Moyle property tax 2-13-20

House Majority Leader Mike Moyle, R-Star, argues for his property tax freeze bill; at left is Rep. Lauren Necochea, D-Boise, on Thursday, Feb. 13, 2020. The House's tax committee approved the bill in a party-line vote, sending it to the full House.

Ada clerk: Freeze would not equal relief for residents

BOISE — A bill to keep local governments from increasing their property tax collections for a year is headed to the House floor.

All but the three Democrats on the House Revenue & Taxation Committee voted for the bill, despite two full days of testimony mostly from local government officials who spoke against it. Bill sponsor House Majority Leader Rep. Mike Moyle, R-Star, and the other Republicans who supported it said HB 409 will help jump-start a conversation with cities and counties on how to reduce the growing burden of property taxes on residents in rapidly growing areas.

“We have a problem,” Moyle said, in his closing statement. “We all admit we have a problem, but nobody wants to find a solution because we’ve never forced the issue so (cities and counties) can find a solution.”

Currently localities throughout Idaho can increase property tax budgets up to 3% annually, plus any additional collections from annexations and new construction. This bill would freeze the property tax portion of localities budgets from increasing at all in the 2021 fiscal year, which Moyle said would drive a broader conversation statewide about how to find relief for Idahoans on fixed incomes and low-income residents struggling to pay rapidly rising property taxes.

Prior to the vote, Ada County Clerk Phil McGrane joined the chorus of local government representatives arguing against the bill. His county has seen some of the highest property tax bill increases in Idaho because of the blisteringly hot real estate market, but he said freezing the property tax collections would not mean relief for residents.

McGrane said he agreed with Moyle about the need to find relief for residents struggling to keep up with double-digit property tax increases year over year, but he said the county increasing its budgets is not the main culprit. He said the main cause of tax bills going up is the ongoing shift of the relative market value from commercial to residential. This means no matter if the property tax section of the budget stays the same, property taxes on homeowners will still go up because their relative portion of the county’s tax base will still be increasing relative to commercial land.

Analysis conducted by the county found even if this legislation is enacted, 82.8% of homeowners would still see a property tax increase. McGrane said this same analysis is not available for the other Idaho counties, but he did not think other counties would see the same pattern.

“The issue and what is causing a lot of our harm is not merely budget,” he said. “I understand the desire to rein in spending and there are some questions of how our current policies are spent, but we need to dial into certain things like the homeowners' exemption and the circuit breaker. There are other policies that have a huge impact on this.”

Republican members of the committee were not convinced. They acknowledged the difficulty this will cause smaller localities that are not struggling with rapid growth and rely on modest increases in collections each year to complete necessary projects, but they thought using the freeze as a bargaining chip to push local governments to make change was more important.

Rep. Rod Furniss, R-Rigby, assailed local government leaders in the Treasure Valley for not finding ways to pay for growth without relying on property taxes from longtime residents, which he said necessitated action from the state.

“We don’t incentivize growth on the back of the taxpayers, on the widows and the people who don’t have money,” he said, about his home of Jefferson County. “You guys have a problem. Ada, you need to fix your problem.”

Rep. Rob Mason, D-Boise, said he is troubled by the  idea that the only way to get cities and counties to act on property taxes is to use sweeping legislation like the freeze. Instead, he said lawmakers and local governments should look at broader options for how to tackle the problem.

“I’m a little bit dismayed that we keep hearing that we have to put this on the floor in order to really have a serious conversation about property tax relief,” he said. “I get sometimes people need a prod to come to the table, but to me that says that we don’t trust we all can have a serious conversation if we don’t do this.”

On Thursday Driggs mayor Hyrum Johnson sent an email to Representatives Marc Gibbs and Chad Christensen and Senator Mark Harris:  

Honorable Representatives Gibbs, Christensen, and Senator Harris,

This morning House Rev & Tax voted to send the property tax freeze bill (H0409) to the floor with a do-pass recommendation. As I've mentioned to you previously, this bill is extremely concerning to us here in Driggs, as an institution which takes our fiscal and fiduciary responsibility very seriously.

House Bill 409 is premised on the flawed assumption that freezing property taxes will help homeowners in areas with rapidly escalating values. In testimony to the committee this morning, Ada County Clerk Phil McGrane said that if a one-year property tax freeze had been in place in 2019, 82% of residential properties in Ada County would still have seen a tax increase because taxes are shifting from commercial property onto homeowners.

This bill is like swatting a fly with a sledgehammer. The damage to cities, counties, and communities around the state would be stark. Property taxes pay for vital police and fire services that protect our communities and maintaining our streets, bridges, and parks. Which of those would the legislature have us stop providing?

Freezing property taxes will force cities to essentially bring development to a halt, if we are unable to pay for the services and infrastructure needed to serve Idaho’s growing population. This, in turn, could exacerbate the already critical housing affordability crisis we are experiencing.

The Legislature has tools at its disposal to fix rising residential home values in the form of increasing and/or indexing the Homeowner’s Exemption, which was capped by the Legislature at $100,000 a few years ago, and providing additional relief through the Circuit Breaker program that helps low-income homeowners who are elderly, widow(ers), disabled, blind, or disabled veterans or former prisoners of war.

Please, support our community, and common sense on this matter. Vote NO on H 409. Thank you for your service to our community.

Respectfully submitted,

Hyrum F. Johnson, Mayor

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