Bill Description: House Bill 46 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.
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?
Current 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. However, the data center can also be included in an urban renewal district (URD), and the property taxes it pays will go to the URD — and can be used to help build the data center itself, or its supporting infrastructure.
House Bill 46 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.
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.
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 46 says that if a large data center takes the available sales tax exemption, the property taxes it pays would not go to the URD. This change would reduce the amount taxpayers are forced to subsidize the services the data center receives.