Bill Description: House Bill 159 would establish that if a large data center takes a sales tax exemption, the property taxes it pays will go on the normal tax rolls, even if it is in an urban renewal district.
NOTE: House Bill 159 is similar to House Bill 46, introduced earlier this session. The most notable change is that House Bill 159 would apply only to "a revenue allocation area for which no bonds have been issued pursuant to section 50-2909, Idaho Code, as of February 15, 2023," while House Bill 46 would apply to any revenue allocation area. House Bill 159 also adds a severability clause.
Does it increase government redistribution of wealth? Examples include the use of tax policy or other incentives to reward specific interest groups, businesses, politicians, or government employees with special favors or perks; transfer payments; and hiring additional government employees. Conversely, does it decrease government redistribution of wealth?
Idaho law allows a large data center (one involving at least a $250 million investment and at least 30 jobs) to take a significant sales tax exemption on the equipment it purchases. A data center can also be included in a revenue allocation area, more commonly known as an urban renewal district (URD). If this is the case, the property taxes it pays will go to the URD — and they can be used to help build the data center itself, or its supporting infrastructure.
House Bill 159 would amend Sections 50-2903 and 63-3622VV, Idaho Code, to clarify that if a large data center takes the available sales tax exemption, the property taxes it pays will be distributed as if it were not within the renewal district (provided there have been no bonds issued for the district before Feb. 15, 2023.)
This change will ensure that a data center cannot receive a sales tax exemption and also have its property taxes redirected back to itself through a URD (provided there have been no bonds issued for the district prior to Feb. 15, 2023.)
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?
Urban renewal districts (URDs) are funded through tax increment financing (TIF), which means that as the assessed value of property inside the district increases, the difference is credited to the URD rather than to the normal tax rolls.
As an example, an empty lot worth $10,000 might be included in an URD and then developed into an office building assessed at $1 million. When it comes time to allocate property taxes, the URD would receive the taxes due on the assessed value of $990,000. The county and other taxing districts would receive the taxes due on $10,000 in assessed value.
This would happen even though the property would receive police and fire protection and other services, funded through regular property taxes. Effectively, tax increment financing forces property taxpayers outside the URD to subsidize the increased services received by properties within it.
House Bill 159 says that if a large data center takes the available sales tax exemption, the property taxes it pays would not go to the URD (provided there have been no bonds issued for the district prior to Feb. 15, 2023). This change would reduce the subsidies taxpayers are forced to give to the data center.