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Understanding property tax relief under CARES Act

Understanding property tax relief under CARES Act

Fred Birnbaum
July 23, 2020
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July 23, 2020

The federal CARES Act gave Idaho about $1.25 billion for COVID-19 relief efforts. Gov. Brad Little earmarked approximately $200 million of the federal cash for property tax relief. 

As of July 20, 54 cities and 28 counties have opted to participate in this property tax relief opportunity. However, there is not a solid understanding of what this will mean for homeowners in participating localitices.

Consider an example homeowner in Boise. 

Based on the Boise mayor’s proposed budget, the city needs to levy 0.00537669% of each home’s value in property taxes, to fund the entire budget. The average assessed value of a home in Boise is about $351,000. After we account for the $100,000 homeowner’s exemption, our hypothetical homeowner must pay 0.00537669% of their $251,000 house value, so they would get a city property tax bill of $1,350. 

Keep in mind, this number does not include property taxes from the county or other taxing districts, so the total property tax bill would be higher. 

Gov. Little’s property tax relief plan allows Boise to receive from the state of Idaho, via the CARES Act funds, a pro-rata amount approximately equal to police, fire, and EMS payroll costs. This state money comes with one important provision: All the money Boise receives to cover public safety payroll costs must be used to lower residents’ property taxes. 

The city has to pay for emergency workers’ salaries no matter what. Since the state gave the city a chunk of money to cover emergency workers’ payroll costs, the city no longer has to collect those funds from property taxpayers. 

How does this impact our hypothetical example? 

Boise will receive approximately $28.9 million from the state to pay emergency worker salaries. If we remove that amount from the city budget, Boise doesn’t need to collect as much tax money from each resident to fund the budget, and the levy rate would be lowered to an estimated 0.004408027%. 

Our average homeowner would pay 0.004408027% of their home value, instead of the original levy rate of 0.00537669%. So they would see a city property tax bill of  $1,107, and would save about $243, or   18 percent. There are two final points to remember. In order to qualify for state aid, cities and counties must limit the growth of their property tax budget. This limitation still allows cities and counties to increase their property tax collection by the value of the new construction and for cities annexation in their districts. 

For example, the city of Boise can still increase the total amount of property taxes it collects by 1.6%. Of course, cities can choose not to grow their budgets at all.

The final point: This is one-time relief. After your December property tax bill, your levy rate will revert to what it would have been without this one-time relief. 

This property tax relief opportunity gets the ball rolling, but it does not offer ongoing savings. Ongoing tax relief will require a change in Idaho property tax statutes – something the Legislature needs to address when they convene next January.

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