Bill Description: House Bill 842 would amend existing law to revise provisions regarding certain limitations of budget requests by taxing districts and to provide certain exceptions to such limits.
Rating: -1
Analysts note: The fiscal note for House Bill 842 makes no claim to any actual tax savings, and a series of assertions are not backed up by any tax data. The bill makes a number of changes to property taxes; some of which are clearly positive and others negative, but the short-term impact will be that of higher property taxes.
Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?
The bill simplifies how the 3% growth calculation is obtained, which is neither positive nor negative, except that it will likely make it easier to calculate the levy rates. The overall 8% cap remains in effect for cities with populations over 30,000. The use of the previous year’s levy rate for the new construction calculation versus using the current market value will work in both directions, depending upon the direction of market values. According to the Idaho Tax Commission data, the 3% increase allowed by the general cap was the single largest tax increase category from 2024 to 2025.
(0)
H842 would increase the overall property tax increase cap on small cities to 15%, and that includes ambulance and fire districts that support these cities. While the SOP claims that the growth will cover the additional taxes, what that means in practice is that those cities that are now pushing up against the 8% cap are driving down levy rates for homeowners. A 15% cap would be an increase relative to the status quo. About 95% of Idaho’s cities are under 30,000, so this bill would potentially subject a lot of Idahoans to a higher cap. The SOP asserts that currently only a few are growing at a rate to exceed the 8% cap, but that does not guarantee anything in the future. The higher 15% cap could have been traded off for a lower base growth factor than the current 3%.
(-1)
Forgone tax revenue will no longer be allowed to be claimed after tax year 2026. This will eliminate an unfunded tax liability for future taxpayers.
(+1)
Unfortunately, H842 does not restrict taxing districts from utilizing all current forgone revenues (to increase budgets as much as possible while allowed for one, final year) and creates an obvious incentive by removing it for future taxpayers. It even adds a provision that will further encourage them to do so by doubling the forgone piece allowed for maintenance and operations from 1 to 2%.
(-1)
H842 allows taxpayers to use the existing initiative and referendum procedures for cities (34-1801B) and counties (34-1801C) to reduce base budgets. The voting threshold to successfully use this process would be 60% for cities and 66.7% for counties. This might seem positive, but this is not an easy process for voters to effectuate. With just a 50% plus vote, voters can vote out city and county elected officials who approve property tax budget increases.
(0)
