Senate Bill 1277 — Homestead exemption application uniformity

Senate Bill 1277 — Homestead exemption application uniformity

by
Idaho Freedom Foundation staff
February 4, 2020
Idaho Freedom Foundation staff
Author Image
February 4, 2020

Analysts: Fred Birnbaum and Lindsay Atkinson

Bill description: SB 1277 would create a uniform homestead exemption application form and increase the homestead exemption from $100,000 to $112,000.

Rating: +2

Does it in any way restrict public access to information related to government activity or otherwise compromise government transparency or accountability? Conversely, does it increase public access to information related to government activity or increase government transparency or accountability? 

SB 1277 would direct the Idaho State Tax Commission to create a uniform homestead exemption application form. It would also direct that this “application form shall be made available at the office of the state tax commission, at each county assessor’s office, and on the websites for each county assessor and the state tax commission.”

Currently, counties not only have different forms, but they also have different methods for residents to access the forms. For instance, Canyon County does not have online access to its form. Meanwhile, both Ada County and Boise County have online access, but the access is to two completely different forms. 

(+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? 

SB 1277 reduces the property tax burden imposed on some property owners. It does so by raising the maximum homeowner exemption from $100,000 to $112,000. So, any property owner whose primary residence is worth more $200,000 can claim a higher exemption and those with values of  $224,000 or more can claim the full exemption.

(+1)

However, this reduction in property taxes is not evenly applied to all property owners. Those with a home valued less than $224,000 will not receive the full exemption. Instead, they will receive an exemption up to “fifty percent (50%) of the market value.” Additionally, farm properties, commercial, and rental properties would not be eligible for this exemption.

(-1)

SB 1277 also has an impact on the taxes of all property taxpayers in the boundaries of a taxing district. It does so by adding in a provision that this exemption increase “be deducted from the new construction roll...but only to the extent that the amount exceeds the same deduction made in the previous year.” 

The new construction roll is a component of the tax equation that local governing bodies use. Specifically, local governments can increase property taxes each year by 3% plus new construction and annexation. When a portion of the market value of a home (in this case, $12,000 if this exemption applies) is removed from the new construction roll for a taxing district, that amount offsets the increased homeowners exemption, avoiding a tax shift. Idaho code, 63-301A, New Construction Rolls does not prevent the new construction roll from running a negative balance. This actually occurred in Star during the last recession. This means that there is a dollar for dollar offset of the taxing district’s budgeting capacity with the taxable market value decreasing due to the increase in the homeowner’s exemption. 

(+1)

Analyst’s Note: This rating reflects amendments made to the bill on 3/13.

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