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Cut spending to provide property tax relief

Cut spending to provide property tax relief

Fred Birnbaum
November 4, 2019

A property tax revolt is brewing in Idaho, and it is easy to understand why. Homeowners are seeing property taxes increase faster than their incomes and that is not sustainable. Seniors, picture a moving truck pulling up to your house; those on fixed incomes can’t — won't be able to — keep up with upward spiraling tax increases.

Those who attended the Oct. 21 legislative working group on property taxes might have noticed something peculiar. While acknowledging that property taxes are budget-driven, public officials didn’t discuss public spending growth. It is easy to understand why: The blame rests squarely with them.

As an Ada County homeowner who has lived in the same house since 2000, I have the perfect lens into the property tax picture.

Let’s start with a fundamental understanding of how Ada County’s budget is tied to an Ada County homeowner’s property taxes. For tax year 2018, the Ada County district levy was .002755643 – yes, that’s a lot of digits. After the homeowner’s deduction, that number is multiplied against your property's total taxable value, which determines the tax amount available to support Ada County’s budget. Keep in mind Ada County’s tax does not include the city of Boise, schools, or even highways which are separate lines on one’s county property tax bill.

For Ada County’s Fiscal Year 2019, which is tax year 2018, the portion of Ada County’s budget tied to this property tax district levy was $125.6 million. When divided by a total taxable market value in Ada County of $45.6 billion the levy rate of .002755643 mentioned above is derived.

To see why this matters, let’s go back a decade to FY09, when the county’s equivalent budget was $80.1 million. The Ada County taxing district budget to be levied grew 57%, from FY09 to FY19, that is from $80.1 million to $125.6 million. However, during that time Ada County’s population grew by roughly 19% and the Consumer Price Index rose by about 15%. So the county budget grew about 68% more than population growth plus inflation.

If the budget had increased commensurately with the population and inflation it would be $107.3 million. The mill rate, assuming similar market values – which are not impacted by Ada County’s budget requests, would be about .00235507 or about 14.5% lower. Would that translate into a 14.5% lower tax amount for that line item on your tax bill? Yes.

Of course, Ada County is just one of nine taxing districts on my tax bill. Since we don’t have the space here to  review the budget growth of each and every district I can’t tell you that similar spending restraint (by the city of Boise, Ada County Highway District, etc.) would save me 14.5% for each district levy line item on my bill. But a 14.5% savings across these taxing district line items would have saved me about $657 in tax year 2018 (FY19). That’s a lot of savings when you consider this analysis still assumed that the Ada County budget to be levied would grow 34% over the last decade.

The solution is clear: Hold mayors’, councilors’, and county commissioners’ feet to the fire on spending. Ask your local elected officials to cut wasteful outlays and prioritize tax relief over pet projects. Otherwise, expect to face higher-than-necessary property tax bills for years to come.

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