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House Bill 409 — Taxing districts, budgets

House Bill 409 — Taxing districts, budgets

Fred Birnbaum
February 10, 2020

Bill description: HB 409 replaces the current property tax formula with a new 4% cap (excluding schools).

Rating: -1

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?

HB 409 caps non-school district property tax growth at 4%. It does allow an add-back for urban renewal and expiring exemptions, which would be limited in scope. It is not possible to estimate the exact fiscal impact of this bill, but it is clear that the current fiscal note estimate is not accurate. The fiscal note for the bill was not updated based on the change from the earlier bill which froze budgets, as opposed to this 4% cap on non-school district budgets. The current fiscal note estimates a property tax savings of $78 to $132 million, which is therefore highly overstated.

A rough estimate would put the savings proposed by this bill at $56 million, if all districts took no more than 4% and those that took less than 4% took the same increases they did in the 2017-2019 period. This estimate assumes that the school districts would not take over 4%, even if they could.


For the period 2017 to 2019, the taxing districts in 22 of Idaho’s 44 counties took average increases of less than 4% per year. The policy implication is that many of the taxing districts with limited new construction would be able to increase their property taxes by up to 33% more than under current law. Therefore, for those living in districts where a 4% increase would exceed the current formula, the passage of HB 409 could result in property tax increases.


Most economists expect the country to enter a recession in the next three years, the time period covered by the amended bill. If Idaho were to enter into a recession, lowered new construction would effectively put the cap closer to 3% under the current formula. However with the 4% cap with this bill and a slow down in growth and new construction, property owners throughout the state would likely be exposed to larger property tax increases than without the bill. 


Analyst’s Note: This rating was updated to reflect amendments made in the Senate on 3/09/20.

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