Idaho Republicans negotiate a bill to reduce property taxes. Here’s what it would do

BOISE (Idaho Statesman) – As the legislative session winds down, Idaho Republicans are quickly pushing through a property tax relief bill that would direct hundreds of millions of dollars to property taxpayers annually. At the same time, it would limit school districts’ ability to seek funding assistance from local voters.

House Bill 292 would leverage the state’s projected $1.4 billion surplus, a result of higher-than-expected tax revenues, and sales tax revenue to relieve property taxes, while directing funds to school districts to pay off bonds and levies.

Idaho property values have skyrocketed in recent years. Ada and Canyon County homeowners saw their property values rise by 30% to 42%, the Idaho Statesman previously reported.

“We wanted to come up with a solution that would provide meaningful, immediate tax relief as well as long-term tax relief for our property taxpayers,” Rep. Jason Monks, R-Meridian, who is co-sponsoring the bill, told the House Local Government and Taxation Committee on Monday.

Bill 292 has been a six-week combined effort from a coalition of influential Republican legislators, including Monks, Rep. Scott Grow, R-Eagle, and Rep. Doug Ricks, R-Rexburg, who all worked on the proposed legislation.

The bill also would make it more difficult for schools to pass bonds by eliminating one of four dates school districts could hold bond and levy elections every year.

The Republican-dominated committee overwhelmingly voted to advance the bill to the full House, overcoming Democratic opposition.

HOW WOULD PROPERTY TAX RELIEF BE FUNDED?

Last month, Republicans pitched three different proposals to address rising property taxes. One would have given state funds to school districts to help them pay off bonds and levies, which are funded by property taxes. Another proposed subsidizing residential property taxes using sales tax revenue. The third would have let the homeowner’s exemption, a property tax reduction program, rise with market values.

House Bill 292 combined aspects of two of the previous proposals. The bill would split $200 million or more annually between school districts and county governments. The schools would be required to use the money to pay off debt, and the counties would distribute the funds evenly among residential property taxpayers with homeowners’ exemptions.

The tax credit would not impact the portion of property tax bills that cover voter-approved bonds and levies.

“We felt if they had voted that responsibility onto themselves, then they were obligated to take care of that responsibility,” Sen. C. Scott Grow, R-Eagle, who co-sponsored the bill, told the committee Monday.

In Canyon County, the proposal would shave off about $500 from an average property tax bill, Canyon County Controller Zach Wagoner told the committee. Because voter-approved bonds and levies are exempt from the tax credit, residents of the same county could see varying benefits, depending on which school district they live in, Wagoner said. Residents of school districts without bonds and levies would see a greater reduction on their tax bills.

“The more taxes you pay to the school, the smaller your homeowners’ credit because the credit is based on the eligible property tax, not the total property tax,” Wagoner said.

Canyon County officials supported an earlier proposal to reduce residential property taxes, by Rep. Bruce Skaug, R-Nampa. His bill would have tied homeowner’s exemptions to market values. The homeowner’s exemption currently is capped at $125,000 of the value of a home, and House Bill 292 would not change that.

Wagoner said Monday that since the Legislature capped the exemption in 2016, property taxes for agricultural land has been cut in half, while residential taxes are 50% higher.

“They’re neighbors, they’re side by side, and yet their property taxes have moved in entirely different directions,” Wagoner said.

The new bill would broaden the qualifications for the circuit breaker, a property tax relief program for low-income seniors. After a 2021 bill removed thousands of Idahoans from the program, House Bill 292 would increase the circuit breaker income cap from $31,900 to $37,000.

“This should allow them to come back on, without going too far and adding a lot of new folks,” Grow said.

SCHOOL DISTRICTS COULD USE FUNDS FOR CONSTRUCTION

School districts across the state need about $850 million to fund facility repairs, according to a study last year by the Idaho Office of Performance Evaluations.

House Bill 292 would direct $100 million every year to subsidize bonds and levies, which districts use to fund construction projects and school operations when regular state and federal funding falls short.

Under the bill, districts would be required to first use the funds to pay off remaining bond and levy obligations, then they could save the funds for future construction projects or use the money to leverage new bonds.

The bill sponsors said funding construction needs would lessen the burden on property taxpayers within a school district. The school funds would be distributed based on average daily attendance, rather than school enrollment.

“It all goes to property tax relief to the homeowners and to all property taxpayers within that district,” Monks said. “Average daily attendance, I think, more accurately reflects the number of students that are attending each school.”

Republican leaders in the House and Senate negotiated the legislation in recent weeks, the sponsors said.

Senate President Pro Tem Chuck Winder, R-Boise, told reporters last week that GOP leadership is pushing to adjourn the legislative session by March 24, and the property tax legislation is a “going-home type of bill.”

House Minority Leader Ilana Rubel, D-Boise, said Democrats were not in the room for the negotiations. When a bill on an important issue emerges near the end of the session, it means there’s little time to vet it, Rubel told reporters.

“When you’re making sausage at 200 miles an hour, some gnarly things make their way into the sausage,” she said.

BOND, LEVY ELECTION DATE WOULD BE NIXED

The legislation also would eliminate March election dates for school districts, the most common time districts ask voters to approve bonds and levies.

March elections typically are the most successful, and school leaders say they’re crucial for timing school budgets. Over the last decade, there have been 126 bond elections by Idaho school districts, according to data from the Idaho School Boards Association. Elections held in March had a 55% approval rate, compared with 36% in May, 33% in August and 24% in November, a Statesman analysis of the data shows.

On Tuesday, voters across the state, including in Nampa and Kuna, will vote in bond and levy elections altogether worth more than $1 billion, Idaho Education News reported.

Quinn Perry, policy and government affairs director for the Idaho School Boards Association, told the committee that March elections give districts stability and predictability before they negotiate teacher salaries and set budgets ahead of June deadlines.

“Predictability and stability are two key factors in operating Idaho’s public school systems,” Perry said. “If a date must go, we do believe that August would have the least direct impact on a school district’s ability to fundamentally operate.”

House Assistant Minority Leader Lauren Necochea, D-Boise, who voted against advancing the property tax bill to the House, said the bond election provision was a deal breaker.

“Not because I don’t desperately want property tax reduction, but because there’s a poison pill in this bill that I cannot support,” she told the committee.

House Majority Caucus Chair Dustin Manwaring, R-Pocatello, said eliminating the March election was a compromise. The House last month passed a bill that would nix March and August school elections, leaving just May and November. The bill, which overcame bipartisan opposition in the House, has stalled in the Senate.

“We know that bill passed this body, and there was support to remove both of those dates,” Manwaring said.