Bill Description: House Bill 690 would use general fund dollars to offset property taxes without any corresponding cuts in local spending.
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?
House Bill 690 creates Section 57-810, Idaho Code, to provide property tax relief from the state's general fund. If there is an excess cash balance in the general fund, the state controller will transfer up to $80 million to counties and cities for property tax relief. Under some circumstances, this could indirectly lower property taxes.
Does it increase government spending (for objectionable purposes) or debt? Conversely, does it decrease government spending or debt?
The prospect of lower property taxes is good. There are several problems with this legislation, however, starting with the fact that we don't know how much money will be made available for this program. The excess cash balance is calculated after all encumbrances and transfers are accounted for.
An additional concern is that House Bill 690 does nothing to encourage cities and counties to reduce spending. The bill does, however, "encourage" cities and counties to use this money to pay down bonds, but this is not required. With no spending cuts required, this bill may actually incentivize cities and counties to increase spending or take on more bond debt now that they have increased access to general fund dollars. A city or county whose voters may punish elected officials for raising taxes might use these general fund dollars to offset spending increases in a revenue-neutral manner.
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?
House Bill 690 directs half of the money pulled from the general fund to counties and half to cities. But many Idahoans whose taxes contribute to the general fund do not live in cities, and thus they will receive less property tax relief compared to Idahoans who live in cities. Likewise, Idahoans who own no property will likely see no reduction in rental prices, even though these folks also pay the taxes that make up the general fund.
Tax relief should be proportionate to taxes paid. If there is an $80 million surplus in the state's general fund, it should be returned proportionately to the taxpayers whose money created the surplus, not shifted to benefit only some taxpayers, with a bias toward urban property owners.