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Panel advances legislation that could protect against large property tax hikes

Panel advances legislation that could protect against large property tax hikes

Dustin Hurst
February 8, 2017
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February 8, 2017

On Tuesday, Republican members of the Idaho House Revenue and Taxation passed legislation that proponents say will protect property owners from massive retroactive tax hikes.

Opponents, including taxpayer-funded government associations, told panel members House Bill 103 would restrict cities and counties from accessing cash in case of emergencies.

The bill passed on a 13 to 2 party-line vote. Only Boise Democratic Reps. Mat Erpelding and John Gannon opposed the measure, which now heads to the House floor for further debate.

The bill addresses foregone balances held by local units of government. Idaho law allows cities, counties and others to hike taxes annually by up to three percent, plus they can add in new property growth and annexation. If officials don’t take all three percent, the percentage they don’t collect automatically stays on a government spreadsheet.

Related: Wayne Hoffman: Moyle's plan could stop massive tax hikes

The uncollected amount represents each taxing district’s foregone balance. It’s not a savings account, per se, because the money isn’t banked. Instead, the government tracks the possible, but not collected, taxing authority of cities, counties, school districts and others.

House Bill 103, sponsored by House Majority Leader Mike Moyle, R-Star, would allow local governments to permanently eliminate some of their foregone balance. For example, one year a school district could take just one percent of the three-percent annual property tax hike allowed by law. Board members could then set aside one percent in the foregone balance account, and decide to “erase” the remaining one percent, so future boards could not retroactively grab it from taxpayers.

Moyle told colleagues the proposal enhances local control and gives city councilors, county commissioners and school board members another tool to protect taxpayers.

Opponents decried the legislation as unnecessary.

John Watts, lobbyist for the Idaho Library Association, said the bill would allow officials to tie the hands of future boards by restricting full access to all available revenue.

Wayne Hoffman, Idaho Freedom Foundation President, told the panel the bill primarily aims to protect taxpayers from large surges on their property tax bills.

Pocatello Mayor Brian Blad offered the lengthiest opposition to Moyle’s bill. He said the foregone balance arrangement allows officials to budget as conservatively as possible because they know they can reach back for extra cash in dire situations.

“The foregone balance to me is a great way to budget,” Blad told the panel.

Blad said he also believes the bill will encourage local officials to take the maximum property tax increases allowed by Idaho law out of fear.

Boise City Council President Elaine Clegg, speaking on behalf of the Association of Idaho Cities, also spoke against Moyle’s bill.

Idaho State Tax Commission records show local governments across the state hold a combined $110 million in foregone property taxes.

Collectively, Idaho’s 44 counties hold just more than $50 million in foregone taxes. Ada County boasts the largest amount at nearly $14 million.

The 191 cities listed in state records hold just more than $29 million. Blad’s Pocatello boasts a $1.7 million foregone balance, while Clegg’s Boise balance sits at just $13,665.

Note: The Idaho Freedom Foundation publishes IdahoReporter.com.

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