In the midst of this budgeting season for municipalities, one city has stood out: Nampa, Idaho. On August 20, the Nampa City Council unanimously voted to disclaim its right to recover the foregone property tax increase for fiscal year 2019 in future years.
The tax increase that a taxing district foregoes represents its foregone balance. This balance is the sum of tax monies not collected throughout the years, which can retroactively be collected in the future.
For example, if a city only actually collects a 2 percent increase in property taxes when they are, by law, allowed a 3 percent increase, the 1 percent increase not collected is saved on a government spreadsheet in the form of an actual dollar amount. This amount accumulates into a foregone balance as it is added to the amount not collected in previous years.
And, this balance can really add up.
In the case of Nampa, the city has a foregone balance of $4.3 million. The city can collect this amount from taxpayers for any budget in future years to exceed their allowed 3 percent yearly property tax increase.
But, thanks to an Idaho law, a local taxing district can disclaim a foregone increase from their budgeting year. In other words, the foregone revenue—or the money taxpayers are allowed to keep when the taxing district does not collect their maximum tax levy allowed by law—for that fiscal year will not be added to the total foregone balance. The foregone revenue will disappear and give taxpayers an actual reduction in their taxes, instead of just a delayed collection.
Mayor Debbie Kling, during the council’s discussion on foregone disclaim, argued that the Association of Idaho Cities does not recommend disclaiming a foregone increase. But Councilman Bruce Skaug, a key advocate for the passage of the recent disclaim resolution, told the Idaho Freedom Foundation, “I was not elected by the Association. I was elected by Nampa taxpayers and I will always advocate for foregone disclaim.”
Nampa is an outlier with its decision. Nampa’s decision to disclaim its foregone increase for FY19 came the same week that Canyon County commissioners voted to use $2.3 million of the county’s available $6.7 million foregone balance to fund temporary jail housing. In sum, county commissioners reached back in time to claim uncollected property taxes, making county residents come up with an additional $2.3 million.
During IFF’s follow-up to Nampa’s disclaim decision, Skaug noted, “I hope [the foregone disclaim] is the habit of the Nampa council in the future.”
Hopefully, it will become habit for many local government entities across Idaho as well.