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Eye On Boise

House passes bill to remove indexing from homeowner’s exemption; 5 Republicans, 10 Dems oppose it

Idaho House chamber (Betsy Z. Russell)
Idaho House chamber (Betsy Z. Russell)

The House has voted 55-15 in favor of HB 431, the bill to remove the indexing from the homeowner’s exemption from property taxes, instead just fixing the exemption at a maximum of $100,000. Five Republicans and 10 Democrats voted against the bill; 51 Republicans and four Democrats voted in favor; the bill now moves to the Senate side.

“Stable, predictable tax policy is by far the better way to go on this,” Rep. Janet Trujillo, R-Idaho Falls, the bill’s sponsor, told the House. She said it’s burdensome for homeowners to have their maximum exemption go up and down with the market, and said most places in Idaho now have home values far below $200,000. However, the Idaho Association of Realtors – a prominent backer of the bill – told lawmakers on the Economic Outlook & Revenue Assessment Committee at the start of this year’s legislative session that average home prices in Idaho in 2015 were just a hair under $200,000, after recovering from a dip during the recession; Idaho’s average home sales price first hit $200,000 in 2008, according to the figures the Realtors submitted.

The homeowner’s exemption shields half of the value of an owner-occupied home and lot, up to a maximum cap, from property tax. It doesn’t change the total amount of taxes collected; if the homeowner’s exemption goes up, all other types of property taxpayers in the district pay a little more to make up the difference; if it goes down, they pay a little less.

Rep. John Gannon, D-Boise, argued against the bill, saying, “This bill does bring some predictability. That predictability is that when … the cost of housing increases the value of your home beyond $200,000, you will not have the benefit of a higher exemption, because the exemption is capped. So you will essentially have a higher tax.”

House Minority Leader John Rusche, D-Lewiston, said, “We have done property tax reductions for businesses, we’ve done that already, the personal property tax reduction. ... I think this is going to be a problem, unless we understand that every two to three years we’re going to have to come in here and argue again whether we should increase the exemption to rebalance the field. I think the index is working pretty well. I’d suggest we keep it.”

Republicans voting against the bill were Reps. Luker, McDonald, Nate, Shepherd, and Sims. Democrats voting in favor of it were Reps. McCrostie, Nye, Rudolph and Smith.

Trujillo told the House that the Idaho House Price Index, which is published by the Federal Housing Finance Administration, is a “construction index” and “it has nothing to do with the value of your home. The construction index has to do with the value of construction at this time.” But the House Price Index is based on home sales and refinancing, not construction; the FHFA has FAQ’s on it here.

Trujillo also told the House that Idaho home prices exceed $200,000 only in a few places, and those that are that high in the Coeur d’Alene area are probably second homes. “We’re not just looking at small pockets of Ada County. We’re talking statewide,” she said.



Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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