt smaller communities. I don’t want to hurt anybody ... I think the key that I see here is that we’ve got a problem that will take some dramatic action, and I, too, fear that if we don’t push the process, we’re not going to have the conversation.”
The debate over the solution is more complicated than an up-or-down vote. For example, the lone exception in the proposed tax freeze is for any school-related taxing district. A breakdown of property taxes in various properties around Kootenai County shows steady climbs in market values — thus a steady climb in property taxes.
However, in a 2019 statement on a Rathdrum home with $332,298 of taxable value after a homeowner’s exemption, the owner’s $5,163 tax bill collects $1,663 for school entities, meaning only $3,500 of the bill would be frozen for the year. It’s an example Kootenai County chief deputy treasurer Laurie Thomas said is indicative of trying to solve a problem with hope, rather than math.
“I can appreciate the Legislature trying to address the problem,” Thomas said, “that in totality, property owners are going to think this is going to have a huge positive impact. But I think, at the end of it, it’s not going to be nearly as much of a solution as people think ... It’s a Band-Aid on a hemorrhaging cut. It’s not going to be the panacea that everybody thinks it’s going to be.”