Bill description: Lowers the minimum investment for a project to qualify for a property tax exemption from county commissioners.

Rating: -2

Analyst’s note: House Bill 192 seeks to change Idaho Code 63-602NN, which stipulates a manufacturing project valued at more than $3 million may be granted a property tax exemption. The new proposal would lower the proposed threshold to $500,000 and remove the manufacturing stipulation, making the tax exemption available to more projects. County Commissioners would continue to decide which projects are eligible.

Does it directly or indirectly create or increase any taxes, fees, or other assessments?

Proponents of the bill contend this legislation won’t increase property taxes because exempt properties would remain off the new construction roll. While this is certainly helpful, it is not the complete story. Properties exempt from taxation may still require some new government services such as roadway construction, fire and police protection, water and sewer and other infrastructure needs. Those costs would be passed on to owners of non-exempt properties through the same property valuation as though no project were added to the site. (-1)

Does it in any way restrict public access to information related to government activity or otherwise compromise government transparency or accountability?

House Bill 192 contains a favorable provision requiring a public hearing on a proposed property tax exemption. “Before granting a property tax exemption under this section, the board of county commissioners shall hold a public meeting regarding whether to grant the exemption. The board of county commissioners shall provide a summary of the application under consideration, a written notice of the time, date and location of the public meeting, and an invitation to participate in the meeting to all affected taxing districts, urban renewal agencies and the Idaho department of commerce at least five (5) calendar days before the meeting.” (+1)

However, the legislation also says, “When considering whether to grant the property tax exemption, the board of county commissioners may consider trade secrets, as defined in section 74-107(1), Idaho Code, in executive session as allowed in section 74-206(1)(d), Idaho Code.” This trade secrets exemption virtually negates the public hearing provision, allowing commissioners to know what public hearing participants don’t know about the good and bad about a specific project. Considering trade secrets behind closed doors also allows commissioners to delve into and make judgments about a company’s operational details, which has little to do with the development of local tax policy. (-1)

Does it violate the spirit or the letter of either the US Constitution or the Idaho Constitution?

Article VII, Section 5 of the Idaho Constitution says, “All taxes shall be uniform upon the same class of subjects within the territorial limits, of the authority levying the tax, and shall be levied and collected under general laws, which shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal: provided, that the legislature may allow such exemptions from taxation from time to time as shall seem necessary and just…” Idaho law evades this uniformity clause by, in the current statute and continuing the proposed bill arguing that the legislation is “necessary and just.” However, it is neither. This bill results in most taxpayers continuing to pay their required taxes while others’ tax liability is forgiven. (-1)