Each year, property owners face explosive tax increases that make it harder to pay the mortgage or afford the taxes necessary to stay in one’s home. Rep. Mike Moyle, a conservative Republican from Star, has a possible fix, which he introduced on Thursday.
Moyle’s plan addresses a problem that has plagued taxpayers since the property tax statutes were rewritten more than 20 years ago. Back then, the state government told local governments they could only increase their total property tax collections by three percent a year (not counting annexations and new construction).
But, local governments were told not to worry. If they decided not to take the full three percent, the state tax commission would keep a running tally of the money the government decided to forgo — and the local government could always come back later and retrieve this “forgone balance.” That clawback can happen at any time, and it often does, which causes your taxes to skyrocket.
For example, let’s say your local city government has a property tax budget of $50 million. It could raise property taxes by three percent a year, but it doesn’t. Instead, it opts to increase its property taxes by just one percent a year. After the third year, the city has given up collecting more than $3 million.
But then, in the fourth year, there’s a change in government: a new mayor and a new city council with new priorities. They’ve decided to collect that $3 million in forgone balances, as well as raise the city’s property taxes by the full three percent allowed by law.
Suddenly, property tax collections will charge forward by nine percent, and taxpayers must absorb that plus their annual increases caused by rising market values. In cities and counties across Idaho, that’s exactly what’s been happening, and it’s not surprising to find a person’s property taxes go up as much as 25 percent. In short, local elected officials budget conservatively, and then years of work evaporate when a new regime comes into power and wants to spend on some big project, with surprising and often devastating financial consequences for the unsuspecting property owner.
Moyle’s House Bill 103 would let local governments not only budget conservatively but take the next big step: tell the state tax commission not to count some or all of the potential tax money it forgoes when it doesn’t tax to the fullest. Local governments would not be compelled to act, but they could, and several local elected officials have said they look forward to telling the tax commission that their decision to keep taxes low should be one that sticks.
Moyle’s plan would let government officials lock in their frugal budgeting without fear that their efforts will come back to haunt taxpayers. It’s the sort of assurance property owners have been needing for two decades, and maybe after this legislative session, they’ll finally get it.