In this season of campaigns and initiatives and increasing housing prices, property taxes make a convenient target. Nobody likes them – well, nobody likes taxes generally, but especially not property taxes – and of a sudden everyone seems to have their pet approach for solving the property tax problem.
Which is a problem. But in trying to throw money at it – with the idea of swapping out sales tax money for property tax money – the various advocates may have a case of bad aim.
The impetus isn’t hard to understand. It grows out of all those stories, dripping out one by one, about people whose houses, new or used, have gained a whole lot of value in the last few years, and who are seeing their property taxes shooting through the roof. Butch Otter, the Republican nominee for governor, is among them, having just lost an appeal of the increase that will cost him tens of thousands of dollars. Prop tax fury is rampaging, especially in the Panhandle and parts of southwest Idaho.
So what if I were to tell you that, over the past seven years, the total amount of money collected from property taxes has risen by about a third – averaged out, about 5% growth a year, or less – no spectacular growth at all? And that it would be considerably less if you took out all the new growth, especially around the Boise and Coeur d’Alene regions, that have added so heavily to the increase?
That’s right. Taken as a broad whole, property taxes in Idaho haven’t been shooting through the stratosphere. Such are the statistics as compiled by the state, through the Tax Commission, and by the Associated Taxpayers of Idaho. (Many thanks to Randy Nelson of ATI for his help in deciphering some of this, though any errors of interpretation are mine; and I don’t mean to suggest he necessarily endorses any of this analysis.)
Want more evidence? Look at the budgets of most local governments around Idaho. Property taxes in Idaho go to schools and local governments; if they were bringing in drastically larger amounts of money, it would show up in those budgets. But for the most part, it doesn’t; local governments have been keeping up with inflation, but few of them have any sudden and fat pots of money to spend.
So what’s going on?
In theory, property taxes are a zero-sum game. Let’s assume a group of local governments receiving property tax money from a group of property owners. Let’s say those governments decided to limit their budgets for next year to the exact amount it is this year. (Stay with me; this is just a hypothetical.) Now let’s say that property values in that area take off, and everyone’s property is worth twice in the second year what it was in the first. Given all this, what would happen? The governments would cut the tax rates by half, meaning that the value would be taxed only half as much. That would mean everyone would pay exactly the same taxes the second year as the first.
Back to the real world, where government budgets do rise annually, generally for inflation and also for some other things – insurance costs, a staff increase, a pay raise, whatever. In Idaho most local governments are limited to about 3% a year. Schools can go up a little more.
The increases in property tax revenue in Idaho has been more than that, but not drastically more. Some of the difference has gone into school bonds. Some of it has gone into the growth places; Meridian, for example, has increased its budget almost ten-fold in the last decade, but then its population has increased about five-fold during that time too. Paint the property tax picture with a very broad brush, and nothing very startling seems tobe going on.
That doesn’t mean these protesting taxpayers are liars, though, becaues not everyone is affected the same way.
The fast-growth communities in places like Ada, Canyon and Kootenai counties certainly have been increasing their budgets, too keep up with the growth, and that has meant that as property value has increased, they have tended to charge the ever-more-valuable properties ever more in taxes.
Not all property has been increasing in value the same way, either. Many of the low-growth areas around Idaho haven’t seen near the value increase that higher-growth areas have. Different types of real property have appreciated, or not, in different ways. Those homeowners who are seeing their property taxes go up by a half might look at all the properties of various sorts that aren’t increasing in value much at all.
A third factor is the change in property tax laws over the last few years, especially the changes allowing for exemptions of various types – but not, usually, for owners of residential property. (The tax advantages have been going to those who hire some of the best lobbyist help at the Statehouse, and the list of such players doesn’t include homeowners.) These law changes have tended to shift more of the tax collections onto homeowners, and away from others (this being a trend of generation-long standing). True, homeowners got an increase in the homeowner exemption this year from the legislature. But that smallist exemption increase will do little good for the owners of all those new quarter mill-and-up houses blanketing suburban Ada and Kootenai.
Making changes in these areas is tedious and difficult. But Idahoans who are looking for realistic solutions to their property tax problems might look in these directions, rather than toward one-time fixes that will simply bring the real issues around in another year or two.Share on Facebook