As the Covid cases climb around us, the ICU capacities max out, businesses struggle and many are touched by this illness, our legislative leaders have decided we must do something “structural” about property tax. At least that’s what Idaho State Senator Jim Rice, co-chair of the interim committee on property tax reform suggests. I guess the “death and taxes” certainty is not lost on them.
Many are more bothered by their property taxes than they are by wearing a mask. So, I guess our leaders are listening to some of us at least. And it is true, in many parts of our state, the property tax bills have climbed almost as steep as the Covid case curve.
But the cause of this painful property tax pandemic lies in the legislatures lap, so it’s appropriate that they should wring their hands over it. If Covid is the “China Flu”, our property tax suffering is the “Boise boondoggle”.
For those paying more in their property tax bill, a careful autopsy is required to show the cause. Counties are legally limited from increasing their budgets, even if they experience rapid growth. Most rural counties population is pretty stagnant, but Ada, Canyon and Twin Falls are booming. And where there’s growth, property values usually go up. Tax rates may not change, but property valuation sure can, so if your tax bill bumped, odds are it’s because the land you live on is worth more. When your property is worth more, your property tax bill goes up (even if the bank owns the majority of your appreciated asset).
Further, the legislature decided to cap the homestead exemption a few years back. This shifted more property taxes to homeowners and off commercial properties.
Moreover, the legislature’s support plan for low income, high property tax residents, the Circuit Breaker support is not widely used. Only about half those eligible apply and get the benefit. Nor has it been adjusted for inflation for 14 years. It takes general fund money from schools and pays part of low-income folks’ county property tax bills.
Finally, back in a one-day special session in 2006, the legislature, voted to remove the “Maintenance and Operations” perpetual levy and “replace it” with a sales tax increase. The “replacement” was about $30M short when sales were good. When the 2008 recession hit, sales taxes tanked and school districts all over the state ran supplemental levies to keep schools open.
It is worth noting that the Republican legislature has twice made property tax breaks for commercial owners over residential ones. The Homeowners exemption cap and the 2006 M&O removal both favored commercial property owners.
So, the autopsy results on your death by property tax could be as multiple as a death by Covid. Some people with the virus might die from infected lungs or blood clots or multiple organ failure. Property tax victims might have passed a local school levy, capped their homeowner exemption, or seen their valuation skyrocket.
Pandemics deserve careful consideration of public health to be contained. Taxes are managed by the laws our elected representatives write. It looks to me like our legislature wants to make it easier on people who own business property and harder on people who live in their homes.
Research and data should drive public health. Likewise, the Idaho Constitution should give some direction to lawmakers.
Taxes fund public institutions. The Idaho Constitution is crystal clear about funding public education:
The stability of a republican form of government depending mainly upon the intelligence of the people, it shall be the duty of the legislature of Idaho, to establish and maintain a general, uniform and thorough system of public, free common schools. (My emphasis)
Given the legislature’s history of undermining school funding, maybe the interim committee should propose a structural change to the Idaho Constitution. That way they can continue to ignore this mandate with a clear conscience.